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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. )
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
REXENE CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
GUY P. WYSER-PRATTE AND SPEAR, LEEDS & KELLOGG
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
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SOLICITATION OF PROXIES
IN CONNECTION WITH A
SPECIAL MEETING OF STOCKHOLDERS
OF
REXENE CORPORATION
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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 [PLACE OF MEETING] on [DAY OF THE WEEK], [DATE],
at [TIME OF DAY]. [Discuss any dispute with Rexene regarding the Special Meeting
date]. This Proxy Statement and the accompanying GOLD proxy card are first being
sent to stockholders of the Company on or about February [__], 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 December 4, 1996, Huntsman issued a press release in which it
expressed its continuing interest in acquiring the Company. The press release
quoted Mr. Huntsman as saying that "we believe that our company is uniquely
situated to offer the fullest price possible" and that "based on our recent
experiences with Rexene and its advisors, we believe that Rexene does not have a
sincere and serious intent to sell the company and maximize shareholder value."
While there is no assurance that Huntsman will make another offer to acquire the
Company, a December 9, 1996 article in "Mergers and Restructurings" reported
that a Huntsman spokesman had reaffirmed its interest in acquiring Rexene.
The Company has since declared in its Revocation Solicitation Statement
filed with the Securities and Exchange Commission on January 27, 1997 (the
"Revocation Solicitation Statement") that "although [the Board] 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." The Soliciting Group believes that 60 days is an arbitrary and
unreasonably short period of time to complete a cash merger. Moreover, the
Company's Revocation Solicitation Statement repeated the Company's prior
statements that now is not a "propitious time" to sell the Company. Based on
those statements and actions taken by the Company in response to the Huntsman
proposals, the Soliciting Group believes that the current Board does not support
the goal of maximizing the current value of Rexene's Common Stock. The
Soliciting Group believes that maximizing current shareholder value should be
the Company's goal and that, under present circumstances, a sale of the Company
is likely to be the best way to achieve that objective.
The 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 ten members of the Board and fill four of the
resulting vacancies with nominees, including any substitute nominees,
of the Soliciting Group (the "Nominees"). The Director Replacement
Proposals consist of two resolutions: a resolution to remove all the
members of the Board (the "Director Removal Resolution") and a
resolution to fill four of the resulting vacancies with the Nominees
(the "Election of Directors Resolution"). It is anticipated that the
Nominees would cause the Board to reduce its size to a total of four
directors (or five directors if Mr. Smith accepts an invitation,
which will be extended by the Board after the Special Meeting, for
Mr. Smith to remain as Chief Executive Officer and a director of the
Company). The Nominees would then constitute a majority of the Board,
committed to the goal of maximizing the current value of the Common
Stock by selling the Company 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 is set
forth under the caption "Special Meeting Proposals -- The Nominees."
Another group of proposals (the "By-laws Proposals"), are being
proposed for adoption by the shareholders in advance of the Director
Replacement Proposals, are intended to facilitate 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:
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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; and
6. The Election of Directors Resolution.
STOCKHOLDERS ENTITLED TO EXECUTE PROXIES AND
EFFECT OF EXECUTION AND DELIVERY OF PROXIES
In the [Revocation Solicitation Statement], the Company contends that
the Board has the right to fix the date and time of the Special Meeting.
[Describe any dispute regarding the Special Meeting date.] In reaching this
conclusion, it appears that the Company is relying on provisions in the By-laws
and the Delaware General Corporation Law that deal with matters other than
calling a special meeting of stockholders and is not giving full effect to the
provision of the Company's Certificate of Incorporation (the "Certificate of
Incorporation"), which states that a special meeting of stockholders may be
called "at any time BY . . . THE HOLDERS OF A MAJORITY OF THE THEN OUTSTANDING
SHARES OF THE COMMON STOCK." (emphasis added) Accordingly, the Soliciting Group
believes that, although it is not entirely free from doubt, the stockholders,
not the Board, have the right to fix the date and time of the Special Meeting.
[Therefore, the Soliciting Group has called the Special Meeting, fixed the
place, date and time of the Special Meeting and caused notice thereof to be
given to the Company's stockholders entitled thereto.]
The record date for determining stockholders entitled to notice of, or
to vote at, the Special Meeting (the "Record Date") shall be at the close of
business on February [__], 1997, which is the day next preceding the day on
which notice of the Special Meeting has been given to stockholders, unless the
Board sets a different record date in accordance with the Delaware General
Corporation Law. As of February [__], 1997, the Board had not set a Record Date
for the Special Meeting.
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 the adoption of (i)
(A) the Omnibus Resolution, (B) the Facilitating By-laws Resolutions and the (C)
Shareholder Rights Resolution will require the affirmative vote of a majority of
the shares of
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Common Stock present in person or represented by proxy and entitled to vote on
the subject matter; (ii) (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
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 and the Shareholders Rights 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 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 ANNUAL 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.
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."
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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 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
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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
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
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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 "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
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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 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,
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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
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
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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 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.
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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."
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,
11
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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." Management's Revocation Solicitation Statement
says that "although [the Board] believes a $16 per share price does not fully
reflect the long-term prospects of the Company, 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." The Soliciting
Group believes that 60 days is an arbitrary and unreasonably short period of
time to complete a cash merger. Moreover, the Company's Revocation Solicitation
Statement repeated the Company's prior statements to the effect that "It is
currently not a propitious time to sell or auction a petrochemical and polymer
company like Rexene. . . ." 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 have in their most recent
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 most
recently in the Revocation Solicitation Statement, that "It is currently not a
propitious 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,
12
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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 FOUR VACANCIES TO
REMAIN UNFILLED. Assuming that the stockholders adopt the
by-laws being proposed by the Soliciting Group to clarify the
right of stockholders to fill vacancies on the Board and to
facilitate the reduction in the size of the Board, the
stockholders would be entitled to take these actions by the
vote of a majority of the Common Stock represented and
entitled to vote at the Special Meeting.
It is anticipated that the Nominees would invite Mr. Smith to remain as
Chief Executive Officer and to be reinstated as a director by the Nominees. If
he does not accept that invitation, Mr. Lawrence McQuade would serve as interim
chairman and Chief Executive Officer until a new Chief Executive Officer is
appointed. The Nominees would then cause the Board to adopt a resolution
reducing the size of the Board from ten to four directors (or five directors if
Mr. Smith accepted the Board's invitation to remain Chief Executive Officer and
a director).
It is anticipated that the Nominees would propose that the Company
either conduct negotiations with Huntsman or other parties that by then may have
indicated an interest in acquiring the Company or retain investment bankers to
prepare offering materials and solicit proposals to acquire the Company for cash
and/or securities. Except for these steps, the Soliciting Group has no specific
plans for selling the Company. If it is not feasible to sell the Company on
terms that the Board and the stockholders find advantageous, the Nominees would
seek to have the Board explore other means of maximizing the current value of
the Common Stock.
The Soliciting Group proposes the election of the following Nominees to
the Board.
THE NOMINEES
<TABLE>
<CAPTION>
Present Principal Occupation and Employment History;
Name and Address Age Directorships
---------------- --- ---------------------------------------------------
<S> <C> <C>
Jonathan R. Macey................ 41 Professor Macey is the J. DuPratt White Professor
Cornell Law School of Law and the Director of the John M. Olin
306 Myron Taylor Hall Program in Law and Economics at Cornell Law
Ithaca, New York 14853 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
</TABLE>
13
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<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation and Employment History;
Name and Address Age Directorships
---------------- --- ---------------------------------------------------
<S> <C> <C>
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 was employed by
127 West Devon Drive AmeriGas, Inc. ("AmeriGas"), a retail propane
Exton, Pennsylvania 19341 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 as a Rhodes
Qualitas International Scholar. From 1963 to 1969, he was the
125 East 72nd Street Assistant Secretary for Domestic and
New York, New York 10021 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").
James S. Pasman, Jr.............. 66 Mr. Pasman was with Aluminum Company of America
29 The Trillium from 1972 to 1985, serving as Vice Chairman
Pittsburgh, Pennsylvania 15238 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.
</TABLE>
Each of the Nominees has entered into an agreement with WPC and Spear,
Leeds whereby WPC and Spear, Leeds have agreed to pay each Nominee a fee of
between $10,000 and $15,000 (the specific amount to be in the sole discretion of
WPC and Spear, Leeds) in the event that he does not become a director of Rexene.
Additionally, WPC and Spear, Leeds have agreed to (i) reimburse each Nominee for
any reasonable out-of-pocket expenses incurred in the performance of his service
as a Nominee and (ii) indemnify each Nominee with respect to any liabilities
relating to or arising out of such service. Mr. McQuade owns beneficially 2,000
shares of Common Stock.
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POSSIBLE ACCELERATION OF DEBT. Pursuant to Section 10.01(k) of the
Amended and Restated Credit Agreement (the "Credit Agreement"), dated as of
April 24, 1996 among the Company, as borrower, The Bank of Nova Scotia, as agent
(the "Agent"), and the lenders signatory thereto (the "Banks"), the Director
Replacement Proposals, if adopted by the stockholders of the Company, would
cause a "change of control" as defined in the Credit Agreement. Pursuant to the
Credit Agreement, the Agent and the Banks could cancel the Banks obligations to
make loans to the Company and/or declare the principal amount then outstanding
of, and the accrued interest on, the loans under the Credit Agreement due and
payable.
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 February [___], 1997, the
closing price of the Senior Notes was $[___].
According to the Company, as of the date of the Revocation Solicitation
Statement, the aggregate indebtedness under the Credit Agreement and the Senior
Notes was approximately $252 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 February [___], 1997
was $[____], 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 Board's
Revocation Solicitation Statement dated January 27, 1997:
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
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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 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.
EMPLOYMENT AGREEMENTS. The following information is based on the Board's
Revocation Solicitation Statement dated January 27, 1997:
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,
if elected, the Nominees would propose to establish a Stockholders' Advisory
Committee (the "Stockholders' Advisory Committee") that would provide
non-binding recommendations to the Board on acquisition proposals received by
the Company.
The Stockholders' Advisory Committee would consist of three members that
would have no current affiliation with the Company other than as stockholders.
Members of the committee would be elected by the stockholders by plurality vote
at the Company's annual meeting of stockholders. The term
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of office of each member would be one year and in no case would a member be able
to serve more than three consecutive terms. The Company would include in its
proxy materials used in the election of directors, nominations and nominating
statements for members of the committee submitted by any stockholder or group of
stockholders which has owned beneficially, within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended, at least $1 million in
market value of Common Stock continuously for the two-year period prior to the
nomination.
To assist it in evaluating an acquisition offer, the Stockholders'
Advisory Committee would be empowered to retain, at the Company's expense,
expert assistance, including attorneys and financial advisors, and incur other
reasonable expenses not to exceed, in the aggregate, $.02 multiplied by the
number of shares of Common Stock outstanding at the time the acquisition
proposal is made.
If the Common Stock were the subject of a tender offer or the Company
were otherwise the subject of an acquisition proposal, the Stockholders'
Advisory Committee would have the opportunity to have included in the Company's
Schedule 14A or 14D-9 filed with the Securities and Exchange Commission in
connection with such tender offer or proposal its evaluation of, and
recommendation concerning, such tender offer or proposal in a statement of not
more than 2,500 words.
The committee's recommendations would be solely advisory in nature and
would not restrict the Board in its ability to take any action it deems in the
Company's best interest.
Although there is no authority directly on point, the Soliciting Group
believes that as long as the Board does not delegate its powers to such a
committee, the Board is authorized to establish and expend corporate funds on
such a committee as a means of communicating with stockholders and gaining and
disseminating information about stockholder sentiment on important corporate
questions. The Soliciting Group believes that the legal authority to establish
such a committee for these purposes comes from the Board's broad powers under
Section 141 to manage the business and affairs of the Company.
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
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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.' "
"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:
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`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 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, effective immediately (capitalized terms have the
meanings set forth in the Proxy Statement of the Soliciting Group)"
The stockholders must amend the By-laws 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 Solicitation
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
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elected to fill such vacancies by a shareholder vote. However, there is Delaware
case law authority which suggests that stockholders have an inherent right to
fill Board vacancies in the absence of clear language to the contrary in the
certificate of incorporation or by-laws. Moon v. Moon Motor Car Co., Del Ch.,
151 A. 298 (1930); Campbell v. Loew's, Inc., Del. Ch. 134 A.2d 852 (1957);
Dileuterio v. U.C. Cavaliers of Delaware, Inc., Del. Ch. Civil Action No. 8801
(1987); Siegman v. Tri-Star Pictures, Inc., C.A. No. 9477 (Del. Ch. 1989).
Comparing the language of the Company's By-laws to the examples cited in
these cases, the language of the Company's By-laws does not seem sufficiently
clear to override the general rule that shareholders are entitled to fill
vacancies on the board of directors; but the Soliciting Group has concluded that
there are sufficient ambiguities to justify a clarifying amendment to the
By-laws.
ELIMINATING ADVANCE NOTIFICATION REQUIREMENT FOR STOCKHOLDER
NOMINATIONS. For stockholders to have an effective right to fill board
vacancies, they must also have the ability to make nominations to the board. The
Company's existing by-law on nominations of directors at special meetings is
Section 2.5(b) which is quoted above. The by-law is ambiguous on whether
stockholders could make such nominations without the cooperation of the existing
Board. The by-law must be amended to cure that ambiguity. The Soliciting Group
believes that the advance notification requirement does not serve any useful
purpose and therefore intends to propose a by-law that would allow stockholders
to make nominations up to and including the time of the meeting.
FACILITATING REDUCTION IN SIZE OF BOARD. The Board presently consists of
ten directors. The Soliciting Group believes that a smaller number of directors
would be a more effective working group and that a reduction in the size of the
Board would help the Company to maintain a uniformly high level of quality on
the Board.
The Certificate of Incorporation and By-laws state that subject to the
rights of holders of preferred stock, the number of directors shall be fixed
exclusively by the Board. However, stockholders can cause a reduction in the
size of the Board indirectly by electing a new Board majority which reduces the
number of directors. The Soliciting Group is proposing that the stockholders
remove all of the ten members of the Board and fill four of the resulting
vacancies, while leaving the other six Board positions vacant. It is anticipated
that the four directors then in office would cause the Board to reduce the total
number of directors to four (or five, if Mr. Smith accepts an invitation from
the Board to remain Chief Executive Officer and a director). See "Director
Replacement Proposals."
The Soliciting Group 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
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Incorporation, or by law, the presence of a majority of the
authorized number of directors shall be required to constitute a
quorum for the transaction of business at any meeting of the Board,
and all matters shall be decided at any such meeting, a quorum being
present, by the affirmative votes of a majority of the directors
present." The number of authorized directors is presently ten. After
the shareholders have removed all of the current directors and filled
four of the resulting vacancies with nominees of the Soliciting
Group, the four members of the Board will not be a majority of the
authorized number of directors and, under the existing By-laws, will
not constitute a quorum. Therefore, the Soliciting Group intends to
propose an amendment to the By-laws reducing a quorum from one-half
to two-fifths of the authorized number of directors;
(iii) granting stockholders the power to appoint the Chairman of the
Board. Section 142(b) of the Delaware General Corporation Law
authorizes the adoption of by-laws which determine the manner in
which officers are chosen. In order to permit a new Chairman of the
Board to be selected at the stockholders meeting, the Soliciting
Group 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 Solicitation
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 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 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
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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 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
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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 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,
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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 months because under those
circumstances it is likely that the market price of the Common Stock will be
affected by expectations that the offeror may make another offer. While there
can be no assurance that the Company will ultimately get a price higher than the
Trigger Premium, acquisition bids often attract competition that leads to
subsequent offers at a price higher than the initial offer or the initial bidder
may raise its price.
The Soliciting Group believes that the provision for a shareholder vote
assures that the By-law will not be used to facilitate coercive offers. The
courts have defined a coercive offer as "an offer which has the effect of
compelling shareholders to tender their shares out of fear of being treated less
favorably in the second stage." If a majority of the Company's shareholders
consider an offer coercive, the Board will be able to win shareholder approval
to continue defensive measures against the Offer for more than ninety days.
Based on their experiences as investors in target company securities,
the Soliciting Group believes that ninety days is normally sufficient time for a
target company, seeking a higher offer, to complete the bidding process.
However, circumstances could arise in which a board of directors seeking a
higher offer was unable to complete the entire process of finding and closing an
alternative transaction within the ninety-day period prescribed by the
Shareholder Rights By-law. Similarly, if a board were trying to negotiate the
terms of an acquisition with a prospective purchaser, the inability to resist a
hostile tender offer by that purchaser beyond an initial ninety-day period could
reduce the board's leverage to negotiate favorable terms for stockholders. The
Soliciting Group believes the ninety-day
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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 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
25
<PAGE>
<PAGE>
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
SHAREHOLDER.
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 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 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
26
<PAGE>
<PAGE>
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 [PLACE OF MEETING] on [DAY OF
THE WEEK], [DATE], at [TIME OF DAY] (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; and
(6) The Election of Directors Resolution."
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.
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
27
<PAGE>
<PAGE>
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 February [__], 1997, Wyser-Pratte
owns beneficially 953,100 shares of the Common Stock, representing approximately
5.07% of the Outstanding Common Stock. This includes shares owned directly by
Wyser-Pratte and shares owned by investment partnerships and other managed
accounts for which affiliates of WPC are the general partner or investment
manager. Other than Wyser-Pratte, no other officer of WPC owns any shares of
Common Stock. In addition, 52,000 shares of Common Stock, representing
approximately .28% of the Outstanding Common Stock were held by clients of WPC
in certain brokerage accounts maintained with WPC. Neither Wyser-Pratte nor WPC
has any voting or investment power or authority with respect to shares of Common
Stock held in such accounts, and both Wyser-Pratte and WPC disclaim beneficial
ownership of such shares.
Spear, Leeds is principally engaged as a registered broker-dealer and
market maker. The principal executive offices of Spear, Leeds are located at 120
Broadway, New York, New York 10271. The sole general partner of Spear, Leeds is
SLK LLC, a New York limited liability company, with principal executive offices
located at 120 Broadway, New York, New York 10271. SLK LLC is controlled by SLK
Management Inc., a New York corporation ("SLK Management"). The executive
offices of SLK Management are located at 120 Broadway, New York, New York 10271.
SLK Management's principal business is serving as the Managing Member of SLK
LLC. As of February [__], 1997, Spear, Leeds owns beneficially 948,600 shares of
the Common Stock, representing approximately 5.04% of the Outstanding Common
Stock. No officer of SLK Management owns any shares of Common Stock.
The members of the Soliciting Group have orally agreed (i) to share
expenses incurred in connection with the filing of the Schedule 13D and this
Solicitation Statement and the matters described herein and (ii) that any
purchases or sales of shares of Common Stock made on or after October 3, 1996
will be allocated 50% to Wyser-Pratte and his affiliates, on the one hand, and
50% to Spear, Leeds, on the other, unless otherwise agreed.
See the Company's Revocation Solicitation Statement for information
regarding Common Stock held by the Company's principal shareholders and its
management.
GENERAL INFORMATION
This Proxy Statement and the accompanying GOLD proxy card are first
being made available to shareholders on or about February [__], 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.
28
<PAGE>
<PAGE>
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 $300,000. The total costs incurred to date in connection
with these solicitations are not in excess of $[________]. 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.
29
<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
10-03-96 25,600
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Date Purchased/(Sold)
-----------------------------------------
<S> <C>
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
-------
-------------------------------------------------------------------
</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
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
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
------
<PAGE>
<PAGE>
SCHEDULE III
The following tables set forth information with respect to all purchases
and sales of Common Stock of the Company by the Soliciting Group's Nominees
during the past two years.
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Name of Nominee Date Purchased/(Sold)
--------------- ---- ----------------
<S> <C> <C>
Lawrence C. McQuade 11-21-96 2,000
</TABLE>
<PAGE>
<PAGE>
APPENDIX 1
REXENE CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [___________________], 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 on [_______________], 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 February [__], 1997, with all capitalized terms used
herein without definition having the meaning set forth therein.
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 above 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
[ ] 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
[Proxy Continued
On Reverse]
<PAGE>
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED
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.
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 BE VOTED "FOR" EACH OF THE SIX PROPOSALS DESCRIBED
ABOVE. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT OF THE
SOLICITING GROUP DATED FEBRUARY [__], 1997, SOLICITING PROXIES FOR THE SPECIAL
MEETING.
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.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
