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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. 1)
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
REXENE CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
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:
.......................................................
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[WYSER-PRATTE AND SPEAR LEEDS LETTERHEADS]
April 4, 1997
IT'S TIME FOR SHAREHOLDERS TO DECIDE REXENE'S FUTURE.
VOTE YOUR GOLD PROXY IF YOU SUPPORT $16 PER SHARE OR MORE.
DEAR FELLOW REXENE SHAREHOLDER:
On April 30, you will at last have the opportunity to decide Rexene's future.
The choice is simple:
Elect a Board committed to selling Rexene for at least $16 per share to
Huntsman Corp. or another qualified buyer, or
Settle for the current Board, which has waged a long campaign filled
with excuses, diversions, misleading and inadequate disclosure, and a
host of entrenchment devices, designed to save management's jobs in the
face of our very real threat to replace the Board.
IMPORTANT BULLETIN!
As this letter went to press, Rexene announced that it is converting the
first stage of its stock repurchase program into a 'Dutch Auction'
self-tender offer to buy up to 2,156,250 shares at prices between $14 and
$16.
This doesn't eliminate the need to replace the board, prevent the
Company from issuing $50 million of 'blocking' preferred stock and
find a buyer. After the Dutch Auction is over, Rexene will be
weighted down with another $35 million of debt it can ill afford
to service.
Rexene tried to buy the election through its stock repurchase
program, by targeting large stockholders who support our plans for
the Company, but the Company was forced to revise its plan when
former director Arthur Goeschel blew the whistle on the Rexene
Board.
THE CHANGES IN THE PROGRAM ARE A GREAT VICTORY FOR SHAREHOLDERS
SINCE THE REPURCHASE PROGRAM IS NOW OPEN TO ALL STOCKHOLDERS ON A
NON-DISCRIMINATORY BASIS, AND STOCKHOLDERS CAN TENDER AND STILL
VOTE ALL THEIR SHARES.
For months, Rexene has been busy criticizing our group's motives in an attempt
to divert you from the real issues. Our motives, of course, extend no further
than simply trying to maximize the value of Rexene for the benefit of all
shareholders.
We intend to achieve this goal by completing a sale of the company -- a
transaction to which the Board keeps claiming it is not opposed -- to Huntsman
or another buyer for at least $16 per share.
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DON'T TAKE ONLY OUR WORD FOR IT. ARTHUR GOESCHEL RESIGNED
FROM REXENE'S BOARD, CITING ITS SCANDALOUS CONDUCT.
The revelations Rexene made last week in its preliminary proxy filing should
shock and concern you. In this SEC filing, Rexene disclosed the details of an
$85 million stock buyback program, which prompted the immediate resignation of
longtime director and former Chairman of the Board, Arthur Goeschel. On March
19, in a remarkably candid letter to the Board, Mr. Goeschel said
'I MUST NOW RESIGN . . . DUE TO ACTIONS THAT HAVE BEEN TAKEN BY THE
BOARD OF THE COMPANY WHICH I BELIEVE ARE NOT IN THE BEST INTERESTS OF
THE COMPANY'S SHAREHOLDERS.'
'The [Buyback] Program will be conducted in such a manner so as to
purchase the stock of individuals or groups that have indicated their
intention to vote for the removal of the Company's current Board . . .'
'THE INTENT OF THE PROGRAM HAS BEEN MADE CLEAR TO ME AT SEVERAL
MEETINGS OF THE BOARD AND . . . CONFIRMED BY STATEMENTS MADE BY CERTAIN
OF THE COMPANY'S FINANCIAL ADVISORS . . . AND THEREFORE WILL SERVE NO
PURPOSE OTHER THAN TO ENTRENCH THE CURRENT BOARD.'
'The Company, if the full Program is executed, will have an additional
$85,000,000 in obligations' incurred to purchase the Company's stock
'at or near the highest price the stock has traded for in the last
several years. This action is particularly inappropriate in view of the
Company's press release on March 19, 1997 indicating that the operating
earnings for the quarter will be very weak.'
VOTE AGAINST THE $50 MILLION NEW ISSUE OF 'BLOCKING' PREFERRED STOCK.
Rexene is asking shareholders to approve the second stage of the Buyback
Program, which will be financed by a new issue of $50 million of 'blocking'
preferred stock -- a typical antitakeover device which we believe may hurt
Rexene's marketability to a potential buyer.
This preferred issue will not be redeemable for five years, and provides
preferred holders with the power to elect two directors in the event of a change
in control.
These hurdles may discourage a Rexene buyer. Why should a buyer of all of Rexene
not be able to control the full Board for five years after the preferred is
issued? Such a buyer would have to negotiate terms for purchasing at least a
majority of the preferred stock, most likely at a hefty premium to gain full
control of the Board.
REXENE'S FAILURE TO DISCLOSE DISCUSSIONS WITH FOUR POTENTIAL BUYERS
In its preliminary proxy statement, Rexene also disclosed for the first time
that the Board engaged in discussions in late 1996 and early 1997 with four
potential acquirors and signed confidentiality
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agreements with two of them. Incredibly, the Company chose not to disclose these
discussions until March 25. In our view:
This outrageous failure to disclose discussions with potential buyers for
several months was done to help Rexene prevent our call for a Special
Meeting.
SHAREHOLDERS HAVE A RIGHT TO PROMPTLY BE INFORMED ABOUT THE NATURE AND
EXTENT OF ALL DISCUSSIONS HELD BY THE COMPANY OR ITS BANKERS WITH POTENTIAL
BUYERS.
IT'S TIME TO ELECT A BOARD WHICH WILL SEEK THE HIGHEST VALUE FOR YOUR SHARES.
The Rexene Board and management clearly acted unethically -- and perhaps
illegally -- by suppressing so much information for so long from the owners of
the Company.
IT SHOULD BE OBVIOUS TO ALL SHAREHOLDERS BY NOW THAT THIS BOARD IS DETERMINED TO
STAY IN POWER, EVEN IF IT MEANS REPEATEDLY BREACHING THEIR FIDUCIARY DUTIES TO
SHAREHOLDERS. THIS BOARD CANNOT BE TRUSTED TO GIVE SHAREHOLDERS COMPLETE
INFORMATION ABOUT KEY ISSUES WHICH DIRECTLY AFFECT THE OUTCOME OF THE SPECIAL
MEETING AND THE VALUE OF THEIR REXENE SHARES.
You now have the opportunity to remove the Rexene Board from office and elect
directors who will represent your interests in seeking to maximize Rexene's
value in a sale to a third party.
HUNTSMAN STILL WANTS A TRANSACTION WITH REXENE AT $16 PER SHARE
Remember: Huntsman Corp. has twice released public statements expressing
continued interest in purchasing Rexene. Huntsman said in a March 17 public
statement that they had closed on 25 previous acquisitions 'with no difficulty'
financing those transactions. HUNTSMAN ALSO POINTED OUT THAT IF THE CURRENT
BOARD HAD ACCEPTED THEIR $16 PER SHARE PROPOSAL LAST OCTOBER, 'THE DEAL WOULD
HAVE BEEN CLOSED LONG AGO AND SHAREHOLDERS WOULD HAVE THEIR MONEY.'
VOTE YOUR GOLD PROXY TODAY.
Don't delay. No matter what the size of your Rexene investment, your support is
critical. It's time to let the shareholders -- the real owners of
Rexene -- decide the Company's future. Please mark, sign date, and mail the
enclosed GOLD proxy card today.
If you have further questions or need assistance in voting your Rexene shares,
please call our proxy advisors, MacKenzie Partners, Inc., toll-free at (800)
322-2885.
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Sincerely,
/s/ GUY P. WYSER-PRATTE /s/ FRED KAMBEITZ
GUY P. WYSER-PRATTE FRED KAMBEITZ
Wyser-Pratte & Co., Inc. Spear, Leeds & Kellogg
</TABLE>
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SOLICITATION OF PROXIES
IN CONNECTION WITH A
SPECIAL MEETING OF STOCKHOLDERS
OF
REXENE CORPORATION
----------------
PROXY 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 Proxy Statement and the accompanying GOLD proxy card are 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 proxies from holders of the
Common Stock by Guy P. Wyser-Pratte ("Wyser-Pratte"), Wyser-Pratte & Co., Inc.
("WPC"), and Spear, Leeds & Kellogg ("Spear, Leeds," and together with
Wyser-Pratte and WPC, the "Soliciting Group") to be used at a special meeting of
the Company's stockholders, and any adjournments and postponements thereof (the
"Special Meeting"), that has been called 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." The
Special Meeting will be held at the offices of The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801 at 11:00 a.m. (or at such other
time and location as set forth in the Company's Notice of Special Meeting),
local time, on Wednesday, April 30, 1997. This Proxy Statement and the
accompanying GOLD proxy card are first being sent to stockholders of the Company
on or about April 4, 1997.
REASONS FOR THE SOLICITATION
During July and August of 1996 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 Huntsman's 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 joint Schedule 13D (the "Schedule 13D") relating to its
stock ownership in the Company.
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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 several occasions since October 29, 1996, Huntsman expressed its
continuing interest in acquiring the Company, most recently on March 17, 1997.
On that day, "Dow Jones News" reported that Huntsman had reaffirmed its interest
in acquiring Rexene at $16 per share. According to the article, a Huntsman
spokesman said that Huntsman could close on its offer in 90 days and that
Huntsman's previous 25 acquisitions had closed on time, with "no difficulty" in
funding any of those transactions.
The Company has declared in its Preliminary Proxy Statement filed with
the Securities and Exchange Commission (the "SEC") on March 25, 1997
(the "Rexene Prelimiary Proxy Statement") that, "Although the Board would
not oppose a fully-financed offer to acquire the Company at $16 a share, the
Board does not believe it currently is the optimal time to sell or auction a
petrochemical and polymer company like Rexene because current stock market
prices for Rexene and other companies in these industries are depressed and
fail to reflect their expected long-term value." Based on this and other
similar statements made in the past 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 Soliciting Group now solicits your proxies 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 eleven 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 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 invite Mr. Andrew J. Smith to remain as Chief
Executive Officer and to be reinstated as a director of the Company
and add Mr. Werner F. Goeckel to the Board. Under Section 223 of
the Delaware General Corporation Law, vacancies on the Board may be
filled by a majority of the directors then in office, although less
than a quorum. The Nominees and Mr. Goeckel (the "New Directors")
would then cause the Board to adopt a resolution reducing the size
of the Board from eleven to five directors (or six directors if
Mr. Smith accepted the Board's invitation). The New Directors 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 on acceptable terms. The Nominees are Jonathan R. Macey,
Robert C. Mauch, Lawrence C. McQuade and James S. Pasman, Jr.
Biographical information on each of the Nominees and Mr. Goeckel is
set forth under the captions "Special Meeting Proposals -- The
Nominees" and "-Additional New Director."
. Another group of proposals (the "By-laws Proposals"), being
proposed for adoption by the shareholders in advance of the Director
Replacement Proposals, are intended to facilitate
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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 consist of three sets of resolutions:
. a set of resolutions 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 Resolutions");
. 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
Section 203 of the Delaware General Corporation Law (the "Business
Combination Statute Resolution").
In addition, 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 Resolutions;
3. The Shareholder Rights Resolution;
4. The Business Combination Statute Resolution;
5. The Director Removal Resolution;
6. The Election of Directors Resolution; and
7. The Stock Repurchase Program Resolution.
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STOCKHOLDERS ENTITLED TO EXECUTE PROXIES AND
EFFECT OF EXECUTION AND DELIVERY OF PROXIES
The Board has purported to fix April 18, 1997 as the record date for
determining stockholders entitled to notice of, or to vote at, the Special
Meeting (the "Record Date"). The Soliciting Group believes that the selection of
April 18 as the Record Date is a highly unusual and inequitable action on the
part of the Board designed to preserve their positions by impairing the ability
of the Rexene stockholders who oppose the Board to vote against them. The
Soliciting Group has brought an action in Delaware Chancery Court seeking a
court order requiring the Company to set a record date no later than April 1,
1997. The Court has granted the defendants' motion to dismiss the action, and
the Soliciting Group has appealed the court's decision. See "Background and
Recent Events."
Votes cast by proxy or in person at the Special Meeting will be
tabulated by the inspector of elections appointed for the meeting who will also
determine whether a quorum is present for the transaction of business. According
to publicly available information, a quorum is present if the holders of a
majority of the issued and outstanding stock of the Company entitled to vote at
the meeting are present in person or represented by proxy. Based on publicly
available information, the Soliciting Group believes that (i) the adoption of
(A) the Omnibus Resolution, (B) the Facilitating By-laws Resolutions, (C) the
Shareholder Rights Resolution and (D) the Stock Repurchase Program Resolution
will require the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote on the subject
matter; (ii) the adoption of (A) the Business Combination Statute Resolution and
(B) the Director Removal Resolution will require the approval of a majority of
the outstanding shares of Common Stock, as of the Record Date; and (iii) the
adoption of the Election of Directors Resolution (assuming that the Facilitating
By-laws Resolutions are approved) will require the affirmative vote of a
majority of the shares of Common Stock present in person or represented by
proxy, in each case assuming a quorum is present. Abstentions and broker
"nonvotes" will be counted as present and entitled to vote in determining
whether a quorum is present. A broker "nonvote" occurs when a broker holding
shares for a beneficial owner votes on one proposal pursuant to discretionary
authority or instructions from the beneficial owner, but does not vote on
another proposal because the broker has not received instructions from the
beneficial owner and does not have discretionary power. An abstention from
voting by a stockholder on any of the proposals has the same effect as a vote
"against" such proposal. Broker nonvotes will not be treated as entitled to vote
on the Omnibus Resolution, the Facilitating By-laws Resolutions, the
Shareholders Rights Resolution and the Stock Repurchase Program Resolution and,
therefore, will have no effect on whether those resolutions have been approved.
Broker nonvotes will have the same effect as votes "against" the Business
Combination Statute Resolution, the Director Removal Resolution and the Election
of Directors Resolution (assuming that the Facilitating By-laws Resolutions are
approved).
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 a
proxy for such shares and will do so only upon receipt of your specific
instructions. Accordingly, you are asked to contact the person responsible for
your account and instruct that person to execute the GOLD proxy card.
PLEASE SUPPORT OUR EFFORTS TO REFORM THE COMPANY'S CORPORATE GOVERNANCE
SYSTEM AND TO MAXIMIZE SHAREHOLDER VALUE. YOU ARE URGED TO VOTE IN FAVOR OF
EACH OF THE SOLICITING GROUP'S PROPOSALS BY PROMPTLY SIGNING, DATING AND MAILING
THE GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
ONLY YOUR LATEST-DATED PROXY WILL COUNT AT THE SPECIAL MEETING,
THEREFORE, DO NOT SIGN ANY PROXY THAT MANAGEMENT MAY DELIVER TO YOU.
If you have any questions concerning this Proxy Statement or need
assistance in voting your Common Stock, feel free to call our proxy solicitor,
MacKenzie Partners, Inc. ("MacKenzie Partners"), toll-free at (800) 322-2885 or
Eric Longmire, Senior Managing Director of WPC, at (212) 495-5357.
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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 release 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 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 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
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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 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 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
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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 product 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
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
7
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"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.
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
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<PAGE>
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."
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
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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 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
10
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<PAGE>
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.
That the Rexene Board of Directors has maintained an open
attitude should be obvious as we have maintained a dialogue with you.
But, you should appreciate that we will only deal with someone
interested in presenting a proposal to maximize Rexene stockholder
value. Thus, our Board only will proceed on the basis of a negotiated
agreement that provides 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. Your proposal falls far short of this objective.
Very truly yours,
A.J. SMITH
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.
However, there is no assurance that Huntsman will make another offer to acquire
the Company.
According to the Company, "On December 23, 1996, the Board met again and
confirmed its position that although it believes a $16 per share price does not
fully reflect the long-term prospects of the Company, at this time the Board
would not oppose a fully-financed cash offer to acquire all of the outstanding
Common Stock on customary terms at $16 per share, as long as the offer is
capable of being consummated through a tender offer or otherwise within 60 days.
If such an offer were made, the Board would take all actions necessary to make
the Company's stockholder rights plan (the so-called `poison pill') inapplicable
to such an offer."
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On January 22, 1997, the Soliciting Group filed its definitive
Solicitation Statement (the "Solicitation Statement") with the SEC and began to
mail the Solicitation Statement to Rexene's stockholders, seeking Agent
Designations from stockholders representing a majority of the outstanding Common
Stock authorizing the call of the Special Meeting. The Soliciting Group set
February 14, 1997 as the target date for the receipt of the requisite Agent
Designations to call the Special Meeting.
On January 27, 1997, the Company filed the Revocation Solicitation
Statement with the SEC and began mailing it to the Company's stockholders.
On February 14, 1997, the Soliciting Group delivered executed Agent
Designations from the requisite majority of the Company's outstanding Common
Stock to the Company's registered agent in Delaware, The Corporation Trust
Company, and called the Special Meeting for Wednesday, April 30, 1997 at 11:00
a.m., local time, at the offices of The Corporation Trust Company, 1209 Orange
Street, Wilmington, Delaware 19801 for the purpose of considering the Special
Meeting Proposals.
On February 14, 1997, the Soliciting Group also filed an action in the
Court of Chancery of the State of Delaware in and for New Castle County titled
Wyser-Pratte et al. v. Rexene Corporation, Civil Action No. 15545-NC (the
"Litigation"). The Soliciting Group asked the Court to declare that the
Soliciting Group had the power to, and did in fact, call a Special Meeting of
Rexene's shareholders for April 30, 1997.
On February 28, 1997, after requesting that the Court stay all
proceedings in the Litigation while it reviewed the Agent Designations, Rexene
conceded that the Soliciting Group had properly called a Special Meeting for
April 30, 1997 and announced that a Special Meeting would take place on that
date. At the same time, the Board set a record date for the Special Meeting of
April 18, 1997.
On March 3, 1997, the Soliciting Group amended its complaint in the
Litigation, adding the members of Rexene's board of directors as defendants,
seeking a court order requiring the Company to set a record date no later than
April 1, 1997 and asserting that the defendants' selection of a record date
that was only twelve calendar days and eight business days prior to the Special
Meeting was designed to preserve their positions by impairing the ability of the
Rexene stockholders who oppose the Board to vote against them. The amended
complaint alleged that many of Rexene's stockholders would be denied an
opportunity to vote at the Special Meeting due to the short period between the
record date and the date of the Special Meeting. The amended complaint also
alleged that since the Soliciting Group must receive a majority of all
outstanding shares in order to replace the directors, any share that could not
be voted at the Special Meeting would, in effect, be counted as a vote for the
current Board. The Soliciting Group alleged that the late record date was
selected in an attempt to fix the upcoming election.
On March 7, 1997, the defendants moved to dismiss the Litigation for
failure to state a cause of action upon which relief may be granted, asserting
that the late record date was selected in order to enfranchise shareholders who
purchased shares up to and including April 18, 1997.
According to the Company's Preliminary Proxy Statement:
Following the publication in late 1996 and early 1997 of the
Board's position relating to bona fide proposals to acquire the
Company at $16 per share, the Company was contacted by four parties
that previously had not held discussions with the Company and who
expressed an interest in exploring a possible acquisition of the
Company. Two of such parties executed a confidentiality/standstill
agreement with the Company for the purpose of conducting a due
diligence review of the Company. No such party subsequently made a
proposal to acquire all of the outstanding shares of Common Stock.
On March 17, 1997, "Dow Jones News" reported that Huntsman had
reaffirmed its interest in acquiring Rexene at $16 a share. According to the
article, a Huntsman spokesman said that Huntsman could close on its offer in 90
days. The spokesman also pointed out that Huntsman had closed on its previous 25
acquisitions with "no difficulty" in funding those acquisitions and that if
Rexene had accepted either of Huntsman's earlier offers at $16 a share, "the
deal would have been closed long ago and the shareholders would have their
money."
On March 18, the Court granted defendants' motion to dismiss on the
basis that the Soliciting Group failed to allege sufficient facts to support its
allegations of inequitable conduct. The Soliciting Group believes that the
amended complaint properly states a cause of action pursuant to Delaware law,
and has appealed the Court's decision.
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On March 19, 1997 the Company announced that the Board had elected
Messrs. Stephen C. Swid and Richard C. Perry to fill two newly created vacancies
on the Board and had instituted a stock repurchase program (the "Stock
Repurchase Program").
According to the Company's Preliminary Proxy Statement:
Following the meeting of the Rexene Board of Directors held on
March 19, 1997, Arthur L. Goeschel resigned as a Rexene director. The
stated reason for the resignation was Mr. Goeschel's opposition to
the Stock Repurchase Program, which Mr. Goeschel believes was
implemented for the purpose of purchasing shares held by stockholders
who would support the removal of Rexene's current directors at the
Special Meeting. Mr. Goeschel also expressed his opposition to
borrowing funds for the purpose of financing repurchases under the
program because of his personal views regarding the danger of
leverage.
YOU HAVE A SAY IN THE FUTURE OF YOUR INVESTMENT
EXERCISE THAT RIGHT AND VOTE FOR THE NOMINEES
AND THE OTHER SPECIAL MEETING PROPOSALS
SPECIAL MEETING PROPOSALS
DIRECTOR REPLACEMENT PROPOSALS
1. DIRECTOR REMOVAL RESOLUTION
(ITEM 1 ON PROXY CARD)
SHAREHOLDERS ARE ASKED TO CONSIDER AND VOTE UPON THE DIRECTOR REMOVAL
RESOLUTION:
"RESOLVED, that all of the directors of the Company, including, without
limitation, any such directors purportedly elected at this Special Meeting, be,
and hereby are, removed from the Board of Directors, effective immediately;
provided, however, that if, notwithstanding the Omnibus Resolution, any nominees
of the Soliciting Group have been elected to the Board prior to the time this
Resolution is adopted, such nominees of the Soliciting Group shall not be
removed from the Board (capitalized terms have the meanings set forth in the
Proxy Statement of the Soliciting Group)."
2. ELECTION OF DIRECTORS RESOLUTION
(ITEM 2 ON PROXY CARD)
SHAREHOLDERS ARE ASKED TO CONSIDER AND VOTE UPON THE ELECTION OF
DIRECTORS RESOLUTION:
"RESOLVED, that the shareholders of Rexene Corporation (the "Company")
hereby elect Jonathan R. Macey, Robert C. Mauch, Lawrence C. McQuade and James
S. Pasman, Jr. as directors of the Company, and elect Mr. McQuade Chairman of
the Board, in each case to hold such office until each of their successors has
been elected and qualified or until their earlier resignation or removal."
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." The Rexene Preliminary Proxy Statement states,
"Although the Board would not oppose a fully-financed offer to acquire the
Company at $16 a share, the Board does not believe it currently is the optimal
time to sell or auction a petrochemical and polymer company like Rexene because
current stock market prices for Rexene and other companies in these industries
are depressed and fail to reflect their expected long-term value."
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Given this attitude, the Soliciting Group believes that management and the Board
are likely to respond to offers that reflect the Company's current value in the
acquisition market by either rejecting such offers or imposing unrealistic
conditions as they did in response to Huntsman's $16 per share acquisition
proposal. 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
Rexene Preliminary Proxy Statement, that it is not currently "the optimal time
to sell or auction a petrochemical and polymer company like Rexene, because
current stock market prices for Rexene and other 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 the industry's 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 is
submitting 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 is requesting
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 Resolutions 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 SEVEN 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 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. It is anticipated that the Nominees would also add Mr. Werner F.
Goeckel to the
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Board. The New Directors would then cause the Board to adopt a resolution
reducing the size of the Board from eleven to five directors (or six directors
if Mr. Smith accepted the Board's invitation to remain Chief Executive Officer
and a director).
It is anticipated that the New Directors 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 New Directors and the stockholders find advantageous, the New
Directors would explore other means of maximizing the current value of the
Common Stock.
The Soliciting Group proposes the election of the following Nominees to
the Board.
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
Cornell Law School White Professor of Law and the
306 Myron Taylor Hall Director of the John M. Olin
Ithaca, New York 14853 Program in Law and Economics
at Cornell Law School,
specializing in corporation
law, comparative corporate
governance, banking and
corporate finance. From late
1993 through mid-1994,
Professor Macey was a Research
Fellow 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.................. 57 From 1978 through 1996, Mr. Mauch
127 West Devon Drive was employed by AmeriGas, Inc.
Exton, Pennsylvania 19341 ("AmeriGas"), a retail propane
marketer/distributor, and/or
several 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
Qualitas International as a Rhodes Scholar. From 1963
125 East 72nd Street to 1969, he was the Assistant
New York, New York 10021 Secretary for Domestic and
International Business for the
U.S. Department of Commerce.
From 1969 to 1975, 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 director of
KaiserTech Limited
("KaiserTech") and Kaiser
Aluminum & Chemical Corporation
("Kaiser Aluminum").
</TABLE>
15
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Name and Address Age Present Principal Occupation and
Employment History; Directorships
<S> <C> <C>
James S. Pasman, Jr.............. 66 Mr. Pasman was with Aluminum
29 The Trillium Company of America from 1972 to
Pittsburgh, Pennsylvania 15238 1985, serving as Vice Chairman
and a director (1982-1985),
Executive Vice
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.
ADDITIONAL NEW DIRECTOR
Werner F. Goeckel 55 Since February 1996, Mr. Goeckel
Innoflex, Inc. has been a principal in
3000 Old Alabama Road Innoflex, Inc., a company
Suite 119-255 that markets re-closures for
Alpharetta, Georgia 30202 flexible packaging. From March
1991 to February 1996, Mr.
Goeckel was with Atlantis
Plastics Inc. ("Atlantis"),
serving as the Vice President
of Marketing and Sales for
Linear Films (March 1991 to
January 1993), President of
Atlantis Plastic Films (January
1993 to March 1995) and
Executive Vice President of
Atlantis and General Manager of
the Customs Films Division
(March 1995 to February 1996).
From November 1988 to March
1991, Mr. Goeckel was the
Executive Vice President and
Chief Operating Officer of
Flexel, Inc. Mr. Goeckel was
with Rexene Corporation (then
known as El Paso Products Co.)
from August 1975 to November
1988, serving as a Market
Development Manager
(1975-1976), Northeast Regional
Sales Manager (1976-1980), Vice
President of Marketing and
Sales (1980-1982), Vice
President of Manufacturing and
Engineering of the CT Films
Division (1982-1984), and
Senior Vice President of Rexene
and President of the CT Films
Division (1984-1988).
</TABLE>
Each of the Nominees and Mr. Goeckel has entered into an agreement with
WPC and Spear, Leeds whereby WPC and Spear, Leeds have agreed to pay each
Nominee and Mr. Goeckel a fee of between $10,000 and $15,000 (the specific
amount to be in the sole discretion of WPC and Spear, Leeds) in the event that
he does not become a director of Rexene. Additionally, WPC and Spear, Leeds have
agreed to (i) reimburse each Nominee and Mr. Goeckel for any reasonable
out-of-pocket expenses incurred in the performance of his service prior to
becoming a director of the Company and (ii) indemnify each Nominee and Mr.
Goeckel with respect to any liabilities relating to or arising out of such
service. Messrs. McQuade and Goeckel own beneficially 2,000 and 4,200 shares of
Common Stock, respectively.
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
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"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.
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 March 31, 1997, the closing
price of the Senior Notes was $104 7/8.
According to the Rexene Preliminary Proxy Statement, the aggregate
indebtedness under the Credit Agreement and the Senior Notes is currently
approximately $283 million.
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 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 March 31, 1997 was
$104 7/8 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.
STOCK OPTION PLANS. The following information is based on the Rexene
Preliminary Proxy Statement:
Certain executive officers of the Company have been granted options
to purchase shares of Common Stock pursuant to the terms of the Rexene
Corporation 1994 Long-Term Incentive Plan (the "1994 Incentive Plan").
Pursuant to the terms of the 1994 Incentive Plan, the Compensation
Committee of the Board may, in its sole discretion, in connection with a
Change of Control (as defined in the 1994 Incentive Plan), (i)
accelerate the time at which such options may be exercised so that such
options may be exercised in full for a limited period of time on or
before a specified date, (ii) require the mandatory surrender to the
Company of some or all of such options (whether or not such options are
then exercisable under the 1994 Incentive Plan) in exchange for an
amount of cash per share of Common Stock subject to such options equal to
the excess, if any, of the Change of Control Value (as defined in the
1994 Incentive Plan) of the Common Stock over the per share exercise
price(s) under such options for such shares, (iii) make such adjustments
to such options as it deems appropriate to reflect such Change of Control
or (iv) provide that, after the Change of Control, upon any exercise of
an option the
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holder shall be entitled to purchase under such option the number of
shares of stock or other securities to which the holder would have been
entitled pursuant to the terms of the transaction constituting the
Change of Control if, immediately prior to such transaction, the holder
had been the holder of the number of shares of Common Stock then covered
by such option. Adoption of the Director Replacement Proposals would
constitute a Change of Control under the 1994 Incentive Plan.
Certain executive officers of the Company have been granted options
to purchase shares of Common Stock pursuant to the terms of the Rexene
Corporation 1993 Non-Qualified Stock Option Plan (the "1993 Non-
Qualified Option Plan"). Pursuant to the terms of the 1993 Non-Qualified
Option Plan, if the employment with the Company or any of its
subsidiaries of a holder of such options is terminated without cause
after a Change of Control (as defined in the 1993 Non-Qualified Option
Plan), or if such holder voluntarily resigns his or her employment with
the Company or any of its subsidiaries after such a Change of Control
because as a condition to such employment such holder would be required
to relocate outside the continental United States or within the
continental United States without assistance equal to that provided under
Rexene's standard relocation policy or accept a reduction in base
salary, then such holder's options shall become fully exercisable.
Adoption of the Director Replacement Proposals would constitute a Change
of Control under the 1993 Non-Qualified Option Plan.
TERMINATION AGREEMENTS. The following information is based on the Rexene
Preliminary Proxy Statement:
Mr. Smith, Lavon N. Anderson, President and Chief Operating Officer
and a director of the Company, Geff F. Perera, Executive Vice President
and Chief Financial Officer of the Company, Jack E. Knott, Executive
Vice President of the Company and President of Rexene Products and a
director of the Company, James M. Ruberto, Executive Vice President -
Administration of the Company, Jonathan R. Wheeler, Executive Vice
President of the Company and President of CT Film, a division of the
Company, and Bernard J. McNamee, Executive Vice President, Secretary
and General Counsel of the Company, are each parties to termination
agreements entered into in 1996. Each termination agreement provides that
in the event the employee is terminated without cause (as defined in
the agreement) within three years after a change in control (as defined
in the agreement) of Rexene or if the employee voluntarily resigns his
employment with Rexene because as a condition to continued employment
with Rexene such employee is required to relocate outside the continental
United States or within the continental United States without assistance
equal to that provided under Rexene's standard relocation policy,
accept a reduction in base salary or accept a position of lesser
responsibility, Rexene is obligated to pay the employee within ten
business days after the effective date of such termination, a lump
sum cash severance equal to three times his then current annual base
salary less $1.00. Additionally, in the event such employee voluntarily
resigns because he is required to locate within the continental
United States after a change in control even though he is offered
assistance equal to that provided under the Company's standard location
policy, such employee is entitled to receive a lump sum cash severance
amount equal to 18 months of such employee's then current base salary.
Adoption of the Director Replacement Proposals would constitute a change
in control under the termination agreements.
STOCKHOLDERS' ADVISORY COMMITTEE. Additionally, it is anticipated that,
the New Directors 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)
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<PAGE>
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 SEC 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 of the Delaware General Corporation Law to manage the business and
affairs of the Company.
IN ORDER TO GIVE SHAREHOLDERS A GREATER VOICE IN THE GOVERNANCE OF THE
COMPANY AND TO ACHIEVE A BOARD COMMITTED TO THE GOAL OF MAXIMIZING SHAREHOLDER
VALUE, THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE FOR THE DIRECTOR REMOVAL
AND ELECTION OF DIRECTORS RESOLUTIONS.
BY-LAWS PROPOSALS
3. PROPOSAL TO AMEND THE BY-LAWS TO FACILITATE DIRECTOR
REPLACEMENT PROPOSALS RESOLUTIONS
(ITEM 3 ON PROXY CARD)
SHAREHOLDERS ARE ASKED TO CONSIDER AND VOTE UPON THE PROPOSAL TO AMEND
THE BY-LAWS TO FACILITATE DIRECTOR REPLACEMENT PROPOSALS RESOLUTIONS:
RESOLUTIONS CLARIFYING STOCKHOLDERS' RIGHTS TO FILL BOARD VACANCIES AND
ELIMINATING ADVANCE NOTIFICATION REQUIREMENT FOR STOCKHOLDER NOMINATIONS
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 2.5(b) of the By-laws in its entirety and replacing therewith the
following:
`(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be conducted at
a special meeting of stockholders as shall have been brought before the meeting
pursuant to the Corporation's notice of meeting. 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) by
any stockholder of the Corporation who shall be entitled to vote at the
meeting.' "
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<PAGE>
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 3.4 of the By-laws in its entirety and replacing therewith the
following:
`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 vote of the majority of the remaining directors, although less
than a quorum, or by the affirmative vote of a majority of the shares present in
person or represented by proxy at a stockholders meeting, or by written consent
of stockholders' "
RESOLUTIONS FACILITATING REDUCTION IN THE SIZE OF THE BOARD
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 3.9 of the By-laws in its entirety and replacing therewith the
following:
`3.9 QUORUM AND MANNER OF ACTING. Except as otherwise provided in the these
Bylaws, the Certificate of Incorporation, or by law, the presence of two-fifths
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. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of directors, provided any action taken is approved by at least a
majority of the required quorum for such meeting. In the absence of a quorum, a
majority of directors present at any meeting may adjourn the same from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given. The directors shall act only as a Board, and the individual directors
shall have no power as such.' "
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 4.1(a) of the By-laws in its entirety and replacing therewith the
following:
`(a) The officers of the Corporation shall be a Chairman of the Board, Chief
Executive Officer, a President, one or more Vice Presidents (the number thereof
and their respective titles to be determined by the Board), a Secretary and a
Treasurer, and such other officers as may be appointed at the discretion of the
Board in accordance with the provisions of Section 4.1(b).' "
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 4.2 of the By-laws in its entirety and replacing therewith the
following:
`4.2 ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers of the
Corporation shall be appointed annually by the Board at the first meeting
thereof held after the election of the Board; provided, however, that if there
is a vacancy in the office of Chairman of the Board of Directors, such vacancy
may be filled by either the Board of Directors or the stockholders by the vote
required to fill vacancies on the Board of Directors. Each officer shall hold
office until such officer shall resign or shall be removed or otherwise
disqualified to serve, or the officer's successor shall be appointed and
qualified.' "
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 4.6 of the By-laws in its entirety and replacing therewith the
following:
`4.6 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside as chairman
at all meetings of the stockholders and the Board, unless a chairman of such
meeting or meetings shall be
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otherwise appointed and given such duties by the Board. The Chairman of the
Board shall perform all duties incident to the office of the Chairman of the
Board and such other duties as may from time to time be assigned to such person
by the Board.' "
"RESOLVED, that pursuant to Section 7.3 of the By-laws of the Company,
any and all amendments, to the By-laws adopted by the Board since October 1,
1996 through the date hereof, are hereby repealed, effective immediately
(capitalized terms have the meanings set forth in the Proxy Statement of the
Soliciting Group)."
The stockholders must amend the By-laws to resolve ambiguities in
order to adopt all of the Director Replacement Proposals. The Soliciting Group
is making a single proposal containing six By-laws amendments described in
this section of the Proxy Statement. If this proposal is not adopted by
stockholders, it will not be possible to implement the Director Replacement
Proposals.
CLARIFYING STOCKHOLDER'S 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.,
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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.
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
eleven 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 is proposing that the stockholders
remove all of the eleven members of the Board and fill four of the resulting
vacancies, while leaving the other seven Board positions vacant. It is
anticipated that the four directors then in office would add Mr. Goeckel to
the Board and cause the Board to reduce the total number of directors to five
(or six, if Mr. Smith accepts an invitation from the Board to remain Chief
Executive Officer and a director). See "Director Replacement Proposals."
The Soliciting Group is proposing 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
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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
eleven. After the shareholders have removed all of the current
directors and filled four of the resulting vacancies with the
Nominees and the Nominees have added Mr. Goeckel to the Board, the
five 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 is proposing 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 is proposing 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 is also proposing the repeal of any
By-laws adopted by the Board since October 1, 1996 so that the Board
can not use new By-laws to prevent the stockholders from
accomplishing the objectives described in this Proxy Statement.
IN ORDER TO GIVE SHAREHOLDERS A GREATER VOICE IN THE GOVERNANCE OF THE
COMPANY AND TO ACHIEVE A BOARD COMMITTED TO THE GOAL OF MAXIMIZING SHAREHOLDER
VALUE, THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND
THE BY-LAWS TO FACILITATE DIRECTOR REPLACEMENT PROPOSALS RESOLUTIONS.
4. PROPOSAL TO AMEND THE BY-LAWS TO SET A TIME LIMIT ON CERTAIN
DEFENSIVE ACTIONS UNLESS APPROVED BY SHAREHOLDERS
(ITEM 4 ON PROXY CARD)
SHAREHOLDERS ARE ASKED TO CONSIDER AND VOTE UPON THE PROPOSAL TO AMEND
THE BY-LAWS TO SET A TIME LIMIT ON CERTAIN DEFENSIVE ACTIONS UNLESS APPROVED BY
SHAREHOLDERS:
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by deleting
Section 7.3 of the By-laws in its entirety and replacing therewith the
following:
`7.3 AMENDMENTS. Except with respect to Section 7.5, in which case the
specific provisions thereof shall apply, (a) these Bylaws, or any of them, may
be altered, amended or repealed, and new Bylaws may be made, (i) by the Board,
by a vote of a majority of the number of directors then in office, or (ii) by
the stockholders and (b) any Bylaws made or altered by the stockholders may be
altered or repealed by either the Board or the stockholders.' "
"RESOLVED, that the Shareholders hereby amend the Company's By-laws by
adding a new Section 7.5, which shall read as follows:
`If an Offer is made to purchase all of the Common Stock and the Board
of Directors opposes such Offer, the Board of Directors shall terminate all
defensive measures against such Offer at the end of the ninetieth day after such
Offer is first published or sent to security holders unless the Board of
Directors' policy of opposition to such Offer is approved by a vote of a
majority of the shares of Common Stock present and entitled to vote on the
subject matter at a meeting of shareholders which is held on or before such
ninetieth day and at which a quorum is present; provided, however, that the
Board of Directors shall not be required to terminate defensive measures against
such Offer at the end of such
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ninetieth day unless at such time such Offer has an expiration date which is at
least ten business days thereafter. Notwithstanding anything to the contrary
contained in Section 2.4 of the by-laws, if the Offer is to be effected by a
tender offer, unless the record date for such shareholders meeting was set prior
to the date on which such Offer was first published or sent to security holders,
the record date for such meeting shall be at least five business days after the
date on which the Company files its statement of position with respect to such
offer in accordance with Rule 14e-2 of the Securities Exchange Act of 1934, as
amended. At such time as it is required, pursuant to the first sentence of this
by-law, to terminate defensive measures against such Offer, the Board of
Directors shall redeem the outstanding Rights under the Rights Agreement between
the Company and American Stock Transfer Company, as Rights Agent, or any
successor agreement. Prior to the end of such ninetieth day, unless the Board's
policy of opposition to such Offer has been approved by a shareholder vote as
provided in this by-law, the Board of Directors shall take such reasonable
actions as are necessary to preserve the possibility of satisfying the
conditions to such Offer after such ninetieth day. This Section 7.5 may be
amended, altered, repealed or rescinded ("Changed") (i) by the Board only if (A)
such Change is made at a meeting of the Board held in connection with an annual
meeting of stockholders, (B) there is public announcement at least ninety days
in advance of such annual meeting that the Board intends to make such Change and
(C) 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 or (ii) by a shareholder vote (and not by a vote of the Board)
pursuant to Section 7.3 of the By-laws. An "Offer" shall mean a fully financed
offer to purchase all the Company's outstanding shares of Common Stock for cash,
by means of a tender offer, merger or other transaction, at a price that
satisfies either of the following two requirements: (A) such price is at least
25% greater than the average closing price of such shares on the New York Stock
Exchange during the 30 days prior to the date on which such offer is first
published or sent to security holders or (B) a prior offer was made to purchase
all of the Common Stock during the twelve months preceding the date on which the
current offer is made, and the price in the current offer is at least equal to
the greater of (x) the closing price of the Common Stock on the New York Stock
Exchange on the trading date next preceding the day on which the current offer
is made and (y) the per share price of such prior offer.' "
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 price that satisfied either of
the following two requirements: (A) such price was at least 25% greater than the
average closing price of such shares on the New York Stock Exchange during the
30 days prior to the date on which such offer was first published or sent to
security holders ("Trigger Premium") or (B) a prior offer was made to purchase
all of the Common Stock during the twelve months preceding the date on which the
current offer was made, and the price in the current offer was at least equal to
the greater of (x) the closing price of the Common Stock on the New York Stock
Exchange on the trading date next preceding the day on which the current offer
was made and (y) 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
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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 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
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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 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 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.
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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. However, there is some support for the validity of the
Shareholder Rights By-law in a recent Oklahoma Federal Court decision involving
an Oklahoma corporation. The court required a corporation to include in its
proxy statement for its 1997 annual shareholders meeting a proposal to adopt a
by-law requiring the board of directors to redeem the existing poison pill and
to submit any successor poison pill to a shareholder vote. International
Brotherhood of Teamsters General Fund v. Fleming Companies, Inc., No.
Civ-96-1650-A (1997).
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 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
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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.
IN ORDER TO GIVE SHAREHOLDERS A GREATER VOICE IN THE GOVERNANCE OF THE COMPANY
AND TO ACHIEVE A BOARD COMMITTED TO THE GOAL OF MAXIMIZING SHAREHOLDER VALUE,
THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND THE
BY-LAWS TO SET A TIME LIMIT ON CERTAIN DEFENSIVE ACTIONS UNLESS APPROVED BY
SHAREHOLDERS.
5. PROPOSAL TO AMEND THE BY-LAWS TO ELECT NOT TO BE GOVERNED
BY THE BUSINESS COMBINATION STATUTE
(ITEM 5 ON PROXY CARD)
SHAREHOLDERS ARE ASKED TO CONSIDER AND VOTE UPON THE PROPOSAL TO AMEND
THE BY-LAWS TO ELECT NOT TO BE GOVERNED BY THE BUSINESS COMBINATION STATUTE:
"RESOLVED, that pursuant to Section 203(b)(3) of the Delaware General
Corporation Law, the Shareholders hereby amend the Company's By-laws by adding a
new section 7.6 which shall read as follows:
`The corporation shall not be governed by Section 203 of the Delaware
General Corporation Law.'"
The Soliciting Group is proposing that stockholders adopt an amendment
to the By-laws electing not to be governed by Section 203 of the Delaware
General Corporation Law ("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
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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 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.
6. OMNIBUS RESOLUTION
(ITEM 6 ON PROXY CARD)
SHAREHOLDERS ARE ASKED TO CONSIDER AND VOTE UPON THE OMNIBUS RESOLUTION:
"RESOLVED, that the resolutions to be considered at the Special Meeting
of Stockholders of Rexene Corporation to be held at the offices of The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 at
11:00 a.m., local time (or at such other time and location as set forth in the
Company's Notice of Special Meeting), on Wednesday, April 30, 1997 (the `Special
Meeting') shall be presented in the following order (capitalized terms have the
meanings set forth in the Proxy Statement of the Soliciting Group):
(1) This Omnibus Resolution
(2) The Facilitating By-laws Resolutions;
(3) The Shareholder Rights Resolution;
(4) The Business Combination Statute Resolution;
(5) The Director Removal Resolution;
(6) The Election of Directors Resolution; and
(7) The Stock Repurchase Program Resolution."
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IN ORDER TO GIVE SHAREHOLDERS A GREATER VOICE IN THE GOVERNANCE OF THE
COMPANY AND TO ACHIEVE A BOARD COMMITTED TO THE GOAL OF MAXIMIZING SHAREHOLDER
VALUE, THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE FOR THE OMNIBUS RESOLUTION.
7. STOCK REPURCHASE PROGRAM RESOLUTION
(ITEM 7 ON PROXY CARD)
Shareholders are asked to consider and vote upon the Stock Repurchase
Program Resolution:
"RESOLVED, that the Rexene Board of Directors hereby is authorized to
cause the repurchase by the Company of up to $50 million of the Common Stock,
either through a continuation of and increase in the Company's current open
market repurchase program, privately negotiated transactions, tender offer or
otherwise."
The Company's Preliminary Proxy Statement states:
In the Board's view, the Company's Stock Repurchase
Program, especially when coupled with the Company's capital
expenditure and improvement programs, is a valuable tool to build
stockholder value. On March 19, 1997, the Rexene directors approved
the $85 million Stock Repurchase Program. The first $35 million
part of the program has been commenced pursuant to open market
purchases.
The Company's Preliminary Proxy Statement further states:
If the Stock Repurchase [Program Resolution] is adopted by
the Company's stockholders, the Company currently intends to
promptly proceed with the issuance
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of a new series of preferred stock of the Company with an aggregate
liquidation value of $50 million (the "Preferred Stock"). The
Preferred Stock will be issued by the Company in a private
placement to certain "qualified institutional buyers" (as such term
is defined in Rule 144A promulgated under the Securities Act of
1933, as amended (the "Securities Act")) and certain other
institutional accredited investors. The sale of the Preferred Stock
will not be registered under the Securities Act and the Preferred
Stock may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the Securities Act. Set forth below is a brief
summary of the anticipated terms of the Preferred Stock. The
Company, after discussions with its financial advisors, believes
it should be successful in issuing the Preferred Stock.
Stockholders should note that the final terms of the Preferred
Stock, if issued, could vary from those set forth below.
Dividends on the Preferred Stock will be payable quarterly
out of funds legally available at a dividend rate to be agreed upon
by Rexene and the initial purchasers of the Preferred Stock (the
"Initial Purchasers"). The Preferred Stock will rank senior to the
Common Stock as to dividends and upon liquidation. The Preferred
Stock will not be redeemable prior to the fifth anniversary of the
date of issuance. Thereafter, the Preferred Stock will be redeemable
at the option of the Company for cash at redemption prices to be
agreed upon by Rexene and the Initial Purchasers. In addition, in
the event of a sale by the Company of shares of Common Stock, shares
of Preferred Stock with an aggregate liquidation value of up to
$17.5 million will be redeemable at the option of the Company for
cash at a redemption price to be agreed upon by Rexene and the
Initial Purchasers. The Preferred Stock will be mandatorily
redeemable by Rexene on the tenth anniversary of the date of
issuance. The holders of the Preferred Stock will not have voting
rights, except in limited circumstances or as required by law. The
terms of the Preferred Stock may include certain of the covenants
included in the Senior Notes Indenture. Upon a change of control of
the Company, (i) the holders of the Preferred Stock will be entitled
to elect two persons to the Board, (ii) the dividend rate on the
Preferred Stock will be increased by an amount to be agreed upon by
Rexene and the Initial Purchasers and (iii) provided that the terms
of the Company's outstanding indebtedness at the time of such change
of control do not prevent such a repurchase, each holder of
Preferred Stock will have the right to require the Company to
repurchase all or a portion of the Preferred Stock owned by such
holder at a redemption price equal to 101% of the liquidation value
of such Preferred Stock.
According to the Company's Preliminary Proxy Statement:
The Rexene Board authorized the Stock Repurchase Program as a
result of the requests of many of the Company's stockholders as
expressed to Rexene management and directors in recent months and
because the Rexene directors feel that the program compliments (sic)
the Company's capital and improvement programs and will build
stockholder value. The first part of the program, which is limited
to purchases of up to $35 million, will be conducted as an open
market purchase program in accordance with rules and regulations
promulgated by the SEC. The program will not discriminate among
stockholders and will be open to all
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stockholders who desire to sell their shares at current market
prices. In fact, the Stock Repurchase Program will have the effect
of reducing the number of affirmative votes that the Wyser-Pratte
Group will need to obtain at the Special Meeting to be successful in
removing Rexene's current directors. In addition, at current market
prices, the program should make Rexene a more attractive acquisition
candidate for an acquirer intending to pay $16 per share. Further,
as designed by the Board, the majority of repurchases pursuant to
the program will be made only if stockholders approve the Stock
Repurchase Proposal at the Special Meeting and, accordingly, could
not possibly have any impact on the vote at the Special Meeting. The
Company's financial advisors expressed to the Board their view that
the financing of the program would not negatively impact the
financial condition of the Company, a view which Mr. Goeschel agreed
with when discussed by the Board and its advisors.
According to the Company's Preliminary Proxy Statement:
Following the meeting of the Rexene Board of Directors held
on March 19, 1997, Arthur L. Goeschel resigned as a Rexene director.
The stated reason for the resignation was Mr. Goeschel's opposition
to the Stock Repurchase Program, which Mr. Goeschel believes was
implemented for the purpose of purchasing shares held by
stockholders who would support the removal of Rexene's current
directors at the Special Meeting. Mr. Goeschel also expressed his
opposition to borrowing funds for the purpose of financing
repurchases under the program because of his personal views
regarding the danger of leverage.
The Soliciting Group believes that if the Board adopted the Stock
Repurchase Program for the reasons put forth by Mr. Goeschel, the Board may have
breached its fiduciary duties to the Company's stockholders, as well as
committed federal securities laws violations. The Soliciting Group is currently
considering whether to pursue legal action against the Company and the Board in
connection with the adoption of the Stock Repurchase Program.
Additionally, there are very serious questions as to the effect the
Stock Repurchase Program and the issuance of $50 million of Preferred Stock
would have on the financial stability and viability of the Company in the
future. The Soliciting Group believes that the Board has not yet provided
shareholders with adequate information to allow them to properly evaluate the
Stock Repurchase Program Resolution.
The Soliciting Group believes that a sale of the Company is preferable
to the Stock Repurchase Program as a way of maximizing the current shareholder
value because stockholders could dispose of all their shares in a sale of the
Company and the price in a corporate sale is likely to be higher than in the
Stock Repurchase Program. See "Reasons for the Solicitation." The Soliciting
Group disagrees with the Company's statement that the Stock Repurchase Program
"should make Rexene a more attractive acquisition candidate for an acquirer
intending to pay $16 per share." The terms of the Preferred Stock would
discourage an acquirer from making an offer for the Company due to the fact the
Preferred Stock would not be redeemable for a period of five years and upon a
change of control the holders of the Preferred Stock would have the right to
name two directors to the Board and the dividend rate would be increased.
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THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE AGAINST THE STOCK
REPURCHASE PROGRAM RESOLUTION.
RECESS OR ADJOURNMENT OF MEETING AND OTHER MATTERS
The individuals named as proxies may 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 Special Meeting
Proposals or to allow the solicitation of additional votes, if necessary, to
approve the Special Meeting Proposals. Except for these ministerial matters, the
Soliciting Group believes that the proposals described in this proxy statement
are the only actions that can be validly taken at the Special Meeting. However,
if other matters do come before the Special Meeting, the Soliciting Group will
vote all proxies in accordance with their best judgment.
CERTAIN INFORMATION CONCERNING WYSER-PRATTE AND SPEAR, LEEDS 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 March 31, 1997, Wyser-Pratte owned
beneficially 1,369,700 shares of the Common Stock, representing approximately
7.28% 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, 122,000 shares of Common Stock, representing
approximately .65% 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 March 31, 1997, Spear, Leeds owned beneficially 1,114,100 shares of
the Common Stock, representing approximately 5.92% of the Outstanding Common
Stock. No officer of SLK Management owns any shares of Common Stock.
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 Proxy 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 Rexene Preliminary Proxy Statement for information regarding
Common Stock held by the Company's principal shareholders and its management.
GENERAL INFORMATION
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This Proxy Statement and the accompanying GOLD proxy card are first
being made available to shareholders on or about April 4, 1997. Executed proxies
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 to
solicit proxies to be used at 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 and the Soliciting Group's
earlier solicitation regarding the calling of the Special Meeting include
expenditures for printing, postage, legal and related expenses and are expected
to be approximately $500,000. The total costs incurred to date in connection
with the these solicitations are not in excess of $350,000. 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 PROXY
You may revoke your proxy 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
proxy is no longer effective. A proxy may also be revoked by notice given to the
Company in a meeting of the Company's stockholders. Any revocation of a proxy
will not effect any action taken pursuant to the proxy 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 A
PROXY WITH RESPECT TO YOUR COMMON STOCK. ACCORDINGLY, PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR A PROXY TO BE SIGNED
REPRESENTING YOUR SHARES OF COMMON STOCK.
IF YOU HAVE ANY QUESTIONS ABOUT GIVING YOUR PROXY 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.
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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
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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
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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.
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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;
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(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
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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>
SCHEDULE I
The following tables set forth information with respect to all purchases
and sales of Common Stock of the Company by Wyser-Pratte and his affiliates
during the past two years. Except as set forth in Schedules I, II and III, no
participant in this solicitation has purchased or sold securities of the Company
within the past two years.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Date Purchased/(Sold)
-----------------------------------------
<S> <C>
08-26-96 35,000
08-26-96 13,300
08-26-96 15,400
08-26-96 3,600
08-26-96 7,300
08-26-96 6,100
08-27-96 9,700
08-27-96 3,800
08-27-96 5,000
08-27-96 4,300
08-27-96 1,000
08-27-96 2,000
08-27-96 1,700
08-28-96 41,300
08-28-96 15,800
08-28-96 22,900
08-28-96 4,200
08-28-96 8,600
08-28-96 7,200
08-29-96 82,500
08-29-96 31,800
08-29-96 40,900
08-29-96 8,200
08-29-96 16,700
08-29-96 14,900
08-30-96 16,900
08-30-96 6,500
08-30-96 8,400
08-30-96 1,700
08-30-96 3,500
08-30-96 3,000
09-17-96 3,000
09-17-96 2,000
09-19-96 7,300
09-19-96 5,400
09-19-96 7,300
09-19-96 1,400
09-19-96 2,900
09-19-96 2,500
09-30-96 1,000
09-30-96 500
10-03-96 5,700
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Date Purchased/(Sold)
- -------------------------------------------
<S> <C>
10-03-96 25,600
10-03-96 62,500
10-03-96 16,000
10-03-96 9,200
10-03-96 2,000
10-03-96 2,700
10-03-96 600
10-03-96 6,500
10-03-96 11,200
10-03-96 1,100
10-03-96 5,100
10-03-96 5,000
10-03-96 800
10-03-96 4,000
10-03-96 (101,200)
10-04-96 38,600
10-04-96 13,800
10-04-96 3,900
10-04-96 7,800
10-04-96 5,900
10-07-96 7,500
10-08-96 7,000
10-08-96 400
10-08-96 2,800
10-08-96 800
10-08-96 1,700
10-08-96 1,200
10-09-96 9,000
10-09-96 10,800
10-09-96 4,500
10-09-96 2,500
10-09-96 2,000
10-09-96 2,900
10-09-96 1,000
10-09-96 3,000
10-10-96 5,400
10-11-96 26,800
10-14-96 6,300
10-15-96 10,000
10-15-96 19,500
10-21-96 20,000
10-23-96 25,000
10-24-96 25,000
10-25-96 124,400
10-28-96 30,300
03-06-97 (14,500)
03-11-97 621,100
03-13-97 (190,000)
</TABLE>
S-I-2
<PAGE>
<PAGE>
SCHEDULE II
The following tables set forth information with respect to all
purchases and sales of Common Stock of the Company by Spear, Leeds & Kellogg
and its affiliates during the past two years.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Date Purchased/(Sold)
-----------------------------------------
<S> <C>
12-12-95 6,000
12-12-95 (2,500)
12-12-95 (3,500)
03-07-96 2,100
03-08-96 15,000
03-08-96 5,000
03-13-96 (2,000)
03-13-96 (4,000)
03-13-96 (2,000)
03-14-96 (2,300)
03-14-96 (3,800)
03-14-96 (2,500)
03-14-96 (5,500)
04-16-96 5,000
04-17-96 2,500
04-23-96 3,000
04-24-96 2,500
05-03-96 2,000
05-21-96 (2,500)
05-22-96 (3,000)
05-30-96 (2,500)
05-31-96 (3,000)
06-04-96 (4,000)
07-23-96 10,000
07-23-96 10,000
07-23-96 10,000
07-23-96 10,000
07-23-96 10,000
07-23-96 10,000
07-23-96 10,000
07-23-96 10,000
07-24-96 10,000
07-24-96 10,000
07-25-96 (10,000)
07-30-96 10,000
07-30-96 25,000
08-02-96 (5,000)
08-02-96 (5,000)
08-02-96 (10,000)
08-02-96 (10,000)
08-02-96 (10,000)
08-06-96 (10,000)
08-07-96 10,000
08-09-96 10,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Date Purchased/(Sold)
- --------------------------------------------
<S> <C>
08-14-96 (30,000)
08-20-96 5,000
08-20-96 5,000
08-20-96 5,000
08-20-96 7,000
08-20-96 8,000
08-20-96 5,000
08-21-96 (5,000)
08-21-96 (8,000)
08-21-96 (5,000)
08-21-96 (18,000)
08-21-96 (10,000)
08-21-96 (15,000)
08-21-96 2,500
08-21-96 175,000
08-22-96 45,000
08-23-96 (11,000)
08-23-96 (10,000)
08-28-96 10,000
08-29-96 25,000
08-29-96 600
08-30-96 15,000
09-03-96 24,800
09-04-96 5,000
09-05-96 50,000
09-06-96 5,000
09-09-96 22,000
09-09-96 3,100
09-09-96 10,000
09-10-96 200
09-12-96 40,000
09-13-96 8,800
09-16-96 5,000
09-16-96 5,000
10-03-96 46,600
10-03-96 10,200
10-04-96 20,000
10-04-96 50,000
10-07-96 7,500
10-08-96 400
10-08-96 15,500
10-09-96 12,500
10-09-96 23,200
10-10-96 5,400
10-11-96 20,500
10-11-96 6,300
10-14-96 6,300
10-15-96 10,000
10-15-96 10,000
</TABLE>
S-II-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Date Purchase(Sold)
------------------------------------------------
<S> <C>
10-15-96 5,000
10-15-96 2,500
10-15-96 2,000
10-21-96 10,000
10-21-96 10,000
10-23-96 25,000
10-24-96 25,000
10-25-96 94,400
10-25-96 30,100
10-28-96 30,000
10-28-96 200
03-06-97 (14,500)
03-11-97 180,000
</TABLE>
S-II-3
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
SCHEDULE III
The following tables set forth information with respect to all
purchases and sales of Common Stock of the Company by Mr. Werner F. Goeckel and
the Soliciting Group's Nominees during the past two years.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Name Date Purchased/(Sold)
- --------------------------------------------------------------
<S> <C> <C>
Werner F. Goeckel 10-07-96 4,200
Lawrence C. McQuade 11-21-96 2,000
</TABLE>
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
GOLD PRO
REXENE CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1997
THIS PROXY IS SOLICITED BY GUY P. WYSER-PRATTE, WYSER-PRATTE & CO., INC.
AND SPEAR, LEEDS & KELLOGG (THE 'SOLICITING GROUP').
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 of the undersigned to vote all of the outstanding
Common Stock, par value $.01 per share (the 'Common Stock'), of Rexene
Corporation (the 'Company') that the undersigned is entitled to vote if
personally present at the Special Meeting of Stockholders of the Company to be
held April 30, 1997 (the 'Special Meeting'), or at any adjournment or
postponement of the Special Meeting, as follows on the following matters which
are described in the Proxy Statement (the 'Proxy Statement') of the Soliciting
Group, dated April 4, 1997, with all capitalized terms used herein without
definition having the meaning set forth therein.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER MARKED
HEREIN BY THE UNDERSIGNED. IF NO MARKING IS MADE AS TO ANY PROPOSAL OR ALL
PROPOSALS, THIS PROXY WILL VOTED 'FOR' EACH OF PROPOSALS 1 THROUGH 6, AND
'AGAINST' PROPOSAL 7 DESCRIBED ABOVE. THE UNDERSIGNED HEREBY ACKNOWLEDGES
RECEIPT OF THE PROXY STATEMENT OF THE SOLICITING GROUP DATED APRIL 4, 1997,
SOLICITING PROXIES FOR THE SPECIAL MEETING.
[Proxy Continued On Reverse]
</R
<PAGE>
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE PROVIDED
THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE "FOR" ITEMS 1-6.
1. DIRECTOR REMOVAL RESOLUTION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS RESOLUTION. Election of Jonathan R. Macey, Robert C.
Mauch, Lawrence C. McQuade and James S. Pasman, Jr. as directors whose terms
expire at the next Annual Meeting of Shareholders.
[ ] FOR all Nominees [ ] WITHHOLD AUTHORITY for all Nominees
INSTRUCTION: To withhold authority to vote for the election of one or more
of the persons nominated by the Soliciting Group, mark FOR all Nominees
and write the name(s) of the person(s) with respect to whom you wish to
withhold authority to vote below:
-------------------------------------------------------------
3. PROPOSAL TO AMEND THE BY-LAWS TO FACILITATE DIRECTOR
REPLACEMENT PROPOSALS RESOLUTIONS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO AMEND THE BY-LAWS TO SET A TIME LIMIT ON CERTAIN
DEFENSIVE ACTIONS UNLESS APPROVED BY SHAREHOLDERS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. PROPOSAL TO AMEND THE BY-LAWS TO ELECT NOT TO BE GOVERNED BY
THE BUSINESS COMBINATION STATUTE
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. OMNIBUS RESOLUTION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SOLICITING GROUP RECOMMENDS THAT YOU VOTE "AGAINST" ITEM 7.
7. STOCK REPURCHASE PROGRAM RESOLUTION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The above-named proxies of the undersigned are authorized to initiate
and vote for proposals to recess or adjourn the Special Meeting for any reason,
including to allow inspectors to certify the outcome of the Special Meeting
Proposals or to allow the solicitation of additional votes, if necessary, to
approve the Special Meeting Proposals, and to vote, in their discretion, upon
such other matters as may properly come before the Special Meeting and any
adjournment or postponement thereof.
ALL PREVIOUS PROXIES GIVEN BY THE UNDERSIGNED TO VOTE AT THE SPECIAL
MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF ARE HEREBY REVOKED.
Date _____________________________________________________________________, 1997
Signature ______________________________________________________________________
Title __________________________________________________________________________
Signature, If Held Jointly______________________________________________________
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.
