<PAGE>
<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. 2)
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] 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)
GUY P. WYSER-PRATTE
AND
SPEAR, LEEDS & KELLOGG
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
<PAGE>
________________________________________________________________________________
SOLICITATION OF AGENT DESIGNATIONS
IN CONNECTION WITH THE
CALL OF A SPECIAL MEETING OF STOCKHOLDERS
OF
REXENE CORPORATION
------------------------
PRELIMINARY SOLICITATION STATEMENT
OF
MR. GUY P. WYSER-PRATTE
WYSER-PRATTE & CO., INC.
63 WALL STREET
NEW YORK, NEW YORK 10005
(212) 495-5350
AND
SPEAR, LEEDS & KELLOGG
120 BROADWAY
NEW YORK, NEW YORK 10271
(212) 433-7000
------------------------
This Preliminary Solicitation Statement is being furnished to holders of
outstanding common stock, par value $.01 per share (the 'Common Stock'), of
Rexene Corporation, a Delaware corporation ('Rexene' or the 'Company'), in
connection with the solicitation of appointments of Designated Agents ('Agent
Designations') from holders of the Common Stock. The Agent Designations are
being solicited by Guy P. Wyser-Pratte ('Wyser-Pratte'), Wyser-Pratte & Co.,
Inc. ('WPC'), and Spear, Leeds & Kellogg ('Spear, Leeds') (collectively, the
'Soliciting Group') to provide for the call of a special meeting of the
Company's stockholders (the 'Special Meeting') for the purposes of considering
and voting upon certain proposals, including proposals targeted at replacing the
Company's current Board of Directors (the 'Board') and preventing the Board from
conducting a prolonged resistance to certain takeover bids without stockholder
approval, as described below under the heading 'Special Meeting Proposals.'
Under the Company's Certificate of Incorporation (the 'Certificate of
Incorporation'), a special meeting of stockholders may be called 'at any time
by . . . the holders of a majority of the then outstanding shares of the
Company's Common Stock' (the 'Requisite Holders').
This Preliminary Solicitation Statement is first being sent to stockholders
of the Company on or about December 27, 1996. It is anticipated that a
Definitive Solicitation Statement and accompanying GOLD Agent Designation card
will be sent to the Company's stockholders in January, 1997.
THE FAILURE TO EXECUTE AND RETURN THE GOLD AGENT DESIGNATION WILL HAVE THE
SAME EFFECT AS OPPOSING THE CALL OF THE SPECIAL MEETING.
________________________________________________________________________________
<PAGE>
<PAGE>
REASONS FOR THE SOLICITATION
During July and August of this year the Huntsman Corporation ('Huntsman')
made proposals to acquire the outstanding shares of Rexene's Common Stock at
prices of $14 and $15 per share. Although the offers represented a substantial
premium above the closing market price on the day prior to the initial offer,
both proposals were unanimously rejected by the Board. During the next two
months there were several meetings between Huntsman and Rexene, and the
Soliciting Group filed a Schedule 13D relating to its stock ownership in the
Company.
On October 29, 1996, Rexene received a letter from Jon Huntsman, Chairman
and Chief Executive Officer of Huntsman, proposing to acquire all of the
Company's outstanding shares in a cash merger at a price of $16 per share
(representing a premium of over 72% over the Company's closing stock price on
the day prior to Huntsman's initial offer). Huntsman and Rexene then entered
into discussions which, according to the Company, were later terminated over
disagreements relating to the structure of a possible transaction.
On December 4, 1996, Huntsman issued a press release in which it expressed
its continuing interest in acquiring the Company. The press release quoted Mr.
Huntsman as saying that 'we believe that our company is uniquely situated to
offer the fullest price possible' and that 'based on our recent experiences with
Rexene and its advisors, we believe that Rexene does not have a sincere and
serious intent to sell the company and maximize shareholder value.' A December
9, 1996 article in 'Mergers and Restructurings' reported that a Huntsman
spokesman had reaffirmed its interest in acquiring Rexene.
Although the Company has since declared that the Board 'continues to
maintain an open attitude,' it has also stated on more than one occasion -- most
recently, in its Preliminary Revocation Solicitation Statement (as defined
below) -- that now is not a 'propitious time' to sell the Company. Based on
those statements and actions taken by the Company in response to the Huntsman
proposals, the Soliciting Group believes that the current Board does not support
the goal of maximizing the current value of Rexene's Common Stock. The
Soliciting Group believes that maximizing current shareholder value should be
the Company's goal and that, under present circumstances, a sale of the Company
is likely to be the best way to achieve that objective.
THE AGENT DESIGNATIONS WILL NOT GIVE THE DESIGNATED AGENTS (AS DEFINED
BELOW) THE RIGHT TO VOTE ANY SHARES OF COMMON STOCK AT THE SPECIAL MEETING AND
NO PROXIES FOR SUCH VOTES ARE BEING SOLICITED WITH THIS PRELIMINARY SOLICITATION
STATEMENT. THE SOLICITING GROUP WILL SEND COMPANY STOCKHOLDERS ADDITIONAL
MATERIALS SOLICITING PROXIES TO VOTE AT THE SPECIAL MEETING.
The Soliciting Group now solicits your Agent Designations to call the
Special Meeting to adopt two groups of proposals designed to advance the goal of
maximizing the current value of Rexene's Common Stock:
One group of proposals (the 'Director Replacement Proposals') would remove
all of the ten members of the Board and fill four of the resulting
vacancies with nominees, including any substitute nominees, of the
Soliciting Group (the 'Nominees'). The Director Replacement Proposals
would consist of two resolutions: a resolution to remove all the members
of the Board (the 'Director Removal Resolution') and a resolution to fill
four of the resulting vacancies with the Nominees (the 'Election of
Directors Resolution'). It is anticipated that the Nominees would cause
the Board to reduce its size to a total of four directors (or five
directors if Mr. Smith accepts an invitation, which will be extended by
the Board after the Special Meeting, for Mr. Smith to remain as Chief
Executive Officer and a director of the Company). The Nominees would then
constitute a majority of the Board, committed to the goal of maximizing
the current value of the Common Stock by selling the Company. The Nominees
are Jonathan R. Macey, Robert C. Mauch, Lawrence C. McQuade and James S.
Pasman, Jr. Biographical information on each of the Nominees is set forth
under the caption 'Special Meeting Proposals -- The Nominees.'
Another group of proposals (the 'By-laws Proposals'), which would be
proposed for adoption by the shareholders in advance of the Director
Replacement Proposals, are intended to facilitate
2
<PAGE>
<PAGE>
passage of the Director Replacement Proposals and to assist the
stockholders of the Company in achieving the goal of maximizing the
current value of the Common Stock.
The By-laws Proposals would consist of three resolutions:
a resolution to facilitate the adoption of the Director Replacement
Proposals by clarifying the right of stockholders to fill vacancies on the
Board and changing the stockholder vote required to fill such vacancies,
eliminating the advance notification requirement for stockholder
nominations of directors at special meetings, reducing the size of a
quorum for action by the Board, giving the Chairman of the Board the
status of an officer of the Company and authorizing the stockholders to
appoint the Chairman, and repealing any by-laws adopted by the Board since
October 1, 1996 (the 'Facilitating By-laws Resolution');
a resolution to amend the Company's By-laws (the 'By-laws') to set a time
limit on certain defensive actions unless approved by shareholders (the
'Shareholder Rights Resolution'); and
a resolution to amend the By-laws to elect not to be governed by the
Business Combination Statute (the 'Business Combination Statute
Resolution').
In addition, there will be an omnibus resolution setting the order in which
the resolutions will be voted upon by the stockholders (the 'Omnibus
Resolution').
The Resolutions will be presented for a shareholder vote in the following
order:
1. The Omnibus Resolution;
2. The Facilitating By-laws Resolution;
3. The Shareholder Rights Resolution;
4. The Business Combination Statute Resolution;
5. The Director Removal Resolution; and
6. The Election of Directors Resolution.
STOCKHOLDERS ENTITLED TO EXECUTE AGENT DESIGNATIONS AND EFFECT OF EXECUTION AND
DELIVERY OF AGENT DESIGNATIONS
The Company has advised the New York Stock Exchange that the Board has
purported to fix December 18, 1996 as the record date for determining
stockholders entitled to call the Special Meeting and submit Agent Designations
in connection therewith. In the Company's Preliminary Revocation Statement filed
with the Securities and Exchange Commission on November 27, 1996 (the
'Preliminary Revocation Solicitation Statement'), the Company also contends that
(i) the Board has the right to fix the date and time of the Special Meeting and
(ii) executed Agent Designations shall cease to be effective unless the
Soliciting Group receives executed Agent Designations from the Requisite Holders
within 60 days of the earliest dated Agent Designation. In reaching these
conclusions, it appears that the Company is relying on provisions in the By-laws
and the Delaware General Corporation Law that deal with matters other than
calling a special meeting of stockholders and is not giving full effect to the
provision of the Certificate of Incorporation, which states that a special
meeting of stockholders may be called 'at any time by . . . the holders of a
majority of the then outstanding shares of the Common Stock.' Accordingly, the
Soliciting Group believes that, although it is not entirely free from doubt, (i)
the record date for determining stockholders entitled to call the Special
Meeting and submit Agent Designations in connection therewith shall be the date
that the Special Meeting is actually called, (ii) the stockholders, not the
Board, have the right to fix the date and time of the Special Meeting and (iii)
Agent Designations with respect to shares of Common Stock shall remain effective
until revoked or unless the person executing such Agent Designation is not the
record holder of such shares at the time the Special Meeting is called.
Therefore, it is the intent of the Soliciting Group that when the persons
designated as the stockholders' agents in the Agent Designations (each a
'Designated Agent') have unrevoked Agent Designations from the Requisite
Holders, they will properly call the Special Meeting, fix the place, date and
time of the Special Meeting and cause notice thereof to be given to the
Company's stockholders entitled thereto. However, as noted above, management may
dispute the Soliciting Group's method of determining whether it holds unrevoked
Agent Designations from the
3
<PAGE>
<PAGE>
Requisite Holders and the Soliciting Group's procedure for calling the Special
Meeting and setting its place, date and time. The Agent Designations grant to
the Designated Agents the full rights and authority of the Requisite Holders to
take these actions in connection with the Special Meeting, but THE AGENT
DESIGNATIONS WILL NOT GIVE THE DESIGNATED AGENTS THE RIGHT TO VOTE ANY SHARES OF
COMMON STOCK AT THE SPECIAL MEETING AND NO PROXIES FOR SUCH VOTES ARE BEING
SOLICITED WITH THIS PRELIMINARY SOLICITATION STATEMENT. THE SOLICITING GROUP
WILL SEND COMPANY STOCKHOLDERS ADDITIONAL MATERIALS SOLICITING PROXIES TO VOTE
AT THE SPECIAL MEETING.
The record date for determining stockholders entitled to notice of, or to
vote at, the Special Meeting shall be at the close of business on the day next
preceding the day on which notice of the Special Meeting is given to
stockholders, unless the Board sets a different record date in accordance with
the Delaware General Corporation Law.
The purpose of the Special Meeting is to provide stockholders of the
Company the opportunity to consider and vote on the Special Meeting Proposals.
By executing and returning the GOLD Agent Designation to MacKenzie Partners
you will not be committing to vote in favor of or against the Special Meeting
Proposals or any other matter to be brought before the Special Meeting, nor will
you be granting any proxies to vote on such matters. A validly executed and
unrevoked Agent Designation will authorize the Designated Agents (i) to call the
Special Meeting, (ii) to set the place, date and time of the Special Meeting,
(iii) to give notice of the Special Meeting and any adjournment thereof and (iv)
to exercise all rights of Requisite Holders incidental to calling and convening
the Special Meeting and causing the purposes of the authority expressly granted
pursuant to the Agent Designations to the Designated Agents to be carried into
effect. To vote on the matters to be brought before the Special Meeting you must
vote by proxy or in person at the Special Meeting.
If any of your shares of Common Stock are held in the name of a brokerage
firm, bank, bank nominee or other institution, only it can execute an Agent
Designation for such shares and will do so only upon receipt of your specific
instructions. Accordingly, you will be asked to contact the person responsible
for your account and instruct that person to execute the GOLD Agent Designation.
BACKGROUND AND RECENT EVENTS
According to the Company, 'On July 17, 1996, Jon Huntsman, Chairman and
Chief Executive Officer of Huntsman, telephoned Ilan Kaufthal, a member of the
Board and a managing director of Schroder Wertheim & Co. Incorporated, the
Company's financial advisor ('Schroder Wertheim'), to inform Mr. Kaufthal that
Huntsman intended to make a proposal to acquire all of the outstanding shares of
Common Stock. On July 18, 1996, Andrew J. Smith, Chairman and Chief Executive
Officer of the Company, received from Mr. Huntsman a letter containing a
proposal to acquire the outstanding shares of Common Stock at $14 per share in a
merger transaction subject to due diligence [(the 'Original Offer')].' The
closing price of the Common Stock on the New York Stock Exchange on July 17,
1996 was $9 1/4.
On July 22, 1996, the Board unanimously rejected the Original Offer and
issued a press issue that stated in part that it was not 'a propitious time to
engage in this type of transaction.'
According to the Company, 'On July 25, 1996, Mr. Smith sent a letter to
stockholders of the Company explaining the Board's reasons for rejecting
Huntsman's proposal. The Board also communicated its determination and reasons
directly to Mr. Huntsman.'
According to the Company, 'On August 1, 1996, Mr. Huntsman delivered
another letter to Mr. Smith in which Huntsman proposed to acquire all of the
outstanding shares of Common Stock for $15 per share in a merger transaction
[(the 'Amended Offer' and together with the Original Offer, the 'Huntsman
Offers')]. The Board was advised of Huntsman's revised proposal at a meeting
held on August 2, 1996. At that meeting, the Board decided to explore whether
any person or group, in addition to Huntsman, might be interested in engaging in
a business combination or other appropriate transaction with the Company.
Accordingly, at that meeting the Board directed management, with the assistance
of Schroder Wertheim, to develop a list of companies that would likely have an
interest in the Company. During the first two weeks of August 1996, six
investment firms and companies were
4
<PAGE>
<PAGE>
contacted by the Company, three of which subsequently executed
confidentiality/standstill agreements with the Company for the purpose of
conducting a due diligence review of the Company.'
According to the Company, 'On August 5, 1996, the Rexene directors met with
its financial and legal advisors to review Mr. Huntsman's revised proposal. At
that meeting, the Board unanimously determined that the revised proposal was not
in the best interests of the Company and its stockholders.'
On August 20, 1996, Huntsman issued a press release announcing that it was
dropping its proposal to acquire the Company. The press release quoted Mr.
Huntsman as stating that he had dropped the Amended Offer 'after Schroder
Wertheim & Co., Rexene's financial adviser, indicated that the Dallas-based
chemicals company would reject offers even in excess of $15 a share.' On August
21, 1996, Reuters reported that in an interview with Mr. Huntsman he had stated
that he was willing to pay $16 per share for Rexene, but that Schroder Wertheim
had indicated that offer would also be refused.
On August 26, 1996, Schroder Wertheim issued a press release stating that,
contrary to statements contained in Huntsman's August 20 press release,
representatives of Schroder Wertheim never told Mr. Huntsman or anyone else that
the Board would reject higher bids.
According to the Company, 'During August, September and October 1996, the
Company and its representatives met with the companies that had executed a
confidentiality/standstill agreement with the Company. The Company urged these
companies to complete their due diligence review of the Company and, if they
remained interested in a transaction at that time, to submit their best proposal
for consideration by the Board.'
According to the Company, 'At Mr. Huntsman's request, Messrs. Smith and
Kaufthal also traveled to Salt Lake City to meet with Mr. Huntsman on September
16, 1996. At that meeting, Mr. Huntsman indicated that he would not make an
offer for the Company that was not supported by the Board, but that he was still
interested in bringing the Company into the Huntsman family. Mr. Huntsman asked
that Mr. Smith present to him some ideas about combining parts of Huntsman's
businesses with the Company's businesses. Mr. Smith indicated that he would
report that request to the Rexene directors, and if they concurred, he would
meet again with Mr. Huntsman some time in mid to late October. The Board, at a
meeting held on September 26, 1996, directed Mr. Smith to meet again with Mr.
Huntsman.'
On October 15, 1996, the Soliciting Group filed a joint Schedule 13D (the
'Schedule 13D') that indicated its members' belief that the Board's rejection
of, and failure to explore, the Huntsman Offers 'was improper and not in the
best interests of the Company.' The Schedule 13D indicated that the members of
the Soliciting Group intended to take certain actions 'in an effort to encourage
greater responsiveness by the Company to the views of its shareholders and to
maximize value for all of the shareholders of the Company . . .' These actions
included calling a special meeting of stockholders of the Company in order to
remove all or a majority of the current directors of the Company, amend the
By-laws, if necessary, to give stockholders the right to fill vacancies on the
Board and replace the directors who have been removed with directors nominated
by the Soliciting Group who would explore alternative ways to maximize value for
the stockholders of the Company. In addition, at such a meeting, the Soliciting
Group disclosed that it intended to submit to the stockholders of the Company
proposed amendments to the By-laws which would (i) require that the Board
terminate defensive measures against a fully financed cash offer after 90 days,
unless the stockholders of the Company vote to support the Board's policy of
opposition to such offer and (ii) provide that the Company shall not be governed
by Section 203 of the Delaware General Corporation Law.
According to the Company, 'On October 17, 1996, Mr. Smith and
representatives of Schroder Wertheim met with Mr. Huntsman and another
representative of Huntsman as a follow-up to the September 16, 1996 meeting. At
this meeting, Mr. Huntsman stated that the acquisition of the Company was no
longer as important to Huntsman's business as he visualized several months
earlier, but that he might be willing to consider a transaction at no more than
$15.50 per share of Common Stock so long as the Board did not oppose such an
offer. In the view of Mr. Smith and the Schroder Wertheim representatives, Mr.
Huntsman did not express any urgent interest in pursuing a transaction.
Following the meeting, Mr. Smith asked the Company's general counsel to furnish
to Huntsman a copy of the Company's form of confidentiality/standstill agreement
for execution so that the Company could
5
<PAGE>
<PAGE>
provide Huntsman and its representatives with non-public information to
facilitate a due diligence review by Huntsman of the Company.'
On October 21, 1996, the publication Plastics News reported that in an
interview on October 14 the Chairman and Chief Executive Officer of Huntsman
would not rule out an acquisition of Rexene. The story quoted him as saying:
'The jury's still out on Rexene . . . I wouldn't write that off by any means.'
The story also stated:
When the Rexene bid stalled, Huntsman said another run at Rexene
wasn't 'worth the aggravation' and he said he would drop any further
negotiations. Since then, however, Huntsman said he has maintained
cordial relations with officers and managers of Rexene.
Rexene spokesman Neil J. Devroy noted that Rexene, as a publicly
held company, has a responsibility to review all potential acquisition
offers, including any new bids from Huntsman.
'If he made another offer, we would consider it,' he said.
In late October, Huntsman made a proposal to acquire the Company at $16 per
share in a cash merger. Huntsman and the Company then entered into discussions
which terminated over disagreements about the structure of the transaction.
Huntsman and the Company gave their respective accounts of those discussions in
press releases issued on December 4 and December 5, 1996.
On December 4, 1996, Huntsman issued the following press release:
Jon M. Huntsman, Chairman and CEO of Huntsman Corporation,
confirmed today that in late October Huntsman Corporation made a new
proposal to acquire Rexene Corporation in a merger transaction for $16
per share in cash. Although counsel for Huntsman and Rexene began
negotiating a merger agreement, discussions are no longer underway.
Reflecting on the nature of the merger discussions, Mr. Huntsman
said, 'Based on our recent experiences with Rexene and its advisors,
we believe that Rexene does not have a sincere and serious intent to
sell the company and maximize shareholder value.'
A copy of a letter sent by Mr. Huntsman to Rexene's directors
following the breakdown of the merger discussions is attached to this
press release.
Mr. Huntsman stated further, 'We believe that our company is
uniquely situated to offer the fullest price possible for Rexene due
to the ideal fit between our respective produce lines and the
extraordinary synergies that such a combination could afford.'
The attached letter stated in full as follows:
November 12, 1996
VIA FACSIMILE
(972) 450-9017
Mr. Andrew J. Smith
Chairman and Chief Executive Officer
The Board of Directors
Rexene Corporation
5005 LBJ Freeway
Dallas, TX 75244
Gentlemen:
I am writing to express concern and disappointment over the
surprising turn of events since I wrote to you on October 29, 1996,
offering to acquire all of the outstanding shares of common stock of
Rexene Corporation at $16 per share in a merger transaction.
In response to our offer letter, I received a phone call from Mr.
Smith and Mr. Kaufthal on the afternoon of October 29 indicating that
the Board of Directors had unanimously approved acceptance, subject to
the review and approval of a 'standard merger agreement.'
In a subsequent phone call with Mr. Smith that same afternoon, I
proposed what I believed to be an aggressive, yet very feasible
schedule to complete the merger in an expeditious and mutually
acceptable manner. In brief, I proposed that (a) our team would
6
<PAGE>
<PAGE>
deliver a draft form of merger agreement to Rexene's counsel early on
November 1, (b) we would be prepared to meet and discuss the merger
agreement starting as early as Saturday, November 2, and (c) we would
take all other steps necessary to finalize and execute the agreement
the following week. I also indicated our preference to structure the
transaction as a one-step merger.
During these phone calls with Mr. Smith and Mr. Kaufthal, I was
assured that Rexene was prepared to negotiate in good faith to
finalize an agreement. I was also assured that Rexene had no hidden
agenda and would move forward to get the deal done.
The statements and actions of Rexene's counsel since that time,
however, have been contrary to those assurances.
Although we adhered to the schedule by delivering a merger
agreement to Rexene's counsel by the start of business on November 1,
we heard very little until November 5, when Mr. Smith telephoned me to
say that Rexene was rejecting our offer because of our preference in
structuring the transaction as a one-step merger rather than a tender
offer.
At a meeting last week between counsel for Rexene and Huntsman,
we were presented with a series of outrageous and unrealistic terms
and demands, including (a) a 'reverse break-up fee' of $100 million to
be paid to Rexene if the transaction is not completed, (b) interest to
be paid by Huntsman, accruing during the time period from
approximately thirty days after the signing of the merger agreement
until completion, (c) Rexene's refusal to give standard and
fundamental representations that are made in virtually every 'public
company' acquisition, (d) Huntsman's commitment to complete the merger
even if Rexene violates all of its representations and covenants under
the merger agreement, and (e) an 'unconditional' letter from our
bankers that all funds are available now and will be available, at
closing to complete the transaction.
None of the issues above were raised by Mr. Smith in my
discussions with him, and one must question whether your counsel was
even authorized by the Rexene Board to raise these issues. We have
never encountered such an onerous list of demands, and it appears that
the actions of your counsel undercut the Board's prior decision to
proceed in good faith to negotiate a merger transaction.
We have on several occasions explained our reasons for
structuring this transaction as a one-step merger. We have indicated
our willingness to enter into a standard merger agreement containing
all reasonable and customary provisions under which Huntsman will be
legally bound to complete the merger in a timely manner. We have
assured Rexene's representatives of our ability and desire to complete
the merger as soon as possible. Unfortunately, another week that could
have been used productively toward completing a transaction has been
lost.
Again, I wish to emphasize that we are prepared to move as
expeditiously as possible to finalize a merger agreement. We are also
prepared to make our representatives available to you to assure you of
our financial capability to complete the transaction. Bankers Trust
offered to cover this matter with your financial team, but there was
total rejection of this offer by your counsel.
Let me also be clear that the well-being of Rexene's employees is
of primary concern to us as it has been in our past transactions, and
we are anxious to meet with Rexene to achieve a mutually satisfactory
transition of those employees into the Huntsman family, and to resolve
any concerns.
I am convinced that if Rexene's shareholders were to learn of the
events of the past two weeks, they would be extremely discouraged and
disappointed.
It is apparent that our capabilities and views are not being
accurately represented to the Rexene board by your counsel. We have
successfully closed more acquisitions than perhaps any other firm in
the chemical industry, but this is the first time outside legal
counsel has unilaterally placed barricades in such an unproductive
manner. It is our sincere hope that the principals can determine
policy matters and let respective counsel implement these decisions.
7
<PAGE>
<PAGE>
To this end, I would welcome the opportunity to meet personally
with the Board to satisfy you as to our company's intent and ability
to close the deal promptly.
Sincerely,
JON M. HUNTSMAN
On December 5, 1996, the Company issued the following press release:
Rexene Corporation (NYSE:RXN) announced today that contrary to
statements attributed to Huntsman Corporation, the Rexene Board of
Directors did not reject the latest takeover proposal from Huntsman;
but rather encouraged Huntsman to change the unusual structure of his
offer to a tender offer in order to assure Rexene stockholders would
receive full and speedy payment for their shares. Huntsman refused to
make any changes to his proposal and elected not to go forward.
After receipt of the unsolicited proposal from Huntsman on
October 29, 1996, the Rexene Board requested and received a detailed
takeover agreement from Huntsman. The Huntsman proposal provided for a
one-step merger transaction (as opposed to the more typical two-step
structure) subject to numerous conditions and contingencies, required
Rexene to grant Huntsman an option on 19.9 percent of Rexene's shares
and to pay an exorbitant cash breakup fee if the transaction was not
completed, was devoid of any details regarding Huntsman's ability to
finance the transaction, imposed on Rexene unreasonable requirements
to assist Huntsman and its representatives in developing a
satisfactory financing structure for the transaction, and severely
restricted Rexene's ability to operate its business pending the
completion of the transaction.
Following the Board's review of the proposal with its financial
and legal advisors, the Rexene Board determined that the Huntsman
proposal was not in the best interests of the Company and its
stockholders and authorized counsel to present Huntsman's
representatives with a modified proposal providing for the acquisition
of Rexene in a two-step tender offer and merger transaction on terms
more customary and usual for the acquisition of a public company.
Huntsman rejected Rexene's modified proposal and, despite Rexene's
invitation and desire, refused to enter into any substantive
discussion to compromise the open points between the parties.
Andrew J. Smith, Chairman and CEO of Rexene, said, 'After careful
review of the latest Huntsman proposal, and with assistance from our
independent advisors, the Board determined that the Huntsman proposal
was fraught with contingencies that made it impossible for the Board
to proceed with reasonable assurance that a transaction could be
completed in a timely fashion without putting substantially at risk
the viability of the Company and its value to stockholders.
'It is unfortunate that Mr. Huntsman would not negotiate a
reasonable and typical agreement that would provide all of Rexene's
stockholders the opportunity and certainty of receiving payment for
their shares within a reasonable period of time. In effect, the
proposal would shut down the expansion and improvement program
currently underway at Rexene and negatively affect several other
ongoing activities with no reasonable assurance that a final
transaction could be completed.'
After receipt of Mr. Huntsman's letter of November 12, cited in
his press release, I replied on November 15 (letter attached). Mr.
Huntsman sent me a three sentence response which read in part: 'I was
sure the letter must be some kind of a joke (even though lawyers are
not known for their senses of humor), and I threw it in the waste
basket.'
Mr. Smith added, 'The Rexene Board of Directors continues to
maintain an open attitude and we are convinced that any party
interested in presenting a proposal to maximize Rexene stockholder
value will proceed on the basis of a negotiated merger agreement
providing for a transaction that reflects fair value and that can be
reasonably achieved in a timely manner in an environment that does not
put the Company or its stockholders at risk.'
8
<PAGE>
<PAGE>
Rexene Corporation, through its Rexene Products and CT Film
divisions, manufactures thermoplastic resins and plastic film.
Headquartered in Dallas, Texas, the Company has manufacturing
facilities in Texas, Wisconsin, Georgia, Delaware, Utah and in
England.
The attached letter stated in full as follows:
Mr. Jon M. Huntsman
Chairman
Chief Executive Officer
Huntsman Corporation
Dear Jon:
I was very disappointed to receive your letter of November 12,
1996. I believe it completely mischaracterizes recent events and never
addresses the fundamental shortcomings of and defects in your
proposal. Let me state that the Rexene Board is not opposed to an
offer to sell the Company that is in the best interest of our
stockholders. Despite your refusal to sign a standard Confidentiality
Agreement, I and our investment bankers traveled to Salt Lake City
several times to meet with you to discuss your interest in the
company.
So that there is no misunderstanding on your part, I want to
reconfirm that the Rexene Board never 'approved acceptance' of your
latest proposal. After receiving your two page letter of October 29,
1996, in which you indicated that the Huntsman Corporation's proposal
'is unconditional both with respect to financing and due diligence,'
that same day I asked you to provide us the details of your proposal
and to furnish our counsel with a draft agreement so that we could be
in a position to understand the terms of your proposal. Our counsel
received the draft three days later, on Friday, November 1, 1996.
Notwithstanding the unrealistic deadlines continuously imposed by you
on the Rexene directors since the time you started making proposals,
we and our counsel and financial advisors worked through the weekend
to be in position to hold the Rexene Board meeting which took place on
the following Monday, November 4, 1996.
Simply put, the Rexene directors were shocked at what you were
proposing for Rexene and its stockholders. Contrary to your October 29
letter, you were attempting to do an LBO of Rexene with no financing
in place subject to numerous conditions and contingencies with
unacceptable restrictions placed on Rexene's ability to operate during
the pendency of the transaction. Moreover, the agreement contained
exorbitant and illegal demands for 'lock up' stock options and
'break-up' fees. The result was that your proposal contemplated an
unacceptably long period of time before the closing of the transaction
and completely failed to provide the Rexene directors with any degree
of comfort that you would be able to complete the transaction. Almost
anyone can make a proposal at a low purchase price and attempt to
finance it on the back of the Rexene stockholders. The delay
contemplated by your proposal also would create havoc with our
customers, who have voiced concerns regarding your interest in Rexene.
At the same time, your proposed agreement would restrict Rexene's
financial and operating flexibility during the pendency of your
proposed transaction.
Following the Rexene Board meeting, on November 5, 1996, I
clearly and unambiguously informed you by telephone that the Rexene
directors had unanimously determined that your proposal was
unacceptable and instructed me to present you with an alternative. I
began by telling you that the Board was opposed to any transaction
that does not provide for a tender offer by which our stockholders
will receive cash consideration for all their shares in a prompt and
efficient manner. When I informed you of the Board's position
concerning the structure of your proposal, you refused to discuss any
of these points and indicated that it would be your way or no way and
that you were no longer interested in acquiring Rexene.
Despite your unwillingness to discuss any of our serious concerns
with your proposal, at your counsel's subsequent request, our counsel
did agree to meet with your counsel to explain and review our
concerns. At that meeting, our counsel did not, as you claim, present
Huntsman with a 'series of outrageous and unrealistic terms and
demands.' Rather, all he did was make some constructive suggestions as
to the ways in which Huntsman could give the
9
<PAGE>
<PAGE>
Rexene directors some comfort that Huntsman was interested in
committing to something more than an option to shop
Rexene to potential financing sources, that its proposal is not
illusory and has some acceptable degree of certainty of being
accomplished. Apparently, judging by the contents of your letter, this
meeting was sought by your counsel not to discuss our differences in
good faith, but rather as part of some sort of campaign to bully the
Rexene Board into capitulating to your unfair and deficient proposal.
You state in your letter that Bankers Trust offered to 'cover'
the matter of Huntsman's financial capability to complete the
transaction with Rexene's financial team. What our counsel was told by
your counsel was that Bankers Trust and its representatives would need
to meet with Rexene representatives to gather information so that it
could then assess whether your proposed transaction could be financed.
If Bankers Trust is willing to finance the transaction, you should
have produced or should produce a commitment letter from Bankers Trust
to that effect. We also would expect Huntsman to represent and warrant
in any definitive agreement that it has the funds to complete the
transaction.
The problems with your draft agreement went far beyond those
noted above. It is obvious that the Huntsman Corporation is not
willing to assume any of the normal risks and expenses associated with
the acquisition of a public corporation. We thought you would act in
good faith and would be mindful of the constraints applicable to
directors of a public corporation in considering a transaction of this
type. Unfortunately, we misjudged your intent.
According to the Company, 'During October and November 1996, the Company
was advised by the various parties who had executed confidentiality/standstill
agreements with the Company that no such party was interested in making a firm
proposal to acquire all of the outstanding shares of Common Stock.'
On November 29, 1996, the publication 'Chemical Week Executive Edition'
reported Mr. Huntsman as saying that Huntsman could still be interested in the
Company, 'but not with the existing directors and officers.'
A December 9, 1996 article in 'Mergers and Restructurings' reported that a
Huntsman Spokesman had reaffirmed Huntsman's interest in acquiring Rexene.
10
<PAGE>
<PAGE>
SPECIAL MEETING PROPOSALS
DIRECTOR REPLACEMENT PROPOSALS
The Soliciting Group believes that the Board's response to Huntsman's
acquisition proposal shows that the present Board is not seeking to maximize the
current value of the Common Stock. Even after Huntsman increased its offer to
$16 per share, representing over a 72% premium over the closing price of the
Common Stock on the New York Stock Exchange on July 17, 1996, the day before
Huntsman made the Original Offer, the Board was unable to reach agreement with
Huntsman on the terms of an acquisition. See 'Reasons for the Solicitation' and
'Background and Recent Events.' While management's Preliminary Revocation
Solicitation Statement says that the Board is not opposed to the sale of the
Company, the Board and management have expressed views and taken positions that
make it highly unlikely the Company will be sold without a change in the Board.
The Preliminary Revocation Solicitation Statement says, 'It is currently not a
propitious time to sell or auction petrochemical and polymer companies,
including Rexene. . . .' Given this attitude, the Soliciting Group believes that
management and the Board are unlikely to be satisfied with offers that reflect
the Company's current value in the acquisition market. When management and the
Board negotiate in response to such offers, the Soliciting Group believes they
are likely to do so without the positive attitude that is necessary to reach
agreement on the sale of the Company. In the Soliciting Group's opinion, the
most recent round of negotiations with Huntsman illustrates the difficulty of
having a successful negotiation in the hostile atmosphere created by
management's basic belief that the Company should not be sold at the present
time. See 'Background and Recent Events.'
The Soliciting Group also disagrees with the view, expressed in the
Preliminary Revocation Solicitation Statement, that 'It is currently not a
propitious time to sell or auction petrochemical and polymer companies,
including Rexene, because current stock market prices for companies in these
industries are depressed and fail to reflect their expected long-term value.'
The Soliciting Group believes that the stock market recognizes that the
petrochemical industry is cyclical and adjusts the multiplier it applies to a
petrochemical company's earnings based on its position in the cycle.
Given the attitude that the Board showed in its response to the Huntsman
Offers, the Soliciting Group believes that the replacement of all of the
directors is the most effective way of pursuing the goal of maximizing the
current value of the Common Stock. Accordingly, the Soliciting Group intends to
submit the Director Replacement Proposals for stockholder action at the Special
Meeting:
REMOVAL OF THE ENTIRE BOARD OF DIRECTORS, INCLUDING ANY DIRECTORS
OTHER THAN THE NOMINEES WHO ARE PURPORTEDLY ELECTED AT THE SPECIAL
MEETING. Section 141(k) of the Delaware General Corporation Law
authorizes this action, with or without cause, by a vote of a majority
of the shares entitled to vote on the election of directors. Assuming
that the Soliciting Group receives sufficient proxies to adopt the
Director Replacement Proposals and the By-laws Proposals, the
Soliciting Group believes that it will not be possible to elect
directors at the Special Meeting to the Board positions that the
Soliciting Group has elected to leave vacant since the shareholders
will adopt a By-law which provides that shareholders may fill the
Board vacancies at the Special Meeting only by the vote of a majority
of the shares represented and entitled to vote at the Special Meeting.
However, the Soliciting Group will request proxies to remove any
directors other than the Nominees purportedly elected at the Special
Meeting. This is an additional precaution against the possibility
that, notwithstanding the Omnibus Resolution, the Chairman of the
Special Meeting attempts to put the Election of Directors Resolution
to a vote before the shareholders vote on the Facilitating By-laws
Resolution and as a result nominees supported by a minority of the
shares represented at the meeting are purportedly elected to fill
vacancies on the Board which the Soliciting Group is not seeking to
fill.
ELECTION OF THE NOMINEES TO FILL FOUR OF THE VACANT POSITIONS ON THE
BOARD, WITH ONE OF THE NOMINEES BEING ELECTED CHAIRMAN OF THE BOARD,
WHILE ALLOWING THE OTHER FOUR VACANCIES TO REMAIN UNFILLED. Assuming
that the stockholders adopt the by-laws being proposed by the
Soliciting Group to clarify the right of stockholders to fill
vacancies on the Board and to facilitate the reduction in the size of
the Board, the stockholders would be entitled to take
11
<PAGE>
<PAGE>
these actions by the vote of a majority of the Common Stock
represented and entitled to vote at the Special Meeting.
It is anticipated that the Nominees would invite Mr. Smith to remain as
Chief Executive Officer and to be reinstated as a director by the Nominees. If
he does not accept that invitation, Mr. Lawrence McQuade would serve as interim
chairman and Chief Executive Officer until a new Chief Executive Officer is
appointed. The Nominees would then cause the Board to adopt a resolution
reducing the size of the Board from ten to four directors (or five directors if
Mr. Smith accepted the Board's invitation to remain Chief Executive Officer and
a director).
It is anticipated that the Nominees would propose that the Company either
conduct negotiations with Huntsman or other parties that by then may have
indicated an interest in acquiring the Company or retain investment bankers to
prepare offering materials and solicit proposals to acquire the Company for cash
and/or securities. Except for these steps, the Soliciting Group has no specific
plans for selling the Company. If it is not feasible to sell the Company on
terms that the Board and the stockholders find advantageous, the Nominees would
seek to have the Board explore other means of maximizing the current value of
the Common Stock.
THE NOMINEES
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE PRESENT PRINCIPAL OCCUPATION AND EMPLOYMENT HISTORY; DIRECTORSHIPS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Jonathan R. Macey .................. 41 Professor Macey is the J. DuPratt White Professor of Law and the
Cornell Law School Director of the John M. Olin Program in Law and Economics at
306 Myron Taylor Hall Cornell Law School, specializing in corporation law, comparative
Ithaca, New York 14853 corporate governance, banking and corporate finance. From late 1993
through mid-1994, Professor Macey was a Research Fellow with the
International Centre for Economic Research in Turin, Italy. Prior
to that, he was a visiting law professor at the Stockholm School of
Economics. From 1990 to 1991, Professor Macey was a Professor of
Law at the University of Chicago, and from 1987 to 1990 he was a
Professor of Law at Cornell University.
Robert C. Mauch .................... 56 From 1978 through 1996, Mr. Mauch was employed by AmeriGas, Inc.
127 West Devon Drive ('AmeriGas'), a retail propane marketer/distributor, and/or several
Exton, Pennsylvania 19341 of its affiliates. He served as President (from 1983) and a
director (from 1992) of AmeriGas Propane, Inc. From 1992 to 1996,
Mr. Mauch was the President, Chief Executive Officer and a Director
of AmeriGas. From 1993 to 1995, he was President, Chief Executive
Officer and a Director of Petrolane, Inc.
Lawrence C. McQuade ................ 68 In 1950, Mr. McQuade was selected as a Rhodes Scholar. From 1963 to
Qualitas International 1969, he was the Assistant Secretary for Domestic and International
125 East 72nd Street Business for the U.S. Department of Commerce. From 1969 to 1975,
New York, New York 10021 Mr. McQuade was the President and Chief Executive Officer of Procon
Incorporated, an engineering and construction subsidiary of
Universal Oil Products Co. that built petroleum refineries and
petro-chemical plants. From 1975 to 1987, he was the Executive Vice
President and a director of W.R. Grace & Co. From 1988 through
1995, Mr. McQuade served as Vice Chairman of Prudential Mutual Fund
Management, Inc. Mr. McQuade also served as a
</TABLE>
(table continued on next page)
12
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE PRESENT PRINCIPAL OCCUPATION AND EMPLOYMENT HISTORY; DIRECTORSHIPS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
director of KaiserTech Limited ('KaiserTech') and Kaiser Aluminum &
Chemical Corporation ('Kaiser Aluminum').
James S. Pasman, Jr. ............... 66 Mr. Pasman was with Aluminum Company of America from 1972 to 1985,
29 The Trillium serving as Vice Chairman and a director (1982-1985), Executive Vice
Pittsburgh, Pennsylvania 15238 President-Finance and Chief Financial Officer (1976-1982), and Vice
President and Treasurer (1972-1976). From 1987 through 1989, Mr.
Pasman was the Chairman and Chief Executive Officer of Kaiser
Aluminum, and first President and Chief Executive Officer and then
Chairman and Chief Executive Officer of KaiserTech. From 1989 to
1991, Mr. Pasman was the President and Chief Operating Officer of
National Intergroup, an industrial holding company, as well as
Chairman of Permian Corp., an oil gathering company. Mr. Pasman has
been retired since 1991. He is a director of ADT, Limited, BEA
Income Fund, Inc., BEA Strategic Income Fund, Inc. and BT Insurance
Funds Trust.
</TABLE>
Each of the Nominees has entered into an agreement with WPC and Spear,
Leeds whereby WPC and Spear, Leeds have agreed to pay each Nominee a fee of
between $10,000 and $15,000 (the specific amount to be in the sole discretion of
WPC and Spear, Leeds) in that event that he does not become a director of
Rexene. Additionally, WPC and Spear, Leeds has agreed to (i) reimburse each
Nominee for any reasonable out-of-pocket expenses incurred in the performance of
his service as a Nominee and (ii) indemnify each Nominee with respect to any
liabilities relating to or arising out of such service. Mr. McQuade owns
beneficially 2,000 shares of Common Stock.
POSSIBLE ACCELERATION OF DEBT. Pursuant to Section 10.01(k) of the Amended
and Restated Credit Agreement (the 'Credit Agreement'), dated as of April 24,
1996 among the Company, as borrower, The Bank of Nova Scotia, as agent (the
'Agent'), and the lenders signatory thereto (the 'Banks'), the Director
Replacement Proposals, if adopted by the stockholders of the Company, would
cause a 'change of control' as defined in the Credit Agreement. Pursuant to the
Credit Agreement, the Agent and the Banks could cancel the Banks' obligations to
make loans to the Company and/or declare the principal amount then outstanding
of, and the accrued interest on, the loans under the Credit Agreement due and
payable. As reported in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, there was $40 million outstanding under the
Credit Agreement as of October 25, 1996.
The Director Replacement Proposals, if adopted by the stockholders of the
Company, would also be a 'change of control' under the Indenture, dated as
November 29, 1994, between the Company and Bank One, Texas, N.A., as Trustee,
pursuant to which the Company's 11 3/4% Senior Notes due 2004 (the 'Senior
Notes') were issued. Accordingly, on a one-time basis, pursuant to an offer
commenced within 10 days of a 'change of control,' each holder of Senior Notes
would have the right to require the Company to purchase all or any part of such
holder's Senior Notes at a price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon to the date of
purchase. Interest on the Senior Notes at the rate of 11.75% per annum is
payable semi-annually on June 1 and December 1 to record holders on the
immediately preceding May 15 or November 15. As of December 20, 1996, the
closing price of the Senior Notes was $111 1/16.
Although the Soliciting Group has not had discussions with the holders of
Rexene debt, the Soliciting Group believes it is unlikely that, if the Director
Replacement Proposals are adopted, the Banks would accelerate their loans or the
holders of the Senior Notes would require the Company to repurchase the Senior
Notes. Furthermore, while the Soliciting Group has not had discussions with
potential sources of refinancing, they believe that if the Company had to
refinance the loans under the
13
<PAGE>
<PAGE>
Credit Agreement or the Senior Notes, they believe the Company could do so
without a material adverse effect on its financial condition.
The Soliciting Group holds these beliefs principally for the following
reasons:
1. They believe the Nominees are qualified to oversee the business of
the Company.
2. They believe Rexene's business is not dependent on Mr. Smith or any
of Rexene's other officers or directors.
3. They believe Rexene is in healthy financial condition.
4. The closing price of the Senior Notes on December 20, 1996 was
$111 1/16, compared to a price of $101.00 (plus accrued interest) at which
the holders could have required the Company to repurchase the Notes on that
date if a Change in Control had occurred.
STOCKHOLDERS' ADVISORY COMMITTEE. Additionally, it is anticipated that, if
elected, the Nominees would propose to establish a Stockholders' Advisory
Committee (the 'Stockholders' Advisory Committee') that would provide
non-binding recommendations to the Board on acquisition proposals received by
the Company.
The Stockholders' Advisory Committee would consist of three members that
would have no current affiliation with the Company other than as stockholders.
Members of the committee would be elected by the stockholders by plurality vote
at the Company's annual meeting of stockholders. The term of office of each
member would be one year and in no case would a member be able to serve more
than three consecutive terms. The Company would include in its proxy materials
used in the election of directors, nominations and nominating statements for
members of the committee submitted by any stockholder or group of stockholders
which has owned beneficially, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, at least $1 million in market value
of Common Stock continuously for the two-year period prior to the nomination.
To assist it in evaluating an acquisition offer, the Stockholders' Advisory
Committee would be empowered to retain, at the Company's expense, expert
assistance, including attorneys and financial advisors, and incur other
reasonable expenses not to exceed, in the aggregate, $.02 multiplied by the
number of shares of Common Stock outstanding at the time the acquisition
proposal is made.
If the Common Stock were the subject of a tender offer or the Company were
otherwise the subject of an acquisition proposal, the Stockholders' Advisory
Committee would have the opportunity to have included in the Company's Schedule
14A or 14D-9 filed with the Securities and Exchange Commission in connection
with such tender offer or proposal its evaluation of, and recommendation
concerning, such tender offer or proposal in a statement of not more than 2,500
words.
The committee's recommendations would be solely advisory in nature and
would not restrict the Board in its ability to take any action it deems in the
Company's best interest.
Although there is no authority directly on point, the Soliciting Group
believes that as long as the Board does not delegate its powers to such a
committee, the Board is authorized to establish and expend corporate funds on
such a committee as a means of communicating with stockholders and gaining and
disseminating information about stockholder sentiment on important corporate
questions. The Soliciting Group believes that the legal authority to establish
such a committee for these purposes comes from the Board's broad powers under
Section 141 to manage the business and affairs of the Company.
BY-LAWS PROPOSALS
The text of all the proposed by-law amendments will be included in the
Soliciting Group's proxy materials for the Special Meeting. Based on publicly
available information, the Soliciting Group believes that adoption of the
proposed amendments to the By-laws requires a majority vote of the shares of
stock represented and entitled to vote at the Special Meeting, assuming a quorum
is present, except that a proposal to amend the By-laws to elect not to be
governed by Section 203 of the Delaware General Corporation Law (the 'Business
Combination Statute') requires approval by a majority of the Outstanding Common
Stock, as provided in the Business Combination Statute. With respect to
14
<PAGE>
<PAGE>
abstentions and broker non-votes, the shares will be considered present at the
Special Meeting, but since they are not affirmative votes for the proposals,
they will have the same effect as votes against the proposals.
PROPOSAL TO AMEND THE BY-LAWS TO FACILITATE DIRECTOR REPLACEMENT PROPOSALS
The stockholders must amend the By-laws in order to adopt all of the
Director Replacement Proposals. The Soliciting Group intends to propose a single
resolution proposing six by-law amendments described in this section of the
Solicitation Statement. If that resolution is not adopted by stockholders, it
will not be possible to implement the Director Replacement Proposals.
CLARIFYING STOCKHOLDERS' RIGHT TO FILL BOARD VACANCIES. One of the proposed
amendments would clarify the right of the stockholders to fill vacancies on the
Board.
Section 223 of the Delaware General Corporation Law states in relevant
part: 'Unless otherwise provided in the certificate of incorporation or bylaws:
(1) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office. . . .'
The Company's By-laws state in relevant part:
2.5 (b) SPECIAL MEETINGS OF STOCKHOLDERS. Nominations of persons
for election to the board of directors may be made at a special
meeting of stockholders at which directors are to be elected pursuant
to the Corporation's notice of meeting (a) by or at the direction of
the board of directors or (b) provided that the board of directors has
determined that directors shall be elected at such meeting, by any
stockholder of the Corporation who is a stockholder of record at the
time of the giving of notice of the special meeting, who shall be
entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 2.5. In the event the Corporation
calls a special meeting of stockholders for the purpose of electing
one or more directors to the board of directors, any such stockholder
may nominate a person or persons (as the case may be), for election to
such position(s) as specified in the Corporation's notice of meeting,
if the stockholder's notice required by paragraph (a)(2) of this
Section 2.5 shall be delivered to the Secretary at the principal
executive offices of the corporation not earlier than the ninetieth
(90th) day prior to such special meeting and not later than the close
of business on the later of the sixtieth (60th) day prior to such
special meeting or the tenth (10th) day following the day on which
public announcement is first made of the date of the special meeting
and of the nominees proposed by the board of directors to be elected
at such meeting.
3.4. VACANCIES. Except as otherwise provided in the Certificate
of Incorporation, any vacancy in the Board, whether because of death,
resignation, disqualification, an increase in the number of directors,
or any other cause, may be filled by a vote of the majority of the
remaining directors. . . .
Read in isolation, the quoted sections of the Delaware General Corporation
Law and the By-laws could be interpreted as granting stockholders the right to
fill vacancies on the Board only when the Board elected to fill such vacancies
by a shareholder vote. However, there is Delaware case law authority which
suggests that stockholders have an inherent right to fill Board vacancies in the
absence of clear language to the contrary in the certificate of incorporation or
by-laws. Moon v. Moon Motor Car Co., Del Ch., 151 A. 298 (1930); Campbell v.
Loew's, Inc., Del. Ch. 134 A.2d 852 (1957); Dileuterio v. U.C. Cavaliers of
Delaware, Inc., Del. Ch. Civil Action No. 8801 (1987); Siegman v. Tri-Star
Pictures, Inc., C.A. No. 9477 (Del. Ch. 1989).
Comparing the language of the Company's By-laws to the examples cited in
these cases, the language of the Company's By-laws does not seem sufficiently
clear to override the general rule that shareholders are entitled to fill
vacancies on the board of directors; but the Soliciting Group has concluded that
there are sufficient ambiguities to justify a clarifying amendment to the
By-laws. Therefore, they intend to propose a By-law amendment that would
explicitly grant stockholders the right to fill vacancies and newly created
positions on the Board.
15
<PAGE>
<PAGE>
ELIMINATING ADVANCE NOTIFICATION REQUIREMENT FOR STOCKHOLDER NOMINATIONS.
For stockholders to have an effective right to fill board vacancies, they must
also have the ability to make nominations to the board. The Company's existing
by-law on nominations of directors at special meetings is Section 2.5(b) which
is quoted above. The by-law is ambiguous on whether stockholders could make such
nominations without the cooperation of the existing Board. The by-law must be
amended to cure that ambiguity. The Soliciting Group believes that the advance
notification requirement does not serve any useful purpose and therefore intends
to propose a by-law that would allow stockholders to make nominations up to and
including the time of the meeting.
FACILITATING REDUCTION IN SIZE OF BOARD. The Board presently consists of
ten directors. The Soliciting Group believes that a smaller number of directors
would be a more effective working group and that a reduction in the size of the
Board would help the Company to maintain a uniformly high level of quality on
the Board.
The Certificate of Incorporation and By-laws state that subject to the
rights of holders of preferred stock, the number of directors shall be fixed
exclusively by the Board. However, stockholders can cause a reduction in the
size of the Board indirectly by electing a new Board majority which reduces the
number of directors. The Soliciting Group intends to propose that the
stockholders remove all of the ten members of the Board and fill four of the
resulting vacancies, while leaving the other six Board positions vacant. It is
anticipated that the four directors then in office would cause the Board to
reduce the total number of directors to four (or five, if Mr. Smith accepts an
invitation from the Board to remain Chief Executive Officer and a director). See
'Director Replacement Proposals.'
The Soliciting Group intends to propose the following amendments to the
By-laws to enable these actions to be taken:
(i) requiring that in order to fill a vacancy on the Board at a
stockholders meeting, the stockholders must act by a majority vote of the
shares represented and entitled to vote at the meeting. Section 216 of the
Delaware General Corporation Law provides that in the absence of provisions
to the contrary in the certificate of incorporation or by-laws, 'Directors
shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting. . . .' Without an
appropriate by-law amendment, the existing Board might seek to (i) make
nominations for the Board positions the Soliciting Group intends to leave
vacant, and (ii) elect their nominees with the support of a minority of the
shares represented at the meeting since the Soliciting Group will not be
seeking proxies to elect nominees to those positions. The Soliciting Group
believes that this action would not be legally valid; but to avoid undue
controversy, the Soliciting Group's by-law amendment explicitly granting
stockholders the right to fill Board vacancies will also require such
actions to be by a majority of the shares represented and entitled to vote
at the meeting;
(ii) reducing size of quorum for action by the Board. Section 3.9 of the
By-laws states in relevant part: Except as otherwise provided in these
Bylaws, the Certificate of Incorporation, or by law, the presence of a
majority of the authorized number of directors shall be required to
constitute a quorum for the transaction of business at any meeting of the
Board, and all matters shall be decided at any such meeting, a quorum being
present, by the affirmative votes of a majority of the directors present.'
The number of authorized directors is presently ten. After the shareholders
have removed all of the current directors and filled four of the resulting
vacancies with nominees of the Soliciting Group, the four members of the
Board will not be a majority of the authorized number of directors and,
under the existing By-laws, will not constitute a quorum. Therefore, the
Soliciting Group intends to propose an amendment to the By-laws reducing a
quorum from one-half to two-fifths of the authorized number of directors;
(iii) granting stockholders the power to appoint the Chairman of the Board.
Section 142(b) of the Delaware General Corporation Law authorizes the
adoption of by-laws which determine the manner in which officers are
chosen. In order to permit a new Chairman of the Board to be selected at
the stockholders meeting, the Soliciting Group intends to propose an
amendment to the By-laws which gives the Chairman of the Board the status
of an officer of the Company and authorizes the stockholders to appoint the
Chairman of the Board; and
(iv) repealing any By-laws adopted by the Board since October 1, 1996. The
Soliciting Group will also propose the repeal of any by-laws adopted by the
Board since October 1, 1996 so that the
16
<PAGE>
<PAGE>
Board can not use new by-laws to prevent the stockholders from
accomplishing the objectives described in this Preliminary Solicitation
Statement.
PROPOSAL TO AMEND THE BY-LAWS TO SET A TIME LIMIT ON CERTAIN DEFENSIVE ACTIONS
UNLESS APPROVED BY SHAREHOLDERS
The Soliciting Group believes that when a substantial offer is made to
acquire the Company, the stockholders rather than the Board should have the
final word on whether the offer is accepted. Today the Company's Shareholder
Rights Plan or 'Poison Pill' enables the Board to block a proposal to acquire
control of the Company even if the acquiror is prepared to implement that
proposal through a tender or exchange offer to the Company's stockholders,
without making the Company a party to the transaction. As a result, potential
buyers like Huntsman do not have the option of dealing directly with
stockholders if the Board opposes their acquisition proposals.
The Soliciting Group is proposing the 'Shareholder Rights By-law' so that
if a substantial offer is made to acquire the Company's shares, the
stockholders, not the Board, will have the ultimate decision on whether to
accept the offer. The By-law would only apply if the Company received an offer
(an 'Offer') to purchase all of the Common Stock for cash, by means of a tender
offer, merger or other transaction, and the Offer met the following criteria:
(i) it was fully financed and (ii) it was at a premium of at least 25% above the
average market price of the Common Stock during the preceding month (the
'Trigger Premium'); provided, however, that if another offer had been made to
purchase all of the Common Stock during the twelve months prior to the date on
which the Offer was made, the price offered would have to be equal to or greater
than the greater of (A) the closing price of the Common Stock on the New York
Stock Exchange on the trading day next preceding the day on which the Offer was
made and (B) the per share price of such prior offer. Under the Shareholder
Rights By-law, if the stockholders received such an Offer, the Board would be
required to terminate all defensive measures against the Offer unless the
Board's policy of opposition was approved by stockholders within ninety days
after the Offer was made. The Shareholder Rights By-law would not affect the
ability of the Board under Sections 251 and 271 of the Delaware General
Corporation Law to approve or disapprove of a proposed merger or sale of all or
substantially all of the assets of the Company. The By-law follows an approach
to tender offer regulation that is followed in Canada, the United Kingdom and
other European Countries.
The passage of the Shareholder Rights By-law will have a significant impact
on the operation of Rexene's Poison Pill. Pursuant to the Poison Pill, each
certificate for shares of Common Stock also represents the same number of rights
('Rights') to purchase one share of Common Stock from Rexene at a price of $60
per share (the 'Purchase Price'). As soon as practicable after the earlier to
occur of (i) the tenth day after the date a person (an 'Acquiring Person') alone
or together with affiliates and associates becomes the beneficial owner of 15%
of the outstanding shares of Common Stock (or such lower threshold as may be
established by the Board) and (ii) the tenth business day after the date (or
such later date as may be determined by the Board prior to such time as any
person becomes an Acquiring Person) of the commencement of, or announcement of
an intention to make, a tender offer or exchange offer, the consummation of
which would result in such offeror becoming an Acquiring Person (the earlier of
(i) or (ii) being the 'Distribution Date'), the Company will distribute
certificates to represent the Rights.
The Rights are not exercisable until the Distribution Date and will expire
on February 8, 2003 (the 'Final Expiration Date'), unless such date is extended
or the Rights are earlier terminated, redeemed or exchanged by Rexene as
described below.
In the event that any person becomes an Acquiring Person (and after the
Company's right to redeem or terminate the Rights has expired and subject to the
Company's right to exchange the Rights for shares of Common Stock, as each is
described below), the Rights would entitle shareholders of the Company (other
than the Acquiring Person) to receive upon exercise of the Right that number of
shares of Common Stock having a market value of two times the Purchase Price.
In the event that on or after the first date of public announcement by
Rexene or an Acquiring Person that an Acquiring Person has become such (the
'Shares Acquisition Date'), Rexene is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or
17
<PAGE>
<PAGE>
earning power are sold, proper provision will be made so that each holder of a
Right (other than the Acquiring Person) will thereafter have the right to
receive, upon the exercise thereof at the Purchase Price, that number of common
shares of the acquiror that at the time of such transaction will have a market
value of two times the Purchase Price.
At any time after the Shares Acquisition Date and prior to the acquisition
by an Acquiring Person of beneficial ownership of 50% or more of the outstanding
shares of Common Stock, the Board of Directors may exchange, in whole or in
part, the Rights (other than the Rights of the Acquiring Person) for Common
Stock, at an exchange ratio of one share of Common Stock (or of a share of a
class or series of the Company's preferred stock having equivalent rights,
preferences and privileges) for each Right.
At any time prior to the earlier to occur of (i) the tenth day after the
Shares Acquisition Date (or such later date as may be approved by the Board) or
(ii) the Final Expiration Date, the Board of Directors may redeem the Rights, in
whole but not in part, at $.01 per share, or terminate the Rights in whole, but
not in part, at no cost. After the Shares Acquisition Date, the Board may extend
the time period described in clause (i) above or may redeem or terminate the
Rights only if at the time of taking such action there are then in office not
less than a majority of directors who are 'Continuing Directors' and such
extension, termination or redemption is approved by a majority of such
Continuing Directors. A 'Continuing Director' is defined as a member of the
Board who is not an Acquiring Person who was either a member of the Board prior
to the Shares Acquisition Date or subsequently became a director and whose
nomination or election to the Board was recommended or approved by a majority of
Continuing Directors then on the Board.
The terms of the Rights may be amended by the Board without the consent of
the holders of the Rights, except that, subject to the Board's right to
terminate or redeem the Rights, from and after the Shares Acquisition Date no
such amendment may adversely affect the interest of the holders of the Rights or
may be made without the consent of the holders of a majority of the Rights
(other than Acquiring Persons). Subsequent to the Shares Acquisition Date,
amendments to the terms of the Rights may be made only if at such time there are
at least three Continuing Directors and such amendment is approved by a majority
of such Continuing Directors.
THE FOREGOING IS A SUMMARY OF THE POISON PILL AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE THERETO. THE DESCRIPTION OF THE RIGHTS SET FORTH AS ITEM 1 OF THE
COMPANY'S REGISTRATION STATEMENT ON FORM 8-A, DATED FEBRUARY 1, 1993, AS AMENDED
TO DATE, IS ATTACHED HERETO AS EXHIBIT A.
Under the Shareholder Rights By-law, if the Company received an Offer that
remained open for 90 days and no person became an Acquiring Person during such
period and the Board did not obtain shareholder approval to continue defensive
measures against the Offer, the Board would be required to either redeem the
Rights or amend the Poison Pill so that it would no longer be an impediment to
such an Offer. The Board would be required to take such action even if the Board
believed in the exercise of its fiduciary duties that the Offer was not
advantageous for the shareholders of Rexene. The Soliciting Group believes that
this result is in the best interest of shareholders because the shareholders,
rather than the Board of Directors, should have the ultimate decision on whether
to accept the Offer.
The Certificate of Incorporation authorizes the Board 'to make, repeal,
alter, amend and rescind the by-laws of the Corporation in accordance with their
terms.' (emphasis added) The Shareholder Rights By-law will provide that it may
be repealed, altered, amended or rescinded ('Changed') by the Board only under
the following conditions: (i) the Change is made at a meeting of the Board held
in connection with an annual meeting of stockholders, (ii) there is a public
announcement at least ninety days in advance of such annual meeting that the
Board intends to make such Change and (iii) the stockholders do not adopt a
resolution at such annual meeting to disapprove such Change by the vote of a
majority of the shares voting on such resolution.
If the Board failed to obtain shareholder approval to continue defensive
measures against a qualified Offer, the Shareholder Rights By-law could require
the Board to terminate such defensive measures whether or not the Offer was
advantageous for the Company's shareholders; but the Soliciting Group believes
that the shareholders' failure to grant such approval would be evidence that the
Offer
18
<PAGE>
<PAGE>
was advantageous for the Company's shareholders and that therefore the adoption
of the Shareholder Rights By-law is in the shareholders' best interests.
In the absence of an offer to purchase all of the Common Stock during the
previous twelve months, the By-law only applies to offers of at least the
Trigger Premium. Although the average acquisition premium in Rexene's industry
is higher than the Trigger Premium, the Soliciting Group believes that a premium
of this size is large enough to be worthy of consideration by stockholders. The
Trigger Premium condition does not apply when there has been an offer for the
Common Stock within the preceding twelve months because under those
circumstances it is likely that the market price of the Common Stock will be
affected by expectations that the offeror may make another offer. While there
can be no assurance that the Company will ultimately get a price higher than the
Trigger Premium, acquisition bids often attract competition that leads to
subsequent offers at a price higher than the initial offer or the initial bidder
may raise its price.
The Soliciting Group believes that the provision for a shareholder vote
assures that the By-law will not be used to facilitate coercive offers. The
courts have defined a coercive offer as 'an offer which has the effect of
compelling shareholders to tender their shares out of fear of being treated less
favorably in the second stage.' If a majority of the Company's shareholders
consider an offer coercive, the Board will be able to win shareholder approval
to continue defensive measures against the Offer for more than ninety days.
Based on their experiences as investors in target company securities, the
Soliciting Group believes that ninety days is normally sufficient time for a
target company, seeking a higher offer, to complete the bidding process.
However, circumstances could arise in which a board of directors seeking a
higher offer was unable to complete the entire process of finding and closing an
alternative transaction within the ninety-day period prescribed by the
Shareholder Rights By-law. Similarly, if a board were trying to negotiate the
terms of an acquisition with a prospective purchaser, the inability to resist a
hostile tender offer by that purchaser beyond an initial ninety-day period could
reduce the board's leverage to negotiate favorable terms for stockholders. The
Soliciting Group believes the ninety-day limit on defensive measures in the
Shareholder Rights By-law need not prevent the Board from obtaining the best
possible terms for stockholders in either of these situations, because the Board
would be free to seek stockholder approval to continue defensive measures for an
additional period of time. However, given the time periods required to solicit
proxies and possibly to call and hold a stockholders meeting, the Board would
have to plan ahead to get such approval before the end of the ninety-day period;
and if the Board failed to do so it is possible that under the Shareholder
Rights By-law the Board would lose the power to take defensive measures against
an Offer that was not in the best interests of Shareholders.
While the Soliciting Group believes that the Shareholder Rights By-law is
valid, they recognize that the courts have not considered the validity of it or
any similar by-law and, therefore, have not resolved the extent to which
stockholder-adopted by-laws may limit the authority of a board of directors to
oppose, or to adopt or employ defensive measures against, takeover bids.
Accordingly, it is uncertain whether the Shareholder Rights By-law would survive
a court challenge.
The Soliciting Group believes that Section 109 of the Delaware General
Corporation Law authorizes the enactment of the Shareholder Rights By-law.
Section 109(a) gives stockholders the power to 'adopt, amend or repeal By-laws.'
Section 109(b) states: 'The by-laws may contain any provision, not inconsistent
with law or with the certificate of incorporation, relating to the business of
the corporation, the conduct of its affairs, and its rights or powers or the
rights or powers of its stockholders, directors, officers or employees.'
(emphasis added) In a review of the Delaware General Corporation Law, the
Certificate of Incorporation and By-laws, the Soliciting Group has not
discovered any provisions that bar stockholders from adopting the Shareholder
Rights By-law. They believe that Section 141(a) of the Delaware General
Corporation Law does not bar the adoption of the Shareholder Rights By-law. That
section states: 'The business and affairs of every corporation organized under
this chapter shall be managed by or under the direction of a board of directors,
except as may be otherwise provided in this chapter or in its certificate of
incorporation.' (emphasis added) The Soliciting Group believes that the adoption
of the Shareholder Rights By-law is not inconsistent with Section 141(a) for two
reasons. First, if Section 141(a) is read as granting the board of directors
exclusive authority over
19
<PAGE>
<PAGE>
the business and affairs of the corporation, that grant is qualified by the
phrase 'except as may be otherwise provided in this chapter or in its
certificate of incorporation.' The savings clause leaves room for the grant of
authority in Section 109 for stockholders to adopt by-laws, such as the
Shareholder Rights By-law, which relate to the rights and powers of stockholders
and directors. Second, the Soliciting Group believes that any reading of Section
141(a) that invalidated the Shareholder Rights By-law would make meaningless
Section 109's broad grant of authority for stockholders to adopt by-laws
relating to the rights of powers of stockholders and directors.
The Soliciting Group also believes that the Shareholder Rights By-law does
not conflict with Delaware case law dealing with the fiduciary duties of boards
of directors. In certain cases, courts interpreting Delaware law have, on the
basis of particular facts presented, upheld reasonable defensive measures
adopted by directors who, in good faith and upon reasonable investigation,
believed that a hostile offer posed a danger to corporate policy and
effectiveness, even though a majority of the stockholders may have tendered
their shares. The Soliciting Group believes that these cases do not support
invalidating the Shareholder Rights By-law because in none of those cases was
the board's discretion limited by a by-law previously adopted by stockholders
pursuant to their powers under Section 109, nor did the court consider the
stockholders' authority to adopt such a by-law. The Soliciting Group believes it
is inherent in the Delaware scheme of corporate law that while the board is
entitled to exercise its judgment in responding to a tender offer or other
takeover bid, its judgment must be exercised within the framework of statutes,
charter provisions and by-laws which in certain instances limit the actions that
directors may take even when the directors believe that their chosen course of
action is in the best interests of stockholders.
PROPOSAL TO AMEND THE BY-LAWS TO ELECT NOT TO BE GOVERNED BY THE BUSINESS
COMBINATION STATUTE
The Soliciting Group will propose that stockholders adopt an amendment to
the By-laws electing not to be governed by the Business Combination Statute.
The Business Combination Statute provides, in effect, that if any person
acquires beneficial ownership of 15% or more of the Company's outstanding shares
(thereby becoming an 'Interested Shareholder'), the Interested Shareholder may
not engage in a business combination with the Company for three years
thereafter, subject to certain exceptions. Among the exceptions are (i) the
Board's prior approval of such acquisition; (ii) the acquisition of at least 85%
of the Company's shares (subject to certain exclusions) in the transaction in
which such person becomes an Interested Shareholder; and (iii) the approval of
such business combination by 66 2/3% of the outstanding stock not owned by the
Interested Shareholder. The Company's shareholders may, by a vote of a majority
of the outstanding shares, adopt an amendment to the By-laws or Certificate of
Incorporation electing not to be governed by the Business Combination Statute.
Such amendment would become effective twelve months after adoption and would not
be subject to amendment by the Board and would not apply to a business
combination with a person who became an Interested Shareholder prior to the
adoption of such amendment.
THE FOREGOING IS A SUMMARY OF THE BUSINESS COMBINATION STATUTE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE THERETO. THE TEXT OF THE BUSINESS COMBINATION
STATUTE IS ATTACHED HERETO AS EXHIBIT B.
While the proposed By-law could facilitate a business combination with a
15% or greater shareholder, whether or not the transaction was advantageous for
shareholders, the Soliciting Group believes that the adoption of this By-law is
in the best interests of shareholders because the Business Combination Statute
discourages offers to acquire the Company's shares; and they believe that the
Delaware 'entire fairness' doctrine provides adequate protection of the
interests of the other shareholders in a business combination with a controlling
shareholder.
The Business Combination Statute discourages offers to acquire the
Company's shares, in the Soliciting Group's opinion, by creating obstacles to
second-stage mergers in which successful offerors acquire the remainder of the
Company's shares. The Business Combination Statute has this effect because it
requires the offeror to win the votes of a two-thirds super-majority of the
minority shareholders to approve a second-stage merger unless the offeror
acquired at least 85% of the Company's shares (subject to certain exclusions) in
the transaction in which the offeror became an
20
<PAGE>
<PAGE>
Interested Shareholder or unless such transaction was approved by the Board of
Directors. If the Company were to opt out of the Business Combination Statute,
there would be no specific vote of the minority shareholders required by statute
to effect a second-stage merger. In such event, if an Interested Shareholder
proposed to acquire the remainder of the Company's shares in a second-stage
merger which was not subject to the Business Combination Statute, it might be
able to accomplish this transaction without the favorable vote of a majority of
the minority shareholders. As a result an acquiror might be able to accomplish a
second-stage merger which was opposed by a majority of the minority shareholders
and which, such shareholders did not believe was in their best interests.
However, the Soliciting Group believes that the Company's remaining
shareholders would not require the protection of the Business Combination
Statute, because under Delaware law a second-stage merger with a controlling
shareholder would have to satisfy the entire fairness test. This test requires
the courts to conduct a comprehensive review of the fairness of such a
transaction. Its scope has been described by the Delaware Supreme Court in
Weinberger v. UOP, Inc.: 'The concept of fairness has two basic aspects: fair
dealing and fair price. The former embraces questions of when the transaction
was timed, how it was initiated, structured, negotiated, disclosed to the
directors, and how the approvals of the directors and shareholders were
obtained. The latter aspect of fairness relates to the economic and financial
considerations of the proposed merger, including all relevant factors: assets,
market value, earnings, future prospects, and any other elements that affect the
intrinsic or inherent value of a company's stock.' It is common practice for
acquirors to satisfy this requirement by conditioning a second-stage merger on
approval by a majority of the minority shareholders.
RECESS OR ADJOURNMENT OF MEETING AND OTHER MATTERS
The Soliciting Group also anticipates requesting, in the proxy solicitation
relating to the Special Meeting, authority to initiate and vote for proposals to
recess or adjourn the Special Meeting for any reason, including to allow
inspectors of the election to certify the outcome of the election of directors,
or to allow the solicitation of additional votes, if necessary, to approve the
Special Meeting Proposals. The Soliciting Group does not currently anticipate
additional Special Meeting Proposals on any substantive matters. Nevertheless,
the Soliciting Group may elect to cause additional Special Meeting Proposals to
be identified in the notice of, and in the proxy materials for, the Special
Meeting.
CERTAIN INFORMATION CONCERNING WYSER-PRATTE AND
OTHER PARTICIPANTS IN THE SOLICITATION
Wyser-Pratte is President and Chief Executive Officer of Wyser-Pratte
Management Company and WPC, which are principally engaged in money management
and event arbitrage. The principal executive offices of WPC are located at 63
Wall Street, New York, New York 10005. As of November 7, 1996, Wyser-Pratte owns
beneficially 953,600 shares of the Common Stock, representing approximately
5.07% of the Outstanding Common Stock. This includes shares owned directly by
Wyser-Pratte and shares owned by investment partnerships and other managed
accounts for which affiliates of WPC are the general partner or investment
manager. Other than Wyser-Pratte, no other officer of WPC owns any shares of
Common Stock. In addition, 52,000 shares of Common Stock, representing
approximately .28% of the Outstanding Common Stock were held by clients of WPC
in certain brokerage accounts maintained with WPC. Neither Wyser-Pratte nor WPC
has any voting or investment power or authority with respect to shares of Common
Stock held in such accounts, and both Wyser-Pratte and WPC disclaim beneficial
ownership of such shares.
Spear, Leeds is principally engaged as a registered broker-dealer and
market maker. The principal executive offices of Spear, Leeds are located at 120
Broadway, New York, New York 10271. The sole general partner of Spear, Leeds is
SLK LLC, a New York limited liability company, with principal executive offices
located at 120 Broadway, New York, New York 10271. SLK LLC is controlled by SLK
Management Inc., a New York corporation ('SLK Management'). The executive
offices of SLK Management are located at 120 Broadway, New York, New York 10271.
SLK Management's principal business is serving as the Managing Member of SLK
LLC. As of November 7, 1996, Spear, Leeds owns beneficially 948,600 shares of
the Common Stock, representing approximately 5.04% of the Outstanding Common
Stock. No officer of SLK Management owns any shares of Common Stock.
21
<PAGE>
<PAGE>
The members of the Soliciting Group have orally agreed (i) to share
expenses incurred in connection with the filing of the Schedule 13D and this
Solicitation Statement and the matters described herein and (ii) that any
purchases or sales of shares of Common Stock made on or after October 3, 1996
will be allocated 50% to Wyser-Pratte and his affiliates, on the one hand, and
50% to Spear, Leeds, on the other, unless otherwise agreed.
See the Company's Preliminary Revocation Solicitation Statement for
information regarding Common Stock held by the Company's principal shareholders
and its management.
GENERAL INFORMATION
This Preliminary Solicitation Statement is first being made available to
shareholders on or about December 27, 1996. It is anticipated that a Definitive
Solicitation Statement and accompanying GOLD Agent Designation Card will be sent
to the Company's stockholders in January, 1997. Executed Agent Designations will
be solicited by mail advertisement, telephone, telecopier and in person.
Solicitation will be made by Wyser-Pratte, Eric Longmire, Senior Managing
Director of WPC, and Fred Kambeitz, George Kohl, Gregg Villany and Howard
Wiesenfeld of Spear, Leeds, none of whom will receive additional compensation
for such solicitation. Proxies will be solicited from individuals, brokers,
banks, bank nominees and other institutional holders. The Soliciting Group has
requested banks, brokerage houses and other custodians, nominees and fiduciaries
to forward all solicitation materials to the beneficial owners of the shares
they hold of record. The Soliciting Group will reimburse these record holders
for their reasonable out-of-pocket expenses.
In addition, the Soliciting Group has retained MacKenzie Partners, Inc.
('MacKenzie Partners') as its information agent and to solicit Agent
Designations in connection with calling the Special Meeting for which MacKenzie
Partners will be paid a fee of approximately $75,000 and will be reimbursed for
its reasonable expenses. MacKenzie Partners will employ approximately 40 people
in its efforts. Costs incidental to this solicitation include expenditures for
printing, postage, legal and related expenses and are expected to be
approximately $300,000. The total costs incurred to date in connection with this
solicitation are not in excess of $200,000. If the Nominees are elected, the
Soliciting Group will ask the Board to have the Company reimburse it for costs
and expenses incurred in connection with this proxy solicitation. The Soliciting
Group does not intend to request that its reimbursement request be submitted to
a vote of stockholders.
REVOCABILITY OF SIGNED AGENT DESIGNATIONS
You may revoke your Agent Designation at any time by executing and
delivering a written revocation to Wyser-Pratte at 63 Wall Street, New York, New
York 10005 or the Company, at 5005 LBJ Freeway, Dallas, Texas 75244 (please send
a copy of any revocation sent to the Company to Wyser-Pratte, so that the
Soliciting Group is aware of the revocation). Such a revocation must clearly
state that your Agent Designation is no longer effective. An Agent Designation
may also be revoked by notice given to the Company in a meeting of the Company's
stockholders. Any revocation of an Agent Designation will not effect any action
taken by the Designated Agents pursuant to the Agent Designation prior to such
revocation.
GUY P. WYSER-PRATTE
SPEAR, LEEDS & KELLOGG
IF YOUR SHARES OF REXENE CORPORATION COMMON STOCK ARE HELD IN THE NAME OF A
BROKERAGE FIRM, BANK, BANK NOMINEE OR OTHER INSTITUTION, ONLY IT CAN SIGN AN
AGENT DESIGNATION WITH RESPECT TO YOUR COMMON STOCK. ACCORDINGLY, PLEASE CONTACT
THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR AN AGENT
DESIGNATION TO BE SIGNED REPRESENTING YOUR SHARES OF COMMON STOCK.
IF YOU HAVE ANY QUESTIONS ABOUT GIVING YOUR AGENT DESIGNATION OR REQUIRE
ASSISTANCE, PLEASE CONTACT MACKENZIE PARTNERS, INC. TOLL-FREE AT (800) 322-2885,
OR ERIC LONGMIRE, SENIOR MANAGING DIRECTOR OF WPC AT (212) 495-5357.
22
<PAGE>
<PAGE>
EXHIBIT A
COMMON STOCK PURCHASE RIGHTS
On January 26, 1993, the Board of Directors of the Registrant declared a
dividend of one common stock purchase right (a 'Right') for each outstanding
share of common stock, par value $.01 per share (the 'Common Stock'), of the
Company. The dividend is payable on February 8, 1993 (the 'Record Date') to the
stockholders of record of the Common Stock on that date. When the Rights become
exercisable, each Right will entitle the registered holder to purchase from the
Registrant one share of Common Stock at a price of $25 per share (the 'Purchase
Price'), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the 'Rights Agreement') between the Registrant and
American Stock Transfer & Trust Company, as Rights Agent (the 'Rights Agent').
Until the earlier to occur of the Close of Business on (i) the tenth day
after the date a person (an 'Acquiring Person') (other than the Registrant, any
subsidiary of the Registrant, or any employee benefit plan of the Registrant or
any subsidiary of the Registrant) alone or together with affiliates and
associates, has become the beneficial owner of 15% (or such lower threshold as
may be established by the Board of Directors) or more of the outstanding shares
of Common Stock or (ii) the tenth business day after the date (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person becomes an Acquiring Person) of the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group (other than the Registrant, any subsidiary of the Registrant, or any
employee benefit plan of the Registrant or any subsidiary of the Registrant) of
15% (or such lower threshold as may be established by the Board of Directors) or
more of such outstanding shares of Common Stock (the earlier of (i) or (ii)
being called the 'Distribution Date'), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock. Until the Distribution
Date (or earlier termination or expiration of the Rights), new Common Stock
certificates issued after the Record Date, upon transfer or new issuance of
shares of Common Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier termination or
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock, outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ('Right
Certificate') will be mailed to holders of record of the shares of Common Stock
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. Each share of Common Stock issued
after the Distribution Date and prior to the earlier of the termination or
expiration of the Rights pursuant to exercise of any option, warrant, right or
conversion privilege contained in any option, warrant, right or convertible
security issued by the Registrant prior to the Distribution Date (other than the
Rights) shall also include the right to receive a Right (unless the Board of
Directors provides to the contrary at the time of issuance of any such option,
warrant, right or convertible security) and Right Certificates evidencing such
Rights shall be issued at the time of issuance of such shares of Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on February 8, 2003 (the 'Final Expiration Date'), unless the Final
Expiration Date is extended or unless the Rights are earlier terminated by the
Registrant, in each case, as described below.
The Purchase Price payable, and the number of shares of Common stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) upon the grant to holders of the shares of Common Stock of certain
rights or warrants to subscribe for or purchase shares of Common Stock at a
price, or securities convertible into shares of Common Stock with a conversion
price, less than the then current market price of the shares
<PAGE>
<PAGE>
of Common Stock or (iii) upon the distribution of holders of the shares of
Common Stock of evidences of indebtedness or assets (excluding a regular
quarterly cash dividend or a dividend payable in shares of Common Stock) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of shares of Common Stock
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Stock or a stock dividend on the Common Stock
payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
In the event that on or after the first date of public announcement by the
Registrant or an Acquiring Person that an Acquiring Person has become such (the
'Shares Acquisition Date') the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold (in one transaction or a series of transactions other than in the
ordinary course of business), proper provision will be made so that each holder
of a Right will thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price of the Right, that number of common shares of
the acquiring company which at the time of such transaction will have a market
value of two times the Purchase Price. In the event that any person, together
with its affiliates and associates, becomes the beneficial owner of 15% (or such
lower threshold as may be established by the Board of Directors) or more of the
shares of Common Stock then outstanding, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive upon exercise that number of shares of Common Stock of the Registrant
having a market value of two times the Purchase Price. Under no circumstances
may a Right be exercised following the occurrence of an event set forth in the
preceding sentence prior to the expiration of the Registrant's right of
termination.
At any time after any person becomes an Acquiring Person and prior to the
acquisition by such person, together with its affiliates and associates, of
beneficial ownership of 50% or more of the outstanding shares of Common Stock,
the Board of Directors of the Registrant may exchange the Rights (other than
Rights owned by such person which have become void), in whole or in part, at an
exchange ratio of one share of Common Stock (or of a share of a class or series
of the Registrant's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Common Stock will be issued and in
lieu thereof, an adjustment in cash will be made based on the market price of
the shares of Common Stock on the last trading day prior to the date of
exercise.
At any time prior to the earlier to occur of (i) the acquisition by a
person, together with its affiliates and associates, of beneficial ownership of
15% (or such lower threshold as may be established by the Board of Directors) or
more of the outstanding shares of Common Stock or (ii) the Final Expiration
Date, the Board of Directors of the Registrant may terminate the Rights in
whole, but not in part, at no cost. The termination of the Rights may be made
effective at such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any termination
of the Rights, all rights relating to the Rights, including the right to
exercise the Rights, will terminate.
The terms of the Rights may be amended by the Board in any manner without
the consent of the holders of the Rights, except that from and after such time
as any person becomes an Acquiring Person, no such amendment may adversely
affect the interest of the holders of the Rights or may be made without the
consent of the holders of a majority of the Rights (other than Acquiring
Persons.)
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Registrant, including, without limitation, the
right to vote (other than with respect to the amendment of Rights in certain
circumstances) or to receive dividends.
As of January 28, 1993, there were (i) 10,496,164 shares of Common Stock
issued and outstanding, (ii) 770 shares of Common Stock held in treasury, and
(iii) 359,261 shares of Common Stock reserved for issuance pursuant to the
Registrant's 1988 Stock Incentive Plan, the Registrant's Nonqualified Stock
Option Plan for Outside Directors, stock options granted to a key employee, and
the 1992 corporate
A-2
<PAGE>
<PAGE>
reorganization of the Registrant under its First Amended Plan of Reorganization
under Chapter 11 of the United States Bankruptcy Code. One Right will be
distributed to stockholders of the Registrant for each share of Common Stock
owned of record by them on February 8, 1993. One Right will be issued with
respect of each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the date of termination
of the Rights and the Final Expiration Date. The Registrant's Board of Directors
has reserved for issuance upon exercise of the Rights 11,000,000 shares of
Common Stock. Prior to the Distribution Date, when additional shares of Common
Stock are issued, Rights will be issued simultaneously therewith and, to the
extent necessary, shares of Common Stock will be reserved for issuance upon
exercise of such Rights.
The Rights have certain anti-takeover effects. The Rights could cause
substantial dilution to a person or group that attempts to acquire the
Registrant in a manner or on terms not approved by the Board of Directors of the
Registrant. The Rights, however, should not deter any prospective offeror
willing to negotiate in good faith with the Board of Directors. Nor should the
Rights interfere with any merger or business combination approved by the Board
prior to an Acquiring Person's acquiring 25% or more of the Registrant's Common
Stock.
A copy of the Rights Agreement between the Registrant and the Rights Agent
specifying the terms of the Rights is attached as an Exhibit and incorporated
herein by reference. The foregoing description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement.
Amendments to the Rights Agreement.
On August 29, 1994, the Company and the Rights Agent entered into an
amendment ('Amendment No. 1') to the Rights Agreement. Amendment No. 1 amends
the Rights Agreement to increase the initial Purchase Price (as defined therein)
of the Common Stock subject to the Rights from $25 to $60 per share.
On July 22, 1996, the Company and the Rights Agent entered into an
amendment ('Amendment No. 2') to the Rights Agreement. Amendment No. 2 amends
the Rights Agreement as follows:
(1) to amend the definition of 'Acquiring Person' to provide that if
the Board of Directors (consisting of a majority of Continuing Directors
(as defined therein)) of the Company, within 10 business days after the
first date on which the Company became aware that any person, together with
its affiliates and associates, is the beneficial owner of shares of Common
Stock of the Company, would be an Acquiring Person, determines in good
faith that such person has inadvertently exceeded the threshold set forth
in the definition of Acquiring Person, and such person divests as promptly
as practicable a sufficient number of shares of Common Stock of the Company
so that such person would no longer be an Acquiring Person, then such
person shall not be deemed an Acquiring Person;
(2) to add a definition of 'Continuing Directors';
(3) to add a legend to the certificates representing shares of Common
Stock of the Company issued after July 22, 1996 to indicate that such stock
certificate entitle the holders thereof to certain rights as set forth in
the Rights Agreement, as amended;
(4) to provide that a majority of the Board of Directors of the
Company may, at its option, at any time prior to the earlier of (i) the
tenth day (or such later date as may be approved by the Board of Directors
of the Company) following the date a person becomes an Acquiring Person or
(ii) the Final Expiration Date (as defined therein), either redeem or
terminate the Rights; and
(5) to amend the amendment provisions to provide that the Rights
Agreement may be amended after a person becomes an Acquiring Person only if
at the time of the action of the Board of Directors approving such
amendment there are then in office not less than three Continuing Directors
and such amendment is approved by a majority of the Continuing Directors
then in office.
A-3
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
EXHIBIT B
203 BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS. (a) Notwithstanding
any other provisions of this chapter, a corporation shall not engage in any
business combination with any interested stockholder for a period of 3 years
following the time that such stockholder became an interested stockholder,
unless:
(1) prior to such time the board of directors of the corporation
approved either the business combination or the transaction which resulted
in the stockholder becoming an interested stockholder, or
(2) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding for purposes of determining
the number of shares outstanding those shares owned (i) by persons who are
directors and also officers and (ii) employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer, or
(3) At or subsequent to such time the business combination is approved
by the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
(b) The restrictions contained in this section shall not apply if:
(1) the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by this section;
(2) the corporation, by action of its board of directors, adopts an
amendment to its bylaws within 90 days of the effective date of this
section, expressly electing not to be governed by this section, which
amendment shall not be further amended by the board of directors.
(3) the corporation, by action of its stockholders, adopts an
amendment to its certificate of incorporation or bylaws expressly electing
not to be governed by this section, provided that, in addition to any other
vote required by law, such amendment to the certificate of incorporation or
bylaws must be approved by the affirmative vote of a majority of the shares
entitled to vote. An amendment adopted pursuant to this paragraph shall be
effective immediately in the case of a corporation that both (i) has never
had a class of voting stock that falls within any of the three categories
set out in subsection (b)(4) hereof, and (ii) has not elected by a
provision in its original certificate of incorporation or any amendment
thereto to be governed by this section. In all other cases, an amendment
adopted pursuant to this paragraph shall not be effective until 12 months
after the adoption of such amendment and shall not apply to any business
combination between such corporation and any person who became an
interested stockholder of such corporation on or prior to such adoption. A
bylaw amendment adopted pursuant to this paragraph shall not be further
amended by the board of directors;
(4) the corporation does not have a class of voting stock that is (i)
listed on a national securities exchange, (ii) authorized for quotation on
The NASDAQ Stock Market or (iii) held of record by more than 2,000
stockholders, unless any of the foregoing results from action taken,
directly or indirectly, by an interested stockholder or from a transaction
in which a person becomes an interested stockholder;
(5) a stockholder becomes an interested stockholder inadvertently and
(i) as soon as practicable divests itself of ownership of sufficient shares
so that the stockholder ceases to be an interested stockholder and (ii)
would not, at any time within the 3 year period immediately prior to a
business combination between the corporation and such stockholder, have
been an interested stockholder but for the inadvertent acquisition of
ownership;
<PAGE>
<PAGE>
(6) the business combination is proposed prior to the consummation or
abandonment of and subsequent to the earlier of the public announcement or
the notice required hereunder of a proposed transaction which (i)
constitutes one of the transactions described in the second sentence of
this paragraph; (ii) is with or by a person who either was not an
interested stockholder during the previous 3 years or who became an
interested stockholder with the approval of the corporation's board of
directors or during the period described in paragraph (7) of this
subsection (b); and (iii) is approved or not opposed by a majority of the
members of the board of directors then in office (but not less than 1) who
were directors prior to any person becoming an interested stockholder
during the previous 3 years or were recommended for election or elected to
succeed such directors by a majority of such directors. The proposed
transactions referred to in the preceding sentence are limited to (x) a
merger or consolidation of the corporation (except for a merger in respect
of which, pursuant to section 251(f) of the chapter, no vote of the
stockholders of the corporation is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a
series of transactions), whether as part of a dissolution or otherwise, of
assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation (other than to any direct or indirect
wholly-owned subsidiary or to the corporation) having an aggregate market
value equal to 50% or more of either that aggregate market value of all of
the assets of the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the corporation; or
(z) a proposed tender or exchange offer for 50% or more of the outstanding
voting stock of the corporation. The corporation shall give not less than
20 days notice to all interested stockholders prior to the consummation of
any of the transactions described in clauses (x) or (y) of the second
sentence of this paragraph; or
(7) The business combination is with an interested stockholder who
became an interested stockholder at a time when the restrictions contained
in this section did not apply by reason of any paragraphs (1) through (4)
of this subsection (b), provided, however, that this paragraph (7) shall
not apply if, at the time such interested stockholder became an interested
stockholder, the corporation's certificate of incorporation contained a
provision authorized by the last sentence of this subsection (b).
Notwithstanding paragraphs (1), (2), (3) and (4) of this subsection, a
corporation may elect by a provision of its original certificate of
incorporation or any amendment thereto to be governed by this section; provided
that any such amendment to the certificate of incorporation shall not apply to
restrict a business combination between the corporation and an interested
stockholder of the corporation if the interested stockholder became such prior
to the effective date of the amendment.
(c) As used in this section only, the term:
(1) 'affiliate' means a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, another person.
(2) 'associate,' when used to indicate a relationship with any person,
means (i) any corporation, partnership, unincorporated association or other
entity of which such person is a director, officer or partner or is,
directly or indirectly, the owner of 20% or more of any class of voting
stock, (ii) any trust or other estate in which such person has at least a
20% beneficial interest or as to which such person serves as trustee or in
a similar fiduciary capacity, and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same residence as such
person.
(3) 'business combination,' when used in reference to any corporation
and any interested stockholder of such corporation, means:
(i) any merger or consolidation of the corporation or any direct or
indirect majority-owned subsidiary of the corporation with (A) the
interested stockholder, or (B) with any other corporation, partnership,
unincorporated association or other entity if the merger or
consolidation is caused by the interested stockholder and as a result of
such merger or consolidation subsection (a) of this section is not
applicable to the surviving entity;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions), except
proportionately as a stockholder of such
B-2
<PAGE>
<PAGE>
corporation, to or with the interested stockholder, whether as part of a
dissolution or otherwise, of assets of the corporation or of any direct
or indirect majority-owned subsidiary of the corporation which assets
have an aggregate market value equal to 10% or more of either the
aggregate market value of all the assets of the corporation determined
on a consolidated basis or the aggregate market value of all the
outstanding stock of the corporation;
(iii) any transaction which results in the issuance or transfer by
the corporation or by any direct or indirect majority-owned subsidiary
of the corporation of any stock of the corporation or of any stock of
the corporation or of such subsidiary to the interested stockholder,
except (A) pursuant to the exercise, exchange or conversion of
securities exercisable for, exchangeable for or convertible into stock
of such corporation or any such subsidiary which securities were
outstanding prior to the time that the interested stockholder became
such, (B) pursuant to a merger under Section 251(g) of this title; (C)
pursuant to a dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for, exchangeable for
or convertible into stock of such corporation or any such subsidiary
which security is distributed, pro rata to all holders of a class or
series of stock of such corporation subsequent to the time the
interested stockholder became such, (D) pursuant to an exchange offer by
the corporation to purchase stock made on the same terms to all holders
of said stock, or (E) any issuance or transfer of stock by the
corporation, provided however, that in no case under (C)-(E) above shall
there be an increase in the interested stockholder's proportionate share
of the stock of any class or series of the corporation or of the voting
stock of the corporation;
(iv) any transaction involving the corporation or any direct or
indirect majority-owned subsidiary of the corporation which has the
effect, directly or indirectly, of increasing the proportionate share of
the stock of any class or series, or securities convertible into the
stock of any class or series, of the corporation or of any such
subsidiary which is owned by the interested stockholder, except as a
result of immaterial changes due to fractional share adjustments or as a
result of any purchase or redemption of any shares of stock not caused,
directly or indirectly, by the interested stockholder; or
(v) any receipt by the interested stockholder of the benefit,
directly or indirectly (except proportionately as a stockholder of such
corporation) of any loans, advances, guarantees, pledges, or other
financial benefits (other than those expressly permitted in
subparagraphs (i)-(iv) above) provided by or through the corporation or
any direct or indirect majority owned subsidiary.
(4) 'control,' including the term 'controlling,' 'controlled by' and
'under common control with,' means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting stock, by
contract, or otherwise. A person who is the owner of 20% or more of the
outstanding voting stock of any corporation, partnership, unincorporated
association or other entity shall be presumed to have control of such
entity, in the absence of proof by a preponderance of the evidence to the
contrary. Notwithstanding the foregoing, a presumption of control shall not
apply where such person holds voting stock, in good faith and not for the
purpose of circumventing this section, as an agent, bank, broker, nominee,
custodian or trustee for one or more owners who do not individually or as a
group have control of such entity.
(5) 'interested stockholder' means any person (other than the
corporation and any direct or indirect majority-owned subsidiary of the
corporation) that (i) is the owner of 15% or more of the outstanding voting
stock of the corporation, or (ii) is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the 3-year period immediately
prior to the date on which it is sought to be determined whether such
person is an interested stockholder; and the affiliates and associates of
such person; provided, however, that the term 'interested stockholder'
shall not include (x) any person who (A) owned shares in excess of the 15%
limitation set forth herein as of, or acquired such shares pursuant to a
tender offer commenced prior to, December 23, 1987, or pursuant to an
exchange offer announced prior to the aforesaid date and commenced within
90 days thereafter and either (I) continued to own shares in excess of such
15% limitation or would have but for action by the
B-3
<PAGE>
<PAGE>
corporation or (II) is an affiliate or associate of the corporation and so
continued (or so would have continued but for action by the corporation) to
be the owner of 15% or more of the outstanding voting stock of the
corporation at any time within the 3-year period immediately prior to the
date on which it is sought to be determined whether such a person is an
interested stockholder or (B) acquired said shares from a person described
in (A) above by gift, inheritance or in a transaction in which no
consideration was exchanged; or (y) any person whose ownership of shares in
excess of the 15% limitation set forth herein in the result of action taken
solely by the corporation provided that such person shall be an interested
stockholder if thereafter such person acquires additional shares of voting
stock of the corporation, except as a result of further corporate action
not caused, directly or indirectly, by such person. For the purpose of
determining whether a person is an interested stockholder, the voting stock
of the corporation deemed to be outstanding shall include stock deemed to
be owned by the person through application of paragraph (8) of this
subsection but shall not include any other unissued stock of such
corporation which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options,
or otherwise.
(6) 'person' means any individual, corporation, partnership,
unincorporated association or other entity.
(7) 'Stock' means, with respect to any corporation, capital stock and,
with respect to any other entity, any equity interest.
(8) 'Voting stock' means, with respect to any corporation, stock of
any class or series entitled to vote generally in the election of directors
and, with respect to any entity that is not a corporation, any equity
interest entitled to vote generally in the election of the governing body
of such entity.
(9) 'owner' including the terms 'own' and 'owned' when used with
respect to any stock means a person that individually or with or through
any of its affiliates or associates:
(i) beneficially owns such stock, directly or indirectly; or
(ii) has (A) the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise;
provided, however, that a person shall not be deemed the owner of stock
tendered pursuant to a tender or exchange offer made by such person or
any of such person's affiliates or associates until such tendered stock
is accepted for purchase or exchange; or (B) the right to vote such
stock pursuant to any agreement, arrangement or understanding; provided,
however, that a person shall not be deemed the owner of any stock
because of such person's right to vote such stock if the agreement,
arrangement or understanding to vote such stock arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made to 10 or more persons; or
(iii) has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable proxy or consent as described in item (B) of clause (ii) of
this paragraph), or disposing of such stock with any other person that
beneficially owns, or whose affiliates or associates beneficially own,
directly or indirectly, such stock.
(d) No provision of a certificate of incorporation or bylaw shall
require, for any vote of stockholders required by this section a greater
vote of stockholders than that specified in this section.
(e) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all matters with respect to this
section.
B-4
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
AGENT DESIGNATION
THIS AGENT DESIGNATION IS SOLICITED BY GUY P. WYSER-PRATTE, WYSER-PRATTE & CO.,
INC. AND SPEAR, LEEDS & KELLOGG (THE 'SOLICITING GROUP') FOR THE APPOINTMENT OF
DESIGNATED AGENTS TO CALL A SPECIAL MEETING OF STOCKHOLDERS OF REXENE
CORPORATION (THE 'COMPANY').
Each of the undersigned hereby constitutes and appoints Daniel H. Burch,
Stanley J. Kay, Jr., and Mark H. Harnett, and each of them, with full power of
substitution, the proxies and agents of each of the undersigned (said proxies
and agents, together with each substitute appointed by any of them, if any,
collectively, the 'Designated Agents') in respect of all shares of Common Stock,
par value $.01 per share (the 'Common Stock'), of the Company owned by the
undersigned to do any or all of the following, to which each of the undersigned
hereby consents:
1. To take all such action as shall be necessary or appropriate to call (BUT
NOT TO VOTE AT) a special meeting of the stockholders of the Company (the
'Special Meeting') for the purpose of considering and voting upon the 'By-laws
Proposals' and 'Director Replacement Proposals,' as described in the
Solicitation Statement of the Soliciting Group.
2. To give or cause to be given, to the Company's stockholders entitled
thereto, notice of the Special Meeting to be held on a date and at a place and
time to be determined by the Designated Agents.
(Agent Designation Continued On Reverse)
<PAGE>
<PAGE>
(continued)
3. To exercise any and all of the other rights of each of the undersigned
incidental to (i) calling and convening the Special Meeting and (ii) causing the
purposes of the authority expressly granted hereinabove to the Designated Agents
to be carried into effect; provided, however, that NOTHING CONTAINED IN THIS
INSTRUMENT SHALL BE CONSTRUED TO GRANT TO THE DESIGNATED AGENTS THE RIGHT, POWER
OR AUTHORITY TO VOTE ANY SHARES OWNED BY THE UNDERSIGNED AT THE SPECIAL MEETING.
PLEASE PROMPTLY COMPLETE,
SIGN, DATE AND MAIL IN THE
ENCLOSED ENVELOPE.
Date __________________, 1996
Signature ___________________
Signature, if Held Jointly __
Title _______________________
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as an attorney,
executor, administrator,
trustee or guardian, give
full title as such. If a
corporation, sign in full
corporate name by President
or other authorized officer.
If a partnership, sign in
partnership name by
authorized person.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
<PAGE>
APPENDIX 2
FIGHT LETTER
[LETTERHEAD OF WYSER-PRATTE & CO., INC.] [LETTERHEAD OF SPEAR, LEEDS & KELLOGG]
December 27, 1996
WHY IS REXENE'S BOARD BLOCKING HUNTSMAN CORPORATION'S
EFFORTS TO BUY REXENE FOR $16 PER SHARE?
DEAR REXENE SHAREHOLDER:
During the last few months Rexene has been the subject of intense interest
from the Huntsman Corporation, one of the nation's most successful chemical
companies. Rexene shareholders have the opportunity to realize $16 per share
from the Huntsman Corporation for their investment. Still, Rexene's management
and its existing board of directors -- your elected representatives --
apparently do not believe that selling the Company should be your decision.
Fortunately, you can tell Rexene's board that you want the ability to
decide your Company's future. How? Simply execute and return the GOLD Agent
Designation Card when you receive our definitive proxy materials asking you to
join us in calling a Special Meeting of shareholders. Once the Special Meeting
is called, you will then be able to consider and vote upon proposals that we
believe will allow you to realize the highest price for your Rexene shares.
WE BELIEVE THAT SHAREHOLDERS, THE TRUE OWNERS OF REXENE, SHOULD BE ABLE TO
TAKE ADVANTAGE OF THE $16 HUNTSMAN OFFER, OR ANY OTHER OFFER THAT THEY FIND
ACCEPTABLE. FOR THIS REASON, WE HAVE STARTED A PROXY FIGHT TO CALL A SPECIAL
MEETING AT WHICH SHAREHOLDERS CAN REPLACE THE CURRENT BOARD WITH DIRECTORS WHO
WILL SEEK OUT THE HIGHEST OFFER FOR YOUR COMPANY.
Wyser-Pratte and Spear, Leeds & Kellogg are owners of 10% of Rexene's
common shares. By contrast, Rexene's board and top management together own less
than one percent of the Company's shares (excluding stock options), and the
total market value of top management's actual stock holdings amount to less than
one-fifth of their last year's compensation. Despite this lack of commitment to
the Company's stock, they would like you to believe that their interests are the
same as yours. It is time to take control of your Company's destiny.
IN MAKING YOUR DECISION CONCERNING THE PROPOSALS, WE ASK THAT YOU CONSIDER
THE FOLLOWING:
First, remember that Rexene's stock closed at $9.25 on the day prior to
an unsolicited offer from the Huntsman Corporation on July 18, 1996.
Huntsman's latest offer, for $16 cash, represents a 73% premium over
Rexene's pre-bid price.
Since Huntsman's $16 offer on October 29th, the Rexene Board has set up
huge impediments and made numerous 'strawman' arguments aimed at
fending off the Huntsman offer. On December 4, 1996, Huntsman issued a
press release stating that
<PAGE>
<PAGE>
'Based on our recent experience with Rexene and its advisors, we
believe that Rexene does not have a sincere and serious intent to sell
the company and maximize shareholder value.'
DESPITE ITS DENIALS -- REXENE'S CURRENT BOARD
IS APPARENTLY OPPOSED TO A SALE.
While claiming to be open-minded about their negotiations with
Huntsman, the Rexene board has revealed a different face in its
repeated statements that now is not a 'propitious time' to sell the
Company. In addition, Rexene has set up outrageous preconditions that
would serve to dissuade any reasonable buyer.
Thus, according to Huntsman, the Company has demanded that Huntsman
close a deal even if Rexene violates all of its representations and
covenants under the draft merger agreement. REXENE ALSO HAS DEMANDED AN
UNCONSCIONABLE $100 MILLION 'REVERSE BREAK-UP FEE' TO BE PAID BY
HUNTSMAN IF THE TRANSACTION IS NOT COMPLETED.
In a letter to Rexene dated November 12th, Jon Huntsman, chief
executive of Huntsman Corporation, states: 'We have never encountered
such an onerous list of demands, and it appears that the actions of
your counsel undercut the Board's prior decision to proceed in good
faith to negotiate a merger transaction.'
REXENE DOES NOT SEEM WILLING TO NEGOTIATE SERIOUSLY.
In his November 12th letter, Mr. Huntsman states: 'Again, I wish to
emphasize that we are prepared to move as expeditiously as possible to
finalize a merger agreement. We are also prepared to make our
representatives available to you to assure you of our financial
capability to complete the transaction. Bankers Trust offered to cover
this matter with your financial team, but there was total rejection of
this offer by your counsel. . . . We have successfully closed more
acquisitions than perhaps any other firm in the chemical industry, but
this is the first time outside legal counsel has unilaterally placed
barricades in such an unproductive manner. . . .'
HUNTSMAN HAS ASSERTED CLEARLY THAT IT HAS THE FINANCIAL MEANS TO BUY
REXENE AT $16 PER SHARE AND IS OFFERING TO ASSURE REXENE'S ADVISORS OF
THAT CAPABILITY. YET REXENE HAS NOT EVEN ATTEMPTED TO REVIEW THE MATTER
FURTHER.
While Huntsman has offered to do a cash merger transaction at $16 per
share, Rexene's board is holding out for a tender offer. What is the
board's motivation? A cash merger is a standard and widely-used form of
transaction. And more importantly, either way all Rexene shareholders
would receive $16 per share.
REXENE'S CURRENT BOARD HAS FAILED YOU BEFORE
AND IS LIKELY TO FAIL AGAIN IF GIVEN ANOTHER CHANCE.
Four of Rexene's ten current directors were on the board of the company
when it went bankrupt just four years ago. Now Rexene's board is
failing you again. On December 11th,
2
<PAGE>
<PAGE>
following rosy forecasts made just this fall, Rexene announced that it
was going to disappoint investors with lower-than-expected earnings.
We believe that the value of Rexene's shares could fall dramatically if
Rexene were to succeed in driving Huntsman away and blocking the
potential sale of the Company. Do not forget that Huntsman's $16 per
share bid -- which was reaffirmed in a press release just this
month -- represents a 73% premium over Rexene's pre-bid price. And
Rexene's current price clearly reflects the possibility that the
Company will be sold.
Our slate of board nominees includes experienced chemical industry
executives who are fully capable of directing the Company's business if
they are elected to replace the existing board. Their top priority will
be to maximize the current value of your shares through a sale of the
Company to the highest bidder.
IT IS WITHIN YOUR POWER TO PROTECT THE VALUE OF YOUR REXENE SHARES AND TO
RECEIVE THE HIGHEST POSSIBLE PRICE FOR YOUR INVESTMENT. WE URGE YOU TO SIGN AND
RETURN THE GOLD AGENT DESIGNATION CARD WHEN YOU RECEIVE YOURS IN THE NEW YEAR.
In the meantime, we ask that you review the enclosed preliminary proxy
materials, which describe in greater detail the process of calling a Special
Meeting to replace the current board with directors committed to maximizing the
value of your shares through a sale to Huntsman or another qualified buyer for
at least $16 per share.
We appreciate your support and encourage you to call us with your views.
You can reach MacKenzie Partners, Inc., which is assisting us in this matter,
TOLL FREE at 800-322-2885 or at 212-929-5500 collect.
Sincerely,
/s/ GUY P. WYSER-PRATTE /s/ FRED KAMBEITZ
GUY P. WYSER-PRATTE FRED KAMBEITZ
Wyser-Pratte & Co., Inc. Spear, Leeds & Kellogg
3
<PAGE>
