<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
REXENE CORPORATION
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[REXENE CORPORATION LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
APRIL 30, 1997
Please take notice that a Special Meeting of Stockholders of Rexene
Corporation, a Delaware corporation, will be held at the offices of The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, on
Wednesday, April 30, 1997 at 11:00 a.m. local time to consider and vote upon the
following matters, all of which are more completely set forth in the
accompanying Proxy Statement.
The items of business for the Special Meeting are:
(1) A proposal by Mr. Guy P. Wyser-Pratte, Wyser-Pratte & Co., Inc. and
Spear, Leeds & Kellogg (collectively, the "Wyser-Pratte Group") to
remove from office all of the incumbent directors of the Company (the
"Director Removal Resolution");
(2) The election of directors of the Company to fill the vacancies created
in the event that the Director Removal Resolution is approved ( the
"Election of Directors Resolution");
(3) A proposal by the Wyser-Pratte Group to amend the Amended and Restated
By-laws of the Company (the "By-laws") in a number of respects to
facilitate the Director Removal Resolution and the election of the
Wyser-Pratte Group's nominees for election to the Board (the
"Facilitating By-laws Resolutions");
(4) A proposal by the Wyser-Pratte Group to amend the By-laws to set a time
limit on certain actions by the Company in response to a takeover offer
unless approved by stockholders (the "Stockholder Rights Resolution");
(5) A proposal by the Wyser-Pratte Group to amend the By-laws to elect that
the Company not be governed by Section 203 of the Delaware General
Corporation Law (the "Business Combination Statute Resolution");
(6) An omnibus resolution proposed by the Wyser-Pratte Group setting the
order in which the resolutions will be voted upon by the stockholders
at the Special Meeting (the "Omnibus Resolutions");
(7) A proposal by the Rexene Board of Directors to grant the Rexene Board
the authority to implement the second $50 million part of the Company's
$85 million stock repurchase program (the "Stock Repurchase Proposal").
Only stockholders of record at the close of business on April 18, 1997 are
entitled to receive notice of, and to vote at, the Special Meeting and any
adjournment thereof.
The second item of business will be withdrawn if stockholders reject the
Director Removal Resolution.
<PAGE> 3
Your Board of Directors unanimously urges you to vote:
- AGAINST items (1), (3), (4), (5) and (6); and
- FOR items (2) and (7)
by signing, dating and returning the enclosed WHITE Special Meeting proxy
card in the enclosed postage-prepaid envelope.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE SPECIAL MEETING PROXY CARD
REGARDLESS OF WHETHER YOU HAVE PREVIOUSLY SIGNED ANY PROXY CARD SENT TO YOU BY
THE WYSER-PRATTE GROUP.
By order of the Board of Directors
/s/ BERNARD J. McNAMEE
Bernard J. McNamee
Secretary
Dallas, Texas
April 9, 1997
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED WHITE SPECIAL MEETING PROXY CARD IMMEDIATELY.
<PAGE> 4
[REXENE CORPORATION LOGO]
5005 LBJ FREEWAY
DALLAS, TEXAS 75244
---------------------
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
APRIL 30, 1997
---------------------
This Proxy Statement and the accompanying WHITE Proxy Card are being
furnished to holders of outstanding shares of common stock, par value $.01 per
share ("Common Stock"), of Rexene Corporation, a Delaware corporation ("Rexene"
or the "Company"), in connection with the solicitation by the Board of Directors
of the Company (the "Board") of proxies for use at the special meeting of
stockholders of the Company (the "Special Meeting") to be held on Wednesday,
April 30, 1997, at 11:00 a.m. local time at the offices of The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801, or at any adjournment
or postponement thereof. The Special Meeting is being called pursuant to the
request of holders of a majority of the outstanding shares of Common Stock as
permitted by the Restated Certificate of Incorporation of the Company following
a solicitation of Appointments of Designated Agents by a group comprised of Mr.
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 "Wyser-Pratte Group"). The Board has fixed April 18, 1997 as the record date
for determining stockholders entitled to notice of and to vote at the Special
Meeting (the "Record Date"). This Proxy Statement and the enclosed WHITE Proxy
Card are first being mailed to stockholders on or about April 9, 1997.
At the Special Meeting, stockholders will consider and vote upon two groups
of proposals made by the Wyser-Pratte Group and opposed by the Board (the
"Wyser-Pratte Proposals"). One group of proposals would (i) remove all of the
members of the Board (the "Director Removal Resolution") and (ii) fill four of
the resulting vacancies with nominees of the Wyser-Pratte Group (the "Election
of Directors Resolution" and, together with the Director Removal Resolution, the
"Director Replacement Proposals"). According to the Definitive Proxy Statement
filed by the Wyser-Pratte Group with the Securities and Exchange Commission (the
"SEC") on April 4, 1997 (the "Wyser-Pratte Proxy Statement"), the Wyser-Pratte
Group anticipates that such nominees following their election would elect Mr.
Werner Goeckel to the Board and cause the Board to reduce its size to a total of
five directors (or six directors if Andrew J. Smith, the current Chairman of the
Board and Chief Executive Officer of the Company, is offered and accepts an
invitation to remain as the Chief Executive Officer and a director of the
Company). Another group of proposals would amend the Amended and Restated
By-laws of the Company (the "By-laws") to (i) clarify the right of stockholders
to fill vacancies on the Board and change the stockholder vote required to fill
such vacancies, eliminate the advance notification requirement for stockholder
nominations of directors at special meetings, reduce the size of a quorum for
action by the Board, give the Chairman of the Board the status of an officer of
the Company and authorize the stockholders to appoint the Chairman, and repeal
any by-law amendments adopted by the Board since October 1, 1996 (the
"Facilitating By-laws Resolutions"), (ii) set a time limit on certain actions by
the Company in response to certain takeover offers unless approved by
stockholders (the "Shareholder Rights Resolution") and (iii) elect that the
Company not be governed by Section 203 of the Delaware General Corporation Law
(the "DGCL") (the "Business Combination Statute Resolution" and, together with
the Facilitating By-laws Resolutions and the Shareholder Rights Resolution, the
"By-laws Proposals"). Stockholders also will consider and vote at the Special
Meeting on an omnibus resolution setting the order in which the resolutions will
be voted upon by the stockholders at the Special Meeting (the "Omnibus
Resolution"). See "The Wyser-Pratte Proposals."
<PAGE> 5
In addition, at the Special Meeting, stockholders will consider and vote
upon the Company's proposal to grant the Rexene Board the authority to implement
the second $50 million part of the Company's $85 million stock repurchase
program (the "Stock Repurchase Proposal"). It currently is contemplated that, if
approved by stockholders, any such repurchases would be funded through the
issuance of a new series of preferred stock of the Company. See "The Stock
Repurchase Proposal."
YOUR BOARD OF DIRECTORS UNANIMOUSLY AND VIGOROUSLY OPPOSES THE WYSER-PRATTE
GROUP'S SOLICITATION OF PROXIES AND URGES YOU NOT TO SIGN ANY GOLD PROXY CARD
SENT TO YOU BY THE WYSER-PRATTE GROUP. WHETHER OR NOT YOU HAVE PREVIOUSLY
EXECUTED A GOLD PROXY CARD SENT TO YOU BY THE WYSER-PRATTE GROUP, THE BOARD
URGES YOU TO SIGN, DATE AND DELIVER THE ENCLOSED WHITE PROXY CARD AS PROMPTLY AS
POSSIBLE, BY FAX OR BY MAIL (USING THE ENCLOSED ENVELOPE), TO D.F. KING & CO.,
INC., 77 WATER STREET, NEW YORK, NEW YORK, 10005-4495.
If your shares of Common Stock are held in the name of a bank, broker or
other nominee, you are urged to contact the person responsible for your account
and direct him or her to execute a WHITE Proxy Card on your behalf.
If you have any questions concerning the Company's solicitation, please
contact D.F. King & Co., Inc., Toll-Free, at 1-800-714-3310.
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BACKGROUND OF THE SOLICITATION
On July 17, 1996, Jon Huntsman, Chairman and Chief Executive Officer of
Huntsman Corporation ("Huntsman"), telephoned Ilan Kaufthal, a member of the
Board of Directors of the Company 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, Mr. Smith received
from Mr. Huntsman a letter containing an unsolicited proposal to acquire the
outstanding shares of Common Stock at $14 per share in a merger transaction
subject to financing and due diligence.
The Board, together with its legal and financial advisors, met to review
the Huntsman proposal and determine an appropriate response. After carefully
considering a wide range of factors, including the market valuation of the
Common Stock, the condition of the commodity chemical industry and the Company's
prospects, the Board determined that the Huntsman proposal did not adequately
reflect the long-term value of the Common Stock and prospects of the Company.
Accordingly, the Board determined that stockholders of the Company would be
better served by the Company continuing to execute its long-term business plans
and strategies. On July 22, 1996, the Company issued a press release explaining
the action taken by the Board and the Board's reasoning, the full text of which
follows:
Rexene Corporation (NYSE: RXN) announced today that its Board of
Directors unanimously has determined to reject an unsolicited acquisition
proposal by Huntsman as not being in the best interest of Rexene and its
shareholders.
Andrew Smith, Rexene's Chairman and Chief Executive Officer, said that
the Board considered a wide range of factors, including the historical and
present market valuation of the Company's Common Stock, the present
condition of the commodity chemical industry and the Company's future
prospects in reaching its conclusions. "The Board has determined that this
is not a propitious time to engage in this type of a transaction," said Mr.
Smith. "Huntsman's proposal appears to represent a unilateral attempt to
acquire Rexene in a transaction that is harmful to the best interest of
Rexene's shareholders and customers and that only benefits Huntsman."
"The Company's financial performance has not yet begun to reflect the
substantial benefits expected from our capital expenditure program and we
believe the Company and its shareholders will be far better served by
continuing our current strategic plan to create shareholder value as an
independent public company," Mr. Smith said. "We believe that implementing
our long-term strategic plan beginning with the introduction of REXflex(R)
polymers in the fourth quarter this year and culminating with the start-up
in 1998 of the first 'compact process' linear low density polyethylene
plant in the United States will realize a far greater financial return to
our shareholders than the Huntsman offer."
The Board's decision followed a meeting at which the directors
received and considered a report by the Company's financial advisor,
Schroder Wertheim.
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.
On July 25, 1996, Mr. Smith sent a letter to the 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.
On August 1, 1996, while the Board was meeting, Mr. Huntsman delivered
another letter to Mr. Smith in which Huntsman then proposed to acquire all of
the outstanding shares of Common Stock for $15 per share in a merger transaction
purportedly not subject to due diligence or financing. On August 2, 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. The directors based their decision in part upon their belief that
Rexene would generate increased value to stockholders through the profitable
growth of Rexene's specialty businesses aided by the
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Company's ongoing strategic investment program. The Board's determination and
reasoning were publicly disclosed in a press release issued by the Company later
that same day. At that meeting, the Rexene directors determined that it would be
beneficial and appropriate to explore whether any person or group, in addition
to Huntsman, might be interested in engaging in a mutually beneficial 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
acquiring 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.
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 "I'm washing my hands of the entire matter. Huntsman Corp.
is not interested in pursuing further negotiations nor in commencing an
unsolicited tender offer at this time. It is simply not worth the aggravation."
The Huntsman press release also indicated that its decision came after Schroder
Wertheim had indicated to Mr. Huntsman that the Board would reject bids
substantially above Huntsman's $15 per share proposal.
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.
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.
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 acquiring the
Company. 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 Wyser-Pratte Group filed a joint Schedule 13D with
the SEC (the "Schedule 13D") relating to the Common Stock. In the Schedule 13D,
the members of the Wyser-Pratte Group reported that they intended to take
certain actions, including 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 Bylaws, if necessary, to clarify the right of stockholders to
fill vacancies on the Board and replace the directors who had been removed with
directors nominated by the Wyser-Pratte Group. In addition, the Wyser-Pratte
Group disclosed that it intended to submit to the stockholders of the Company
proposed amendments to the Bylaws which would (i) require that the Board
terminate defensive measures against a fully financed cash offer after 90 days,
unless the stockholders of the Company vote to support the Board's policy of
opposition to such offer and (ii) provide that the Company shall not be governed
by Section 203 of the DGCL.
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.
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On October 29, 1996, the Company received from Mr. Huntsman a letter in
which he (i) indicated that Huntsman would not execute a
confidentiality/standstill agreement with the Company and (ii) proposed that
Huntsman acquire all of the outstanding shares of Common Stock at $16 per share.
Mr. Huntsman's letter stated that the Huntsman offer was "unconditional both
with respect to financing and due diligence." Later that same day, Mr. Smith
telephoned Mr. Huntsman to request the details of Huntsman's proposal and a
draft merger agreement for review by the Board and the Company's counsel.
On November 1, 1996, the Company's counsel received a draft merger
agreement from Huntsman's counsel.
On November 4, 1996, the Board of Directors met to consider Huntsman's
latest proposal, including the terms of Huntsman's draft merger agreement. The
Rexene directors determined that Huntsman's proposal was unacceptable for the
following reasons:
- Huntsman had no financing for its proposal
- Huntsman's proposal was subject to numerous conditions and, in the
Board's view, not likely to lead to a transaction in the near term, even
if financing was obtained
- The proposal prohibited the Company from continuing to implement its
capital expenditure program and placed other unacceptable restrictions on
the Company's ability to operate during the pendency of the transaction
- In the Board's view, the value of the Company could be materially
diminished over the long period of time contemplated by the proposal
- Huntsman's proposal contained demands for "lock-up" stock options and
"break-up" fees that, in the view of the Company's counsel, were illegal
under Delaware law
The Board unanimously determined that Mr. Smith should contact Mr. Huntsman
and advise him that the Board believed that Huntsman should increase the
purchase price it was proposing and modify the terms of its proposal to make the
accomplishment of a transaction more certain for the Rexene stockholders. In
addition, the Company's counsel was instructed to communicate the Board's
position to Huntsman's counsel.
The next day, Mr. Smith telephoned Mr. Huntsman to discuss the terms of
Huntsman's proposal. After Mr. Smith informed Mr. Huntsman of the Board's
position concerning the structure of his proposal, Mr. Huntsman indicated that
he was not prepared to discuss any points and that he was no longer interested
in acquiring the Company.
Notwithstanding Mr. Huntsman's previous telephone conversation with Mr.
Smith, on November 8, 1996, Huntsman's counsel contacted the Company's counsel
and indicated that they would like to meet to discuss the draft merger
agreement. Huntsman's and the Company's counsel met later that day and discussed
their respective views concerning the draft merger agreement and the Huntsman
proposal.
On November 12, 1996, the Company received from Mr. Huntsman a letter in
which Mr. Huntsman expressed disappointment with the Board's unwillingness to
accept Huntsman's latest proposal. On November 15, 1996, Mr. Smith faxed a
letter to Mr. Huntsman which communicated the Board's views regarding the
defects in his proposal.
The Company has received only a brief response from Mr. Huntsman to Mr.
Smith's letter of November 15, 1996, which did not contain any substantive
information.
During October and November 1996, the Company was advised by the various
parties who had executed confidentiality/standstill agreements with the Company
that no parties were 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
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officers." A December 9, 1996 article in "Mergers and Restructuring" reported
that a Huntsman spokesman had reaffirmed Huntsman's interest in acquiring
Rexene.
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, 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.
On or about January 23, 1997, the Wyser-Pratte Group mailed to stockholders
of the Company a definitive Solicitation Statement soliciting Appointments of
Designated Agents to call the Special Meeting (the "Wyser-Pratte Solicitation
Statement"). On or about January 27, 1997, the Company mailed to stockholders a
Revocation Solicitation Statement soliciting revocations of Appointments of
Designated Agents in opposition to the solicitation by the Wyser-Pratte Group.
In February 1997, the Wyser-Pratte Group delivered to the Company executed and
unrevoked Appointments of Designated Agents from the holders of the requisite
number of shares of Common Stock required pursuant to the Company's Restated
Certificate of Incorporation to call the Special Meeting.
On February 27, 1997, the Board fixed April 30, 1997 as the date of the
Special Meeting and April 18, 1997 as the Record Date.
Following the publication in late 1996 and early 1997 of the Board's
position relating to bona fide proposals to acquire the Company at $16 per
share, the Company was contacted by four parties that previously had not held
discussions with the Company and who expressed an interest in exploring a
possible transaction with the Company. Two of such parties executed a
confidentiality/standstill agreement with the Company for the purpose of
conducting a due diligence review of the Company. No such party subsequently
made a proposal to acquire all of the outstanding shares of Common Stock.
In published statements issued on February 7, 1997 and March 17, 1997,
Huntsman reaffirmed its interest in acquiring Rexene at $16 per share.
On March 19, 1997, the Board met and further considered alternatives to
maximize the value of the Common Stock. At the meeting, the Board determined
that a stock repurchase program would serve the best interests of the Company
and its stockholders and would be responsive to the desires of many of the
Company's stockholders as expressed to management of the Company at meetings
held in connection with the Company's solicitation of revocations of the
Appointments of Designated Agents solicited by the Wyser-Pratte Group.
Accordingly, at the meeting the Rexene directors authorized the repurchase by
the Company of up to $85 million of Common Stock (the "Stock Repurchase
Program"), to be implemented in two parts. The first part of the Stock
Repurchase Program, which was to commence as soon as practicable, was to consist
of open market repurchases funded by $35 million in borrowings under the
Company's existing bank loan facility. The second $50 million part of the Stock
Repurchase Program, which was to be effected by open market or privately
negotiated transactions, tender offer or otherwise as determined by the Board,
was to be submitted to the Company's stockholders for their consideration and
approval at the Special Meeting. The Board determined that the Stock Repurchase
Program would serve the best interests of Rexene's stockholders by affording to
those stockholders who desire liquidity an opportunity to sell all or a portion
of their shares of Common Stock. See "The Stock Repurchase Proposal."
At the March 19, 1997 Board meeting, the Rexene directors also increased
the size of the Board and elected Stephen C. Swid and Richard C. Perry to the
Board, effective at the close of the Board meeting. Entities affiliated with the
new independent directors own in the aggregate approximately 1.2 million shares
of Common Stock, or approximately 6.6% of the outstanding shares. See "Ownership
of Common Stock -- Security Ownership of Management."
At the March 19, 1997 meeting, the Rexene directors also authorized the
following public announcement made by the Company later that day: "Separately,
in response to recent comments from Jon Huntsman, Rexene reiterated that its
Board of Directors would not oppose an all-cash, fully-financed offer to
purchase the
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Company for $16 per share from Mr. Huntsman or any other party." As publicly
stated on March 19, the Rexene directors will not oppose any fully-financed
offer to acquire Rexene at $16 per share, regardless of whether such offer
provides for a tender offer or a long-form merger transaction or would or would
not be consummated within 60 days. If an offeror declines to proceed by tender
offer and instead conditions its offer on the execution of a merger agreement,
the Rexene directors would authorize management to execute such a merger
agreement, provided it contained customary terms and conditions.
On March 19, 1997, following the Board meeting, Arthur Goeschel resigned as
a director of the Company. See "Information Concerning the Board of Directors
and Executive Officers."
Following the March 19, 1997 Board meeting, the Company commenced open
market repurchases of the Common Stock pursuant to the first part of the Stock
Repurchase Program. The open market repurchases were conducted pursuant to Rule
10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in order to give all stockholders the opportunity to
participate, Smith Barney Inc. ("Smith Barney"), acting on behalf of the
Company, was instructed not to solicit repurchases of shares and to purchase
shares only at or below the published bid price. Due to the low number of shares
of Common Stock available for repurchase by the Company in accordance with the
foregoing instructions in the open market (only 11,500 shares were purchased),
the Company was unable to repurchase a significant number of shares of Common
Stock following the commencement of repurchases. At a meeting on March 27, 1997
the Board discussed the status of the first part of the Stock Repurchase Program
with its advisors. At the March 27 meeting, the Board authorized management to
consider the advisability of a "Dutch Auction" tender offer in lieu of open
market repurchases. Following the March 27 meeting, the Company suspended
further open market repurchases pending a final decision with respect to the
tender offer.
On April 3, 1997, the Board authorized the making of a "Dutch Auction"
tender offer by the Company to purchase up to 2,156,250 shares of the Common
Stock, or approximately 11.5% of the outstanding shares of Common Stock (the
"Offer"). Under the terms of the Offer, the Company will invite stockholders to
tender shares of Common Stock at prices between $14 and $16 per share. Based
upon the number of shares tendered and the prices specified by the tendering
stockholders, the Company will determine the single per share price within that
price range that will allow the Company to purchase 2,156,250 shares or such
lesser number of shares as are properly tendered. Pursuant to the terms of the
Offer, the Company may purchase additional shares of Common Stock so long as the
price for the total shares purchased does not exceed $34.5 million. The Offer
will expire on May 5, 1997, unless the Offer is extended. Consistent with the
Company's desire to make the Stock Repurchase Program available to all
stockholders, the Offer, in accordance with the requirements of the Exchange
Act, will not discriminate among stockholders and will be open to all
stockholders who desire to sell their shares pursuant to the terms of the Offer
(except that pursuant to the terms of the Offer and applicable rules odd lot
holders will not be subject to proration). The Company expects to fund the offer
from the Company's existing long term credit facilities. The Company publicly
announced the Offer on April 3, 1997 and commenced the Offer on April 4, 1997.
Additional information concerning the Offer is included in the Issuer Tender
Offer Statement on Schedule 13E-4 filed by the Company with the SEC on April 4,
1997.
Stockholders who wish to tender shares of Common Stock pursuant to the
Offer may nevertheless vote those shares at the Special Meeting, in any manner
the tendering stockholder desires to vote, whether the shares are tendered prior
to, on or after the Record Date. Stockholders should note, however, that if the
Director Replacement Proposals are adopted, such an event would constitute a
"change of control" and an automatic event of default under the Amended and
Restated 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"), as amended and supplemented effective March 14,
1997 (as so amended, the "Credit Agreement"). In such event, the Banks could
refuse to make loans to the Company necessary to purchase the shares of Common
Stock in the Offer. It is a condition to the Offer that the Banks under the
Credit Agreement continue to make loans available under the Credit Agreement
following a change of control of the Company. If the Wyser-Pratte Group were
successful in removing and replacing the Company's current directors at the
Special Meeting, the Offer would not close unless the lenders under the Credit
Agreement determined to continue to make loans available under the Credit
Agreement or the Company at such time otherwise had available adequate funds to
purchase properly tendered shares in the Offer.
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<PAGE> 11
THE WYSER-PRATTE PROPOSALS
THE DIRECTOR REPLACEMENT PROPOSALS
Set forth below are the Wyser-Pratte Proposals to be acted upon at the
Special Meeting. According to the Wyser-Pratte Proxy Statement, the Wyser-Pratte
Proposals are part of an effort by the Wyser-Pratte Group to take control of the
Company in order to attempt a sale of the Company. As more fully described under
"-- Recommendation of the Board," the Board has determined that the Wyser-Pratte
Proposals are not in the best interest of the Company's stockholders and is
opposing the Wyser-Pratte Group's solicitation.
Item 1. Director Removal Resolution. The Wyser-Pratte Group has proposed
the following resolution for adoption by the Company's stockholders at the
Special Meeting:
"RESOLVED, that all of the directors of the Company, including,
without limitation, any such directors purportedly elected at this Special
Meeting, be, and hereby are, removed from the Board of Directors, effective
immediately; provided, however, that if, notwithstanding the Omnibus
Resolution, any nominees of the Soliciting Group have been elected to the
Board prior to the time this Resolution is adopted, such nominees of the
Soliciting Group shall not be removed from the Board (capitalized terms
have the meanings set forth in the Proxy Statement of the Soliciting
Group)."
FOR THE REASONS SET FORTH UNDER "-- RECOMMENDATION OF THE BOARD," THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" THE DIRECTOR REMOVAL RESOLUTION.
Item 2. Election of Directors Resolution. If the Wyser-Pratte Group
succeeds in removing all of the current members of the Board pursuant to the
Director Removal Resolution, stockholders will vote to elect directors to fill
the resulting vacancies. If the Director Removal Resolution is adopted, the
Wyser-Pratte Group has nominated Jonathan R. Macey, Robert C. Mauch, Laurence C.
McQuade and James C. Pasman, Jr. for election as directors (the "Wyser-Pratte
Nominees"). According to the Wyser-Pratte Proxy Statement, the Wyser-Pratte
Group anticipates that the Wyser-Pratte Nominees, if elected, would add Mr.
Werner Goeckel to the Board and cause the Board to reduce its size to a total of
five directors (or six directors if Mr. Smith is offered and accepts an
invitation to remain as the Chief Executive Officer and a director of the
Company).
If the Director Removal Resolution is adopted, the Board has nominated each
of the persons currently serving on the Board for re-election to the Board (the
"Board Nominees"). Each of these individuals has previously been elected to the
Board by the stockholders, except for Messrs. Swid and Perry, who were elected
to the Board by the Company's directors in March 1997. See "Background of the
Solicitation." For information concerning the Board Nominees, see "Information
Concerning the Board of Directors and Executive Officers."
FOR THE REASONS SET FORTH UNDER "-- RECOMMENDATION OF THE BOARD," THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE BOARD NOMINEES. If the
Director Removal Resolution is defeated, the Election of Directors Resolution
will be deemed withdrawn and not considered at the Special Meeting.
THE BY-LAWS PROPOSALS
Item 3. Facilitating By-laws Resolutions. The Wyser-Pratte Group has
proposed the following resolutions for adoption by the Company's stockholders at
the Special 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 2.5(b) of the By-laws in its entirety and replacing
therewith the following:
'(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the board of directors may be made
at a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting
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<PAGE> 12
(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.' "
"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 these
Bylaws, the Certificate of Incorporation, or by law, the presence of
two-fifths of the authorized number of directors shall be required to
constitute a quorum for the transaction of business at any meeting of the
Board, and all matters shall be decided at any such meeting, a quorum being
present, by the affirmative votes of a majority of the directors present. A
meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, provided any action
taken is approved by at least a majority of the required quorum for such
meeting. In the absence of a quorum, a majority of directors present at any
meeting may adjourn the same from time to time until a quorum shall be
present. Notice of any adjourned meeting need not be given. The directors
shall act only as a Board, and the individual directors shall have no power
as such.' "
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by
deleting Section 4.1(a) of the By-laws in its entirety and replacing
therewith the following:
'(a) The officers of the Corporation shall be a Chairman of the Board,
Chief Executive Officer, a President, one or more Vice Presidents (the
number thereof and their respective titles to be determined by the Board),
a Secretary and a Treasurer, and such other officers as may be appointed at
the discretion of the Board in accordance with the provisions of Section
4.1(b).' "
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by
deleting Section 4.2 of the By-laws in its entirety and replacing therewith
the following:
'4.2 Election, Term of Office and Qualifications. The officers of the
Corporation shall be appointed annually by the Board at the first meeting
thereof held after the election of the Board; provided, however, that if
there is a vacancy in the office of Chairman of the Board of Directors,
such vacancy may be filled by either the Board of Directors or the
stockholders by the vote required to fill vacancies on the Board of
Directors. Each officer shall hold office until such officer shall resign
or shall be removed or otherwise disqualified to serve, or the officer's
successor shall be appointed and qualified.' "
"RESOLVED, that in accordance with Section 7.3 of the By-laws of the
Company, the stockholders of the Company hereby amend the By-laws by
deleting Section 4.6 of the By-laws in its entirety and replacing therewith
the following:
'4.6 Chairman of the Board. The Chairman of the Board shall preside as
chairman at all meetings of the stockholders and the Board, unless a
chairman of such meeting or meetings shall be 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.' "
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<PAGE> 13
"RESOLVED, that pursuant to Section 7.3 of the By-laws of the Company,
any and all amendments, to the By-laws adopted by the Board since October
1, 1996 through the date hereof, are hereby repealed, effective immediately
(capitalized terms have the meanings set forth in the Proxy Statement of
the Soliciting Group)."
STOCKHOLDERS MUST APPROVE THE FOREGOING FACILITATING BY-LAWS RESOLUTIONS IN
ORDER TO MAKE IT POSSIBLE TO IMPLEMENT THE WYSER-PRATTE'S DIRECTOR REPLACEMENT
PROPOSALS. FOR THIS REASON AND FOR THE REASONS SET FORTH UNDER
"-- RECOMMENDATION OF THE BOARD," THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"AGAINST" THE FACILITATING BY-LAWS RESOLUTIONS.
Item 4. Shareholder Rights Resolution. The Wyser-Pratte Group has proposed
the following resolutions for adoption by the Company's stockholders at the
Special 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 7.3 of the By-laws in its entirety and replacing therewith
the following:
'7.3 Amendments. Except with respect to Section 7.5, in which case the
specific provisions thereof shall apply, (a) these Bylaws, or any of them,
may be altered, amended or repealed, and new Bylaws may be made, (i) by the
Board, by a vote of a majority of the number of directors then in office,
or (ii) by the stockholders and (b) any Bylaws made or altered by the
stockholders may be altered or repealed by either the Board or the
stockholders.' "
"RESOLVED, that the Shareholders hereby amend the Company's By-laws by
adding a new Section 7.5, which shall read as follows:
'If an Offer is made to purchase all of the Common Stock and the Board of
Directors opposes such Offer, the Board of Directors shall terminate all
defensive measures against such Offer at the end of the ninetieth day after
such Offer is first published or sent to security holders unless the Board
of Directors' policy of opposition to such Offer is approved by a vote of a
majority of the shares of Common Stock present and entitled to vote on the
subject matter at a meeting of shareholders which is held on or before such
ninetieth day and at which a quorum is present; provided, however, that the
Board of Directors shall not be required to terminate defensive measures
against such Offer at the end of such ninetieth day unless at such time
such Offer has an expiration date which is at least ten business days
thereafter. Notwithstanding anything to the contrary contained in Section
2.4 of the by-laws, if the Offer is to be effected by a tender offer,
unless the record date for such shareholders meeting was set prior to the
date on which such Offer was first published or sent to security holders,
the record date for such meeting shall be at least five business days after
the date on which the Company files its statement of position with respect
to such offer in accordance with Rule 14e-2 of the Securities Exchange Act
of 1934, as amended. At such time as it is required, pursuant to the first
sentence of this by-law, to terminate defensive measures against such
Offer, the Board of Directors shall redeem the outstanding Rights under the
Rights Agreement between the Company and American Stock Transfer Company,
as Rights Agent, or any successor agreement. Prior to the end of such
ninetieth day, unless the Board's policy of opposition to such Offer has
been approved by a shareholder vote as provided in this by-law, the Board
of Directors shall take such reasonable actions as are necessary to
preserve the possibility of satisfying the conditions to such Offer after
such ninetieth day. This Section 7.5 may be amended, altered, repealed or
rescinded ("Changed") (i) by the Board only if (A) such Change is made at a
meeting of the Board held in connection with an annual meeting of
stockholders, (B) there is public announcement at least ninety days in
advance of such annual meeting that the Board intends to make such Change
and (C) the stockholders do not adopt a resolution at such annual meeting
to disapprove such Change by the vote of a majority of the shares voting on
such resolution or (ii) by a shareholder vote (and not by a vote of the
Board) pursuant to Section 7.3 of the By-laws. An "Offer" shall mean a
fully financed offer to purchase all of 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
10
<PAGE> 14
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.' "
FOR THE REASONS SET FORTH UNDER "-- RECOMMENDATION OF THE BOARD," THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" THE SHAREHOLDER RIGHTS
RESOLUTION.
Item 5. Business Combination Statute Resolution. The Wyser-Pratte Group has
proposed the following resolution for adoption by the Company's stockholders at
the Special Meeting:
"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."'
FOR THE REASONS SET FORTH UNDER "-- RECOMMENDATION OF THE BOARD," THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" THE BUSINESS COMBINATION STATUTE
RESOLUTION.
Item 6. Omnibus Resolution. The Wyser-Pratte Group has proposed the
following resolution for adoption by the Company's stockholders at the Special
Meeting:
"RESOLVED, that the resolutions to be considered at the Special
Meeting of Stockholders of Rexene Corporation to be held at the office of
The Corporation Trust Company, 1201 Orange Street, Wilmington, Delaware
19801 on Wednesday, April 30, 1997, at 11:00 a.m. (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."
FOR THE REASONS SET FORTH UNDER "-- RECOMMENDATION OF THE BOARD," THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" THE OMNIBUS RESOLUTION.
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<PAGE> 15
RECOMMENDATION OF THE BOARD
The Board opposes the solicitation by the Wyser-Pratte Group and recommends
that stockholders vote against each of the Wyser-Pratte Group Proposals because,
in its opinion:
The proposed actions of the Wyser-Pratte Group are unnecessary:
- As has been stated publicly by the Company, the current Rexene directors
would not oppose a fully-financed cash offer to acquire all of the
outstanding Common Stock at $16 per share, regardless of whether such
offer provides for a tender offer or a long-form merger transaction or
would or would not be consummated within 60 days.
- The Board has publicly stated that it would take all actions that are
necessary to make the Company's stockholders rights plan (the so-called
"poison pill") inapplicable to an offer that meets the foregoing
conditions so that the offeror could make an offer directly to the
stockholders, who would then be in a position to determine whether to
accept or reject the offer.
- The Board has taken active steps to determine the interest of Huntsman
and others in potential business combinations with the Company, beginning
even before the Wyser-Pratte Group purchased shares of Common Stock.
- Notwithstanding the Company's public statement regarding its intention
not to oppose a fully-financed offer to acquire the Company at $16 per
share, its solicitation of indications of interest and its grant of
access to non-public information to a number of potential acquirors,
neither Huntsman nor any other party has made a fully-financed offer to
acquire the Company at $16 per share.
The proposed Wyser-Pratte Group actions are not likely to maximize the
value of the Common Stock:
- In the Board's view, if the Wyser-Pratte Group gains control of the Board
and is incapable of selling the Company at $16 per share (as the current
Board has been despite its knowledge of the Company and efforts in this
regard), the Wyser-Pratte nominees -- who have no current experience in
managing a specialized polymer company like Rexene -- will be forced to
manage the Company or sell the Company at an unacceptably low price.
- A new Board that has only a short-term view and no experience or interest
in managing a specialized polymer company is not likely to promote or
sustain continued growth of the Company and the long-term value of the
Common Stock.
- The capital expenditure and improvement programs authorized by the Board
and now in progress are intended to maximize stockholder value through
increased cash flow and earnings in future years, yet in the Board's view
the Wyser-Pratte Group has no interest in any method to maximize
stockholder value other than an immediate sale.
- In the Board's view, the Stock Repurchase Program, especially when
coupled with the Company's capital expenditure and improvement programs,
is a valuable tool to build stockholder value.
- The Company's current management team has a proven track record in
enhancing the value of the Company: from the end of 1993 to the end of
1996, Rexene's stock price has increased from $2.88 to $13.63, its net
worth has increased from -$5 million to $169 million, its debt to total
capital has decreased from 100% to 58% and its earnings (loss) per share
has grown from a loss of $2.40 to earnings of $1.55.
- Although the Board would not oppose a fully-financed offer to acquire the
Company at $16 per share, the Board does not believe it currently is the
optimal time to sell or auction a petrochemical and polymer company like
Rexene because current stock market prices for Rexene and other companies
in these industries are depressed and fail to reflect their expected
long-term value.
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<PAGE> 16
In addition, the Board believes that the Wyser-Pratte Proposals are not in
the best interests of the Company's stockholders for the reasons described
below.
The Board believes that the adoption of the Director Replacement Proposals
could have a serious detrimental effect on the financial condition of the
Company and result in a substantial decrease in the value of the Common Stock.
Pursuant to Section 10.01(k) of the Credit Agreement, Wyser-Pratte's attempts to
replace a majority of the Rexene directors, if adopted by the stockholders of
the Company at the Special Meeting, 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 loans then outstanding under the Credit Agreement due and payable.
The Company expects that the facility available under the Credit Agreement will
be increased from $150 million to approximately $225 million.
Wyser-Pratte's attempts to replace a majority of the Rexene directors, if
successful, also would be a "change of control" under the Indenture, dated as
November 29, 1994 (the "Senior Notes Indenture"), 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. Each holder of Senior Notes
would then 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.
If the Banks and the holders of the Senior Notes were to elect to exercise
their rights as described above, the Company would have to refinance the
aggregate amount of the loans under the Credit Agreement and the Senior Notes
outstanding under the Indenture. The aggregate amount of such indebtedness as of
March 31, 1997 was approximately $283 million. There is no certainty that the
Company would be capable of arranging such financing, especially in the context
of a possible sale of the Company. An inability to arrange for such financing
could require the Company to seek the protection of the federal bankruptcy laws,
which could have a substantial negative impact on the value of the Common Stock.
The Wyser-Pratte Proxy Statement discloses that the Wyser-Pratte Group has
no plans for the Company should the Wyser-Pratte Group gain control of the Board
of Directors and thereafter fail in its efforts to sell the Company.
Stockholders should consider what will happen to the value of the Common Stock
if the Wyser-Pratte Group gained control of the Board but failed to sell the
Company, leaving Rexene in the hands of directors who in the Board's view have
no experience in the Company's current business and no strategic plan for the
future and the prospect of having to refinance more than $283 million in
indebtedness.
Election of the Wyser-Pratte Nominees at the Special Meeting also could
result in certain benefits becoming vested under the Company's benefit plans and
agreements.
The Board also believes that the Shareholder Rights Resolution is
ill-advised and against the best interests of the Rexene stockholders. As a
general matter, the Board believes that a corporation's board of directors is
the proper body to evaluate the merits of takeover proposals. Stockholders may
not have all the information possessed by the board of directors regarding a
company's business, financial condition and future prospects. If a board
determines that a sale is in the best interests of the company and the
stockholders, the Rexene Board believes that it is the board, rather than the
stockholders as a whole, that is better able to negotiate and conclude a
transaction in a timely manner.
In the Wyser-Pratte Proxy Statement, the Wyser-Pratte Group asserts that
the Shareholder Rights Resolution is necessary because a potential buyer like
Huntsman does not have the option of dealing directly with stockholders if the
Board disapproves its acquisition proposal. The Rexene Board does not oppose a
fully-financed offer to acquire all of the outstanding Common Stock of the
Company at $16 per share. The Board also has publicly stated that it would take
all actions that are necessary to make the Company's stockholder rights plan
inapplicable to such an offer. Accordingly, if Huntsman were to obtain financing
for his proposal, Huntsman currently could make an offer directly to the
stockholders, who would then be in a position to determine whether to accept or
reject the offer. In addition, the Wyser-Pratte Group's Stockholder Rights
Resolution has no application to any of Huntsman's proposals, because none of
them were financed.
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<PAGE> 17
In addition, counsel has advised Rexene that it believes that the
Shareholder Rights Resolution may be invalid as a matter of Delaware law. The
Board believes that it has the affirmative legal duty under Delaware law to
respond to and resist takeover attempts that it determines in good faith to be
against the best interests of the Company and the stockholders. Such a duty has
been set forth in a line of Delaware cases, including Unocal Corp. v. Mesa
Petroleum Co., 493 A.2d 946 (1985), and Ivanhoe Partners v. Newmont Mining
Corp., 535 A.2d 1334 (1987). The Wyser-Pratte Group's proposals would, by a
By-law amendment, attempt to remove this legal obligation from the Board. The
Board believes that such a restriction of statutory and fiduciary responsibility
may not be effected through a By-law amendment under Delaware law.
The Board of Directors believes that passage of the Business Combination
Statute Resolution would not be in the best interests of the stockholders or the
Company. By virtue of being incorporated in Delaware, the Company is subject to
the provisions of Section 203 of the DGCL. Section 203 of the DGCL prohibits the
Company from engaging in a business combination, such as a merger or
consolidation, with any person who acquires 15% or more of the Common Stock (an
"interested stockholder") for three years, unless the Company's Board of
Directors approves the proposed business combination before the interested
stockholder reaches the 15% threshold. However, this three year ban will not
apply if the interested stockholder acquires 85% of the stock in the same
transaction that the stockholder acquires 15% of the stock (excluding shares
owned by officers and directors and certain employee stock plans). Nor will the
ban apply if the business combination is approved by the Board before a
potential acquiror becomes an interested stockholder or thereafter by the
holders of at least two-thirds of stock not owned by the interested stockholder.
Section 203 of the DGCL permits stockholders to "opt-out" of its provisions by
voting to amend the Company's Bylaws to provide that the Company elects not to
be governed by Section 203 of the DGCL.
Section 203 of the DGCL provides potential acquirors with an incentive to
deal with the Board by exempting transactions approved by the Board from its
coverage. Section 203 of the DGCL enhances the likelihood that stockholders will
receive the benefit of Board consideration and evaluation of a takeover proposal
and that any takeover proposal presented to stockholders will be favorable to
all stockholders. If a prospective acquiror seeks Board approval of a proposed
business combination, the Board members have a fiduciary duty to act in the best
interests of stockholders in evaluating such an offer. Section 203 of the DGCL
protects stockholders against inadequate offers or abusive takeover tactics
employed by large stockholders.
---------------------
FOR THE REASONS SET FORTH ABOVE, YOUR BOARD OF DIRECTORS UNANIMOUSLY AND
VIGOROUSLY OPPOSES THE WYSER-PRATTE GROUP'S SOLICITATION OF PROXIES AND URGES
YOU NOT TO SIGN ANY GOLD PROXY CARD SENT TO YOU BY THE WYSER-PRATTE GROUP.
WHETHER OR NOT YOU HAVE PREVIOUSLY EXECUTED A GOLD PROXY CARD SENT TO YOU BY THE
WYSER-PRATTE GROUP, THE BOARD URGES YOU TO SIGN, DATE AND DELIVER THE ENCLOSED
WHITE PROXY CARD AS PROMPTLY AS POSSIBLE, BY FAX OR BY MAIL (USING THE ENCLOSED
ENVELOPE), TO D.F. KING & CO., INC., 77 WATER STREET, NEW YORK, NEW YORK,
10005-4495.
If your shares of Common Stock are held in the name of a bank, broker or
other nominee, you are urged to contact the person responsible for your account
and direct him or her to execute a WHITE Proxy Card on your behalf.
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<PAGE> 18
THE STOCK REPURCHASE PROPOSAL
In the Rexene Board's view, the Company's Stock Repurchase Program,
especially when coupled with the Company's capital expenditure and improvement
programs, is a valuable tool to build stockholder value. On March 19, 1997, the
Rexene directors approved the $85 million Stock Repurchase Program. The first
$35 million part of the program was commenced pursuant to open market
repurchases and is being continued pursuant to the Offer. Arthur Goeschel voted
against the Stock Repurchase Program and subsequently resigned from the Board.
See "Background of the Solicitation" and "Information Concerning the Board of
Directors and Executive Officers."
Applicable law grants the Board the authority to implement the entire Stock
Repurchase Program without stockholder approval. Although the Board does not
believe that the financing of the Stock Repurchase Program would impact the
financial condition of the Company in a materially adverse manner, the Board
does recognize that implementation of the entire program would increase the
leverage of the Company. The Board believes that it is appropriate for
stockholders to consider the advisability of the increased leverage that would
result from implementation of the entire program and determine whether to grant
the Board the authority to implement the second $50 million part of the Stock
Repurchase Program. Accordingly, the Board of Directors has proposed the
following resolution for adoption by the Company's stockholders at the Special
Meeting:
"RESOLVED, that the Rexene Board of Directors hereby is authorized to
cause the repurchase by the Company of up to $50 million of the Common
Stock, either through an open market repurchase program, privately
negotiated transactions, tender offer or otherwise."
If the Stock Repurchase Proposal is adopted by the Company's stockholders,
the Company currently intends to promptly proceed with the issuance of a new
series of preferred stock of the Company with an aggregate liquidation value of
$50 million (the "Preferred Stock"). The Board would authorize the establishment
of the Preferred Stock without any subsequent vote of stockholders as permitted
by the authority granted to the Board by the Company's Restated Certificate of
Incorporation. The Preferred Stock would be issued by the Company in a private
placement to certain "qualified institutional buyers" (as such term is defined
in Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act")) and certain other institutional accredited investors. The
sale of the Preferred Stock would not be registered under the Securities Act and
the Preferred Stock may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of
the Securities Act. Set forth below is a brief summary of the anticipated terms
of the Preferred Stock. At the time the Board approved the Stock Repurchase
Program, the Board, after discussions with its financial advisors, believed it
should be successful in issuing the Preferred Stock. Stockholders should note
that conditions in the market for high yield securities have weakened since the
time the Board approved the Stock Repurchase Program and the ability of the
Company to issue the Preferred Stock, and the final terms and pricing thereof,
will depend upon then prevailing market conditions. If stockholders were to
approve the Stock Repurchase Proposal and the Company were not capable of
selling the Preferred Stock, the Board reserves the right to finance the program
through alternate sources, or to partially implement or elect not to implement
the second part of the program.
Dividends on the Preferred Stock will be payable quarterly out of funds
legally available at a dividend rate to be agreed upon by Rexene and the initial
purchasers of the Preferred Stock (the "Initial Purchasers"). The Preferred
Stock will rank senior to the Common Stock as to dividends and upon liquidation.
The Preferred Stock will not be redeemable prior to the fifth anniversary of the
date of issuance. Thereafter, the Preferred Stock will be redeemable at the
option of the Company for cash at redemption prices to be agreed upon by Rexene
and the Initial Purchasers. In addition, in the event of a sale by the Company
of shares of Common Stock, shares of Preferred Stock with an aggregate
liquidation value of up to $17.5 million will be redeemable at the option of the
Company for cash at a redemption price to be agreed upon by Rexene and the
Initial Purchasers. The Preferred Stock will be mandatorily redeemable by Rexene
on the tenth anniversary of the date of issuance. The holders of the Preferred
Stock will not have voting rights, except to elect two directors in the event of
the failure of Rexene to pay dividends on the Preferred Stock for a specified
number of consecutive quarters or in certain circumstances upon a change of
control of Rexene as described below or as required by law. The Company will
have the option in certain circumstances to exchange the Preferred Stock for
subordinated debentures of the Company. The terms of the Preferred Stock may
include certain of the
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<PAGE> 19
covenants included in the Senior Notes Indenture. Upon a change of control of
the Company, (i) provided that the terms of the Company's outstanding
indebtedness at the time of such change of control do not prevent such a
repurchase, each holder of Preferred Stock will have the right to require the
Company to repurchase all or a portion of the Preferred Stock owned by such
holder at a redemption price equal to 101% of the liquidation value of such
Preferred Stock and (ii) if the Company does not offer to repurchase the
Preferred Stock as described in clause (i), the dividend rate on the Preferred
Stock will be increased and the holders of the Preferred Stock will be entitled
to elect two persons to the Board.
If the Stock Repurchase Proposal is not approved by stockholders, the
Company will not implement the second $50 million part of the Stock Repurchase
Program. If the Stock Repurchase Proposal is approved by stockholders and the
Company is successful in issuing the Preferred Stock or has access to alternate
available funds, then repurchases of Common Stock may be made from time to time
by the Company as directed by the Board in its discretion through open market or
privately-negotiated transactions, tender offer or otherwise.
As noted above, as currently contemplated, upon a change of control of the
Company, (i) provided that the terms of the Company's outstanding indebtedness
at the time of such change of control do not prevent such a repurchase, each
holder of Preferred Stock would have the right to require the Company to
repurchase all or a portion of the Preferred Stock owned by such holder at a
redemption price equal to 101% of the liquidation value of such Preferred Stock
and (ii) if the Company does not offer to repurchase the Preferred Stock as
described in clause (i), the dividend rate on the Preferred Stock would be
increased and the holders of the Preferred Stock would be entitled to elect two
persons to the Board. The right of the holders of the Preferred Stock to elect
two persons to the Board and the resulting inability of an acquiror to control
the entire Board could make Rexene a less attractive acquisition candidate.
However, the acquiror would be free to designate as many persons to the Board as
it desires and the Board does not believe that the possibility of minority
representation would preclude an acquiror intent on acquiring the Company from
effecting the acquisition. Moreover, minority representation could be avoided by
an acquiror if (i) it is capable of acquiring through negotiation a majority of
the outstanding shares of Preferred Stock, (ii) Rexene is free under the terms
of the Company's outstanding indebtedness at the time of such change of control
to repurchase the Preferred Stock pursuant to the offer described above or (iii)
if Rexene is not free under the terms of its indebtedness to repurchase the
Preferred Stock, the acquiror is capable of (A) refinancing the indebtedness on
terms that would not prevent a repurchase of the Preferred Stock or (B) obtain
the waiver of the requisite holders of the Company's indebtedness to allow the
Company to repurchase the Preferred Stock.
Issuance of the Preferred Stock and purchases of Common Stock pursuant to
the Stock Repurchase Program could under certain changed circumstances in the
future make an acquisition of the Company more expensive. However, repurchases
of shares pursuant to the terms of the Offer and at current market prices (i.e.,
purchases of Common Stock at or below $16 per share) should make Rexene a more
attractive acquisition candidate for an acquiror intending to pay $16 per share.
The Company has no current plans or proposals regarding the manner in which the
second part of the Stock Repurchase Program, if approved by stockholders, would
be implemented, or the price at which shares will be repurchased. Possible
future purchases by the Company will depend on numerous factors, including the
market price of the shares, the results of the Offer, the Company's business and
financial condition and general economic and market conditions.
The holders of the Preferred Stock generally would not have any voting
rights in the election of directors and therefore the issuance of the Preferred
Stock would not have any impact on proxy contests involving the Company.
Repurchases of shares pursuant to the Stock Repurchase Program will have the
effect of increasing the proportionate ownership of stockholders who do not sell
their shares to the Company. As of March 31, 1997, no person was known by the
Company to be the beneficial owner of more than 5% of the outstanding shares,
except that: the Company understands from publicly available reports to the SEC
that (a) the Wyser-Pratte Group may be deemed to be a group for federal
securities law purposes beneficially owning in the aggregate 2,483,800 shares or
approximately 13.2% of the outstanding shares and (b) David C. Swalm and certain
affiliates (collectively, "Swalm") may be deemed to be a group for federal
securities law purposes beneficially owning in the aggregate 1,850,000 shares or
approximately 9.8% of the outstanding shares. See "Ownership of Common
Stock -- Security Ownership of Certain Beneficial Owners." If the Company
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<PAGE> 20
purchases 2,156,250 shares pursuant to the Offer (approximately 11.5% of the
outstanding shares as of March 31, 1997), assuming no shares beneficially owned
by the Wyser-Pratte Group are tendered in the Offer, shares beneficially owned
by the Wyser-Pratte Group would represent 14.9% of the outstanding shares and
assuming no shares beneficially owned by Swalm are tendered in the Offer, shares
beneficially owned by Swalm would represent 11.1% of the outstanding shares. The
Company has no knowledge as to whether the Wyser-Pratte Group or Swalm will
tender shares pursuant to the Offer.
As of March 31, 1997, the Company's directors and executive officers as a
group (15 persons) beneficially owned 1,661,430 shares (including 350,919 shares
issuable upon the exercise of options exercisable within 60 days of such date),
which constituted approximately 8.7% of the outstanding shares (including shares
issuable if options held by the Company's directors and executive officers
exercisable within 60 days of such date were exercised) at such time. If the
Company purchases 2,156,250 shares pursuant to the Offer and no director or
executive officer tenders shares pursuant to the Offer (as is intended by the
directors and executive officers), then after the purchase of shares pursuant to
the Offer, the Company's directors and executive officers as a group would
beneficially own approximately 9.8% of the outstanding shares (including shares
issuable if options held by the Company's directors and executive officers
exercisable within 60 days of such date were exercised). As of March 31, 1997,
no director or executive officer had beneficial ownership of more than 1% of the
outstanding shares, except Richard C. Perry and Stephen C. Swid, each a director
of the Company, whose beneficial ownership was approximately 3.2% and 3.4%,
respectively, of the outstanding shares. If the Company purchases 2,156,250
shares pursuant to the Offer, assuming no shares beneficially owned by Messrs.
Perry and Swid are tendered in the Offer (as is intended by Messrs. Perry and
Swid), shares beneficially owned by Messrs. Perry and Swid would represent
approximately 3.5% and 3.8%, respectively, of the outstanding shares (including
shares issuable if options held by the Company's directors and executive
officers exercisable within 60 days of such date were exercised).
The Company has no present plans or proposals as to how the second part of
the Stock Repurchase Program would be implemented or the price at which shares
would be repurchased. In addition, the Company has no idea as to whether the
Company's 5% stockholders or directors and executive officers would or would not
sell shares to the Company pursuant to the Stock Repurchase Program. If no such
person sold shares, the Company purchased 2,156,250 shares pursuant to the Offer
and purchased an additional 3,603,603 shares pursuant to the second part of the
Stock Repurchase Program ($50 million worth of shares calculated at the closing
price on April 7, 1997 of $13.875), then, after giving effect to all such
repurchases, the Wyser-Pratte Group would beneficially own approximately 19% of
the outstanding shares, Swalm would beneficially own approximately 14.2% of the
outstanding shares, the Company's directors and executive officers would
beneficially own approximately 12.4% of the outstanding shares, Mr. Perry would
beneficially own approximately 4.6% of the outstanding shares and Mr. Swid would
beneficially own approximately 4.9% of the outstanding shares.
The Company has in place a stockholder rights plan (or so-called "poison
pill") that was adopted by the Board to discourage unsolicited takeovers of the
Company on terms that the Board determines to be not in the best interests of
the Company and its stockholders. The provisions of the plan are intended to
provide the Board with means to counter abusive takeover tactics the Board deems
unfair and to enhance the ability of the Board to negotiate with any potential
acquiring person or group from the strongest possible positions. However, the
plan could have the effect of discouraging certain attempts to acquire the
Company because the plan would effect substantial voting and economic dilution
on any stockholder acquiring beneficial ownership of 15% or more of the
outstanding shares of Common Stock (except by means of repurchase of shares by
the Company) without the consent of the Board. Stockholders should be aware that
the Board has stated that it would take all steps that are necessary to make the
Company's stockholder rights inapplicable to a fully-financed cash offer to
acquire all of the outstanding Common Stock at $16 per share, regardless of
whether such offer provides for a tender offer or a long-form merger transaction
or would or would not be consummated within 60 days. Accordingly, an offer that
meets the foregoing conditions could be made directly to Rexene's stockholders,
who would then be in a position to determine whether to accept or reject the
offer.
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<PAGE> 21
Stockholders also should be aware that the Company's Restated Certificate
of Incorporation authorizes the Board to issue preferred stock from time to time
in one or more series, each series to have such dividend rates, convertibility
options, redemption rates and prices, liquidation preferences, voting rights and
other rights, limitations and qualifications as the Board may determine. The
foregoing could be used by the Board to dilute the voting and ownership interest
of persons seeking to gain control of the Company. Other than the Preferred
Stock and the preferred stock authorized in connection with the stockholder
rights plan, the Board has no present plans to authorize the issuance of any
series of preferred stock. In addition, the Company's By-laws require
stockholders who wish to propose nominees for election to the Board and other
business for consideration by stockholders at a regular or special meeting of
stockholders to give prior written notice to the Company. The Company's Restated
Certificate of Incorporation also provides that action may be taken by
stockholders by written consent in connection with any particular matter only
with the consent of the holders of 2/3 or more of the shares entitled to vote on
the matter.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE STOCK REPURCHASE
PROPOSAL.
INFORMATION CONCERNING THE SPECIAL MEETING
The Board has fixed the close of business on April 18, 1997 as the Record
Date for the determination of the holders of Common Stock entitled to notice of
and to vote at the Special Meeting. Only stockholders of record at the close of
business on the Record Date will be entitled to notice of and to vote at the
Special Meeting. In order to ensure that all stockholders entitled to vote at
the Special Meeting receive timely notice of the Special Meeting, the Company
plans to commence mailing of the notice and a copy of this proxy statement and
form of proxy on or about April 9, 1997 to all stockholders of record as of a
recent date and also to provide on a daily basis notice and such materials to
all persons who become record stockholders of the Company through April 18,
1997. Stockholders who wish to tender shares of Common Stock pursuant to the
Offer may nevertheless vote those shares at the Special Meeting, in any manner
the tendering stockholder desires to vote, whether the shares are tendered prior
to, on or after the Record Date.
Each holder of Common Stock on the Record Date will be entitled to one vote
for each share of Common Stock held of record upon each matter properly
submitted at the Special Meeting. The presence, either in person or by proxy, of
a majority of the outstanding shares of Common Stock entitled to be voted at the
Special Meeting is necessary to constitute a quorum thereat. Abstentions and
broker non-votes will be included in the calculation of the number of votes
represented at the meeting for purposes of determining whether a quorum has been
achieved. A "broker non-vote" 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. As of March 31, 1997, there were 18,816,453
shares of Common Stock issued and outstanding.
If the enclosed WHITE Proxy Card is properly executed and received by the
Company in time to be voted at the Special Meeting, the shares of Common Stock
represented thereby will be voted in accordance with the instructions marked
thereon. Executed proxies with no instructions indicated thereon will be voted
"AGAINST" each of the Wyser-Pratte Proposals, "FOR" the Board Nominees pursuant
to the Election of Directors Resolution and "FOR" the Stock Repurchase Proposal.
The Board is not aware of any matters other than those set forth in the
Notice of Special Meeting of Stockholders that may be brought before the Special
Meeting, and under the By-laws no business may be transacted at the Special
Meeting other than such business as is designated in the Notice of Special
Meeting of Stockholders. If any other procedural matters properly come before
the Special Meeting, the persons named in the accompanying WHITE Proxy Card will
vote the shares represented by all properly executed proxies on such matters in
such manner as shall be determined by such persons.
Pursuant to the DGCL and the Restated Certificate of Incorporation of the
Company, (i) the adoption of each of the Omnibus Resolution, the Facilitating
By-laws Resolutions and the Shareholder Rights Resolution
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<PAGE> 22
will require the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote on the subject
matter; (ii) the adoption of each of the Business Combination Statute Resolution
and 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) assuming
that the Director Removal Resolution is approved, directors will be elected by
the affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy (if the Omnibus Resolution and Facilitating
By-Laws Resolutions are approved) or a plurality vote of the shares of Common
Stock present in person or represented by proxy and entitled to vote on the
election of directors (if the Omnibus Resolution and Facilitating By-Laws
Resolutions are not approved).
The required vote of the stockholders of the Company on the Business
Combination Statute Resolution and the Director Removal Resolution is based upon
the total number of outstanding shares of Common Stock as of the Record Date.
Accordingly, the abstention from voting by a stockholder and broker non-votes
will have the same effect as a vote "AGAINST" the Business Combination Statute
Resolution and the Director Removal Resolution. The required vote of the
stockholders of the Company on the Omnibus Resolution, the Facilitating By-laws
Resolutions, the Shareholder Rights Resolution and the Stock Repurchase Proposal
is based upon the number of outstanding shares of Common Stock present in person
or represented by proxy at the Special Meeting and entitled to vote on the
subject matter. Accordingly, the abstention from voting by a stockholder will
have the same effect as a vote "AGAINST" the Omnibus Resolution, the
Facilitating By-laws Resolutions, the Shareholder Rights Resolution and the
Stock Repurchase Proposal and broker non-votes will have the effect of reducing
the number of affirmative votes required for approval of the Omnibus Resolution,
the Facilitating By-Laws Resolutions, the Shareholder Rights Resolution and the
Stock Repurchase Proposal. Abstentions and broker non-votes will have the same
effect as votes "AGAINST" the Election of Directors Resolution (if the Omnibus
Resolution and the Facilitating By-Laws Resolutions are approved) or will have
no effect on voting on such resolution (if the Omnibus Resolution and the
Facilitating By-Laws Resolutions are not approved).
A proxy may be revoked prior to its being voted by: (i) delivering to the
Secretary of the Company, at or before the Special Meeting, a written instrument
bearing a later date than the proxy which instrument, by its terms, revokes the
proxy; (ii) duly executing a subsequent proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the Special Meeting;
or (iii) attending the Special Meeting and giving notice of revocation to the
Secretary of the Company or in open meeting prior to the proxy being voted
(although attendance at the Special Meeting will not in and of itself constitute
a revocation of a proxy). Any written instrument revoking a proxy should be sent
to: Rexene Corporation, 5005 LBJ Freeway, Dallas, Texas 75244, Attention:
Secretary of the Corporation.
If you have any questions concerning the Company's solicitation of proxies,
or the Wyser-Pratte Group's solicitation of proxies, please contact D.F. King &
Co., Inc., Toll-Free, at 1-800-714-3310.
RECESS OR ADJOURNMENT OF MEETING AND OTHER MATTERS
The individuals named as proxies in the form of proxy solicited by the
Board of Directors 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 Wyser-Pratte Proposals or the Stock Repurchase
Proposal, or to allow the solicitation of additional votes, if necessary,
against the Wyser-Pratte Proposals or for the Stock Repurchase Proposal, to vote
against proposals to recess or adjourn the Special Meeting, and to vote, in
their discretion, upon such other procedural matters as may properly come before
the Special Meeting and any adjournment or postponement thereof.
CERTAIN LEGAL MATTERS
On July 23, 1996, the Company was served with a purported stockholder class
action lawsuit as filed in the Chancery Court of the State of Delaware, in and
for New Castle County, arising from the Company's rejection of Huntsman's
unsolicited offer to purchase all of the issued and outstanding shares of Common
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<PAGE> 23
Stock for $14.00 per share. The lawsuit names the Company and each of its
directors as defendants. The complaint alleges that the defendant directors
breached their fiduciary duty to stockholders by refusing to attempt in good
faith to maximize stockholders value in the sale of the Company and engaging in
a plan to thwart and reject offers from third parties, including Huntsman, in
order to entrench management. Plaintiff seeks certification of the lawsuit as a
class action, an order requiring defendants to take various actions including
exposing the Company to the market place in an effort to create an auction of
the Company and an unspecified amount of damages. The Company is also aware of
two other similar lawsuits that are also pending in the Chancery Court. The
Company believes that these lawsuits are without merit and intends to contest
them vigorously.
On February 14, 1997, the Wyser-Pratte Group filed a complaint in the
Chancery Court of the State of Delaware seeking to compel Rexene to hold the
Special Meeting on April 30, 1997 at 11:00 a.m. at the offices of The
Corporation Trust Company in Wilmington. On March 3, 1997, after the Board
announced the notice of the Special Meeting for April 30, 1997 at the time and
place requested by the Wyser-Pratte Group plaintiffs, the Wyser-Pratte Group
filed an amended complaint seeking to have the court set aside the record date
of April 18 set by the Board in accordance with Section 213(a) of the DGCL and,
instead, set March 20, 1997 as the record date for the Special Meeting. On March
7, 1997, the Company filed a motion to dismiss the Wyser-Pratte Group's amended
complaint. On March 18, 1997, the court granted the Company's motion to dismiss,
thereby upholding the Rexene Board's setting of April 18, 1997 as the record
date for the Special Meeting. The Wyser-Pratte Group has appealed the court's
decision to the Delaware Supreme Court.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The table set forth below provides certain information with respect to
those persons who are currently serving as directors of the Company and
executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Andrew J. Smith...................... 55 Chairman of the Board, Director and Chief
Executive Officer
Lavon N. Anderson.................... 61 Director, President and Chief Operating
Officer
James R. Ball........................ 54 Director
Harry B. Bartley..................... 69 Director
R. James Comeaux..................... 59 Director
William B. Hewitt.................... 58 Director
Ilan Kaufthal........................ 49 Director
Charles E. O'Connell................. 65 Director
Jack E. Knott........................ 42 Director, Executive Vice President and
President -- Rexene Products, a division of
the Company
Richard C. Perry..................... 42 Director
Stephen C. Swid...................... 56 Director
Jonathan R. Wheeler.................. 45 Executive Vice President and President -- CT
Film, a division of the Company
James M. Ruberto..................... 50 Executive Vice President -- Administration
Bernard J. McNamee................... 61 Executive Vice President, Secretary and
General Counsel
Geff Perera.......................... 43 Executive Vice President and Chief Financial
Officer
</TABLE>
ANDREW J. SMITH has been Chairman of the Board of Directors since April
1996 and Chief Executive Officer and a director of the Company since March 1992.
From December 1991 to March 1992, he was a private consultant. From June 1991 to
December 1991, he was President and Chief Operating Officer of Itex Enterprises,
Inc., an environmental remediation company. Mr. Smith also served as a
consultant to Rexene from January 1991 to June 1991. Immediately prior thereto,
he had been a director of Rexene since May 1988
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<PAGE> 24
and the President and Chief Executive Officer of Rexene since June 1988. Mr.
Smith joined the Company in 1976.
LAVON N. ANDERSON has been President and Chief Operating Officer of the
Company since January 1991 and a director since February 1990. From May 1988 to
January 1991, Dr. Anderson was Executive Vice President-Manufacturing and
Technical of Rexene. Prior thereto, Dr. Anderson served the Company in various
capacities since 1972.
JAMES R. BALL has been a director of the Company since April 1996. He is a
private investor and is engaged in private consulting. Mr. Ball served Vista
Chemical Company in a number of capacities from 1984 to 1994, including Vice
President, Marketing from July 1984 to August 1987, Senior Vice President,
Commercial from August 1987 to February 1992, Executive Vice President and Chief
Operations Officer, from February 1992 to July 1992, and President and Chief
Executive Officer from July 1992 to December 1994. Prior to July 1984, Mr. Ball
held various positions with Conoco since 1969. Mr. Ball is a director of The
Carbide/Graphite Group.
HARRY B. BARTLEY has served as a director of the Company since April 1995.
He is currently retired. Mr. Bartley served Hoechst Celanese Corporation in a
number of capacities from 1950 to 1989, including President of Celanese Chemical
Co. from 1976 to 1987, President of Hoechst Celanese Chemical Group from 1987 to
1989 and director of Hoechst Celanese Corporation from 1987 to 1989.
R. JAMES COMEAUX has served as a director of the Company since April 1995.
He has served as President of Petrochemical Management, Inc., a consulting firm,
since April 1993. From August 1989 to January 1993, Mr. Comeaux was President,
Chief Executive Officer and Director of Arcadian Corporation, a fertilizer
manufacturer. Prior to such time, Mr. Comeaux was Senior Vice President of FINA,
Inc. from 1984 to 1989 and served Gulf Oil Corporation in a number of capacities
from 1967 to 1984.
WILLIAM B. HEWITT has served as a director of the Company since February
1990. He has been President of Union Corporation, a receivables management and
customer service outsourcing company, since May 1995 and Chairman of the Board
and Chief Executive Officer of Capital Credit Corporation, a receivables
management company, since September 1991. Mr. Hewitt was Executive Vice
President of First Manhattan Consulting Group, a management consulting firm,
from 1980 to September 1991. He is also a director of the Union Corporation.
ILAN KAUFTHAL has served as a director of the Company since September 1992.
He has been a managing director of Schroder Wertheim since 1987. He is also a
director of United Retail Group, Inc., Cambrex Corporation and Russ Berrie &
Company.
CHARLES E. O'CONNELL has served as a director of the Company since April
1995. He is currently retired. From 1985 to 1988, Mr. O'Connell served as
President of the Society of Plastics Industries, a trade association. From 1964
to 1984, he served Gulf Oil Corporation in a variety of capacities.
JACK E. KNOTT has been a director of the Company since April 1996 and
Executive Vice President of the Company and President of Rexene Products since
March 1995. Prior to March 1995, Mr. Knott had been Executive Vice
President-Sales and Market Development of the Company since March 1992. Prior
thereto, Mr. Knott was an Executive Vice President of Rexene since January 1991
and President of CT Film since February 1989.
RICHARD C. PERRY has served as a director of the Company since March 19,
1997. Mr. Perry is President of Perry Corp., a New York based private investment
management firm, which he founded in November 1988. From 1977 to 1988, Mr. Perry
implemented investment strategies in the equity trading area of Goldman, Sachs &
Co. He also is Chairman of the Board of FTD Corporation and a director of Radio
& Records, Inc.
STEPHEN C. SWID has served as a director of the Company since March 19,
1997. Mr. Swid has served as Chairman and Chief Executive Officer of SCS
Communications, an owner and operator of diverse media properties, since late
1989. From February 1990 to January 1995, Mr. Swid was the Chairman and Chief
Executive Officer of Westview Press. Prior thereto, Mr. Swid had been the
Chairman and Chief Executive Officer of SBK Entertainment World, Inc., from
November 1986 to May 1989. For the twelve years prior
21
<PAGE> 25
thereto, Mr. Swid had been the Co-Chairman and Co-Chief Executive Officer of
Knoll International Holdings, Inc.
JONATHAN R. WHEELER has been Executive Vice President of the Company and
President of CT Film since January 1996. Prior thereto, Mr. Wheeler was
Executive Vice President-Administration since April 1995. Prior thereto, Mr.
Wheeler had been Senior Vice President-Administration of the Company since
December 1990.
JAMES M. RUBERTO has been Executive Vice President-Administration since
January 1996. Prior thereto, Mr. Ruberto had been Executive Vice President of
the Company and President of CT Film since March 1992. Prior thereto, Mr.
Ruberto had been Executive Vice President-Sales and Market Development of Rexene
since January 1991. From April 1989 to January 1991, Mr. Ruberto was Executive
Vice President-Marketing and Business Planning of Rexene.
BERNARD J. MCNAMEE has been Executive Vice President, Secretary and General
Counsel of the Company since April 1995. Prior thereto, Mr. McNamee had been
Vice President, Secretary and General Counsel of the Company since May 1993.
From September 1989 to November 1992, Mr. McNamee was Vice President and General
Counsel of Ferro Corporation, a multinational manufacturer of specialty
materials.
GEFF PERERA has been Executive Vice President and Chief Financial Officer
of the Company since May 1996. Prior thereto, Mr. Perera had been Vice President
of the Company since January 1991 and Controller since February 1989.
On July 7, 1992, the United States Bankruptcy Court for the District of
Delaware entered an order confirming a First Amended Plan of Reorganization,
which became effective on September 18, 1992, relating to the Company's
bankruptcy proceedings pursuant to voluntary petitions filed by the Company's
predecessor under Chapter 11 of the United States Bankruptcy Code on October 18,
1991. Messrs. Anderson, Hewitt and Smith, directors of the Company, were also
directors of the Company's predecessor that filed such petitions.
Following the meeting of the Rexene Board of Directors held on March 19,
1997, Arthur L. Goeschel resigned as a Rexene director. The stated reason for
the resignation was Mr. Goeschel's opposition to open market purchases pursuant
to the first part of the Stock Repurchase Program, which Mr. Goeschel believes
was implemented for the purpose of purchasing shares held by stockholders who
would support the removal of Rexene's current directors at the Special Meeting.
Mr. Goeschel also expressed his opposition to borrowing funds for the purpose of
financing repurchases under the program because of his personal views regarding
the dangers of leverage.
The Company strongly disagrees with Mr. Goeschel's characterization of the
Stock Repurchase Program and the motivations of the Rexene directors in
authorizing the program. The Rexene Board authorized the Stock Repurchase
Program as a result of the requests of many of the Company's stockholders as
expressed to Rexene management and directors in recent months and because the
Rexene directors feel that the program complements the Company's capital and
improvement programs and will build stockholder value. At the time of Mr.
Goeschel's resignation, the first part of the Stock Repurchase Program was to be
implemented by purchases of up to $35 million and was to be conducted as an open
market purchase program in accordance with rules and regulations promulgated by
the SEC. The program was not to discriminate among stockholders and was to be
open to all stockholders who desire to sell their shares at current market
prices. In fact, the Stock Repurchase Program was to have the effect of reducing
the number of affirmative votes that the Wyser-Pratte Group would need to obtain
at the Special Meeting to be successful in removing Rexene's current directors.
In addition, at current market prices, the program would have made Rexene a more
attractive acquisition candidate for an acquiror intending to pay $16 per share.
Further, as designed by the Board, the majority of repurchases pursuant to the
program were to be made only if stockholders approve the Stock Repurchase
Proposal at the Special Meeting and, accordingly, could not possibly have had
any impact on the vote at the Special Meeting. The Company's financial advisors
expressed to the Board their view that the financing of the program would not
impact the financial condition of the Company in a materially adverse manner, a
view which Mr. Goeschel agreed with when discussed by the Board and its
advisors. Such a view was based upon management's belief as to the future
prospects of Rexene's business and the pro forma impact
22
<PAGE> 26
on the Company's financial coverage ratios of the bank borrowings and issuance
of Preferred Stock necessary to finance the Stock Repurchase Program.
During 1996, the Board of Directors held 16 meetings. The Board of
Directors has an Executive Committee. When the Board is not in session, the
Executive Committee may, to the extent permitted by law, exercise the powers of
the Board of Directors in the management of the business and affairs of the
Company. The Executive Committee of the Board of Directors is composed of Lavon
N. Anderson, William B. Hewitt and Andrew J. Smith. During 1996, the Executive
Committee held no meetings.
The Company has standing audit, compensation and nominating committees of
the Board of Directors. The Management Development and Compensation Committee
(the "Compensation Committee"), which held 8 meetings during 1996, is composed
of William B. Hewitt (Chairman), Harry B. Bartley, Jr., R. James Comeaux and
Charles E. O'Connell. The Compensation Committee exercises the powers of the
Board of Directors in connection with all matters relating to compensation of
executive officers, employee benefit plans and the administration of Rexene's
stock option programs.
The Audit Committee, which held 2 meetings in 1996, is composed of Ilan
Kaufthal (Chairman), Harry B. Bartley, Jr. and James R. Ball. The Audit
Committee's primary responsibilities are to (i) recommend Rexene's independent
auditors to the Board of Directors, (ii) review with Rexene's auditors the plan
and scope of the auditors' annual audit, the results thereof and the auditors'
fees, (iii) review internal audit procedures and periodically meet with Rexene's
internal auditors to review the results of such procedures, (iv) review Rexene's
financial statements and (v) take such other action as they deem appropriate as
to the accuracy and completeness of financial records of Rexene and financial
information gathering, reporting policies and procedures of Rexene.
The function of the Nominating Committee is to recommend nominees for
election as directors at the annual meeting of stockholders and to recommend the
candidates for election to fill vacancies on the Board as they occur. The Board
of Directors considers and takes action upon the recommendations of the
Nominating Committee. Although this committee has no formal policy on the
subject, the Board of Directors believes that any nominee recommended by a
stockholder in writing to the Secretary of the Company with complete
biographical data regarding the nominee would be considered by the Nominating
Committee. The Nominating Committee, which held two meetings in 1996, is
composed of R. James Comeaux, Ilan Kaufthal and Andrew J. Smith.
CERTAIN TRANSACTIONS
A son of Andrew J. Smith, the Chief Executive Officer and a director of the
Company, became a Vice President of Orion Pacific, Inc. ("Orion") in 1990 and
was a shareholder of Orion between 1993 and 1994. In August 1993, the son of Mr.
Smith resigned as an officer and employee of Orion. Pursuant to contractual
arrangements originated in 1988, (i) the Company sells to Orion certain
discarded byproducts which Orion extracts from Company landfills and (ii) Orion
packages and processes a portion of the REXtac APAO manufactured by the Company
at its plant in Odessa, Texas. During the year ended December 31, 1996, the
Company sold approximately $36,000 of such by-products to Orion in the ordinary
course of business. For the same period, the Company purchased approximately
$1.3 million of APAO processing and packaging services and miscellaneous
materials from Orion. The Company also has agreed to pay Orion an additional
$250,000 per plant for each APAO plant utilizing the technology which the
Company builds or licenses outside the United States (excluding a former joint
venture plant in Japan). The Company currently licenses this technology to Orion
so that Orion can continue providing these services to the Company.
23
<PAGE> 27
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning the
compensation paid or awarded to the Chief Executive Officer of the Company and
the four other highest paid executive officers of the Company in 1996 (the
"named executive officers") for the years indicated.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
OPTIONS
(NUMBER ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OF SHARES) COMPENSATION
--------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Andrew J. Smith............................ 1996 $452,088 $357,186 80,000 $ 6,300(1)
Chief Executive Officer and 1995 431,671 469,808 -- 7,176
Chairman of the Board 1994 367,502 380,000 70,000 4,902
Lavon N. Anderson, President and........... 1996 $297,000 $ 70,000 -- $ 8,568(2)
Chief Operating Officer 1995 297,000 248,054 -- 10,888
1994 292,000 297,000 40,000 6,273
Jack E. Knott, Executive Vice.............. 1996 $241,267 $160,162 40,000 $ 3,106(3)
President and President of 1995 221,675 203,338 -- 3,542
Rexene Products Company 1994 217,921 176,000 38,000 3,209
("Rexene Products"), a division of the
Company
Jonathan R. Wheeler, Executive............. 1996 $225,845 $138,914 40,000 $ 3,573(4)
Vice President and President 1995 206,675 190,630 -- 3,548
of Consolidated 1994 200,838 164,000 32,000 2,703
Thermoplastics Company ("CT Film"), a
division of the Company
James M. Ruberto, Executive Vice........... 1996 $220,008 $ 87,727 20,000 $ 4,427(5)
President -- Administration 1995 220,008 165,270 -- 3,579
1994 217,921 176,000 38,000 3,762
</TABLE>
- ---------------
(1) Consists of Company contributions to employee benefit plans (and related
cash supplements) of $2,250, $4,584 and $2,310 in 1996, 1995 and 1994,
respectively, and imputed income for life insurance of $4,050, $2,592 and
$2,592 for 1996, 1995 and 1994, respectively.
(2) Consists of Company contributions to employee benefit plans (and related
cash supplements) of $2,250, $4,570 and $2,223 in 1996, 1995 and 1994,
respectively, and imputed income for life insurance of $6,318, $6,318 and
$4,050 in 1996, 1995 and 1994, respectively.
(3) Consists of Company contributions to employee benefit plans (and related
cash supplements) of $2,225, $2,744 and $2,426 in 1996, 1995 and 1994,
respectively, and imputed income for life insurance of $881, $798 and $783
in 1996, 1995 and 1994, respectively.
(4) Consists of Company contributions to employee benefit plans (and related
cash supplements) of $2,175, $2,812 and $1,988 in 1996, 1995 and 1994,
respectively, and imputed income for life insurance of $1,398, $736 and $715
in 1996, 1995 and 1994, respectively.
(5) Consists of Company contributions to employee benefit plans (and related
cash supplements) of $2,175, $2,218 and $2,426 in 1996, 1995 and 1994,
respectively, and imputed income for life insurance of $2,252, $1,361 and
$1,336 in 1996, 1995 and 1994, respectively.
24
<PAGE> 28
OPTION GRANTS, EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to options
to purchase Common Stock granted during the year ended December 31, 1996 to the
named executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------ ---------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS EXERCISE
GRANTED GRANTED TO OR
(NUMBER OF EMPLOYEES BASE PRICE EXPIRATION
NAME SHARES)(1) IN 1996 ($/SH)(2) DATE 5%($)(3) 10%($)(4)
---- --------------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Smith................. 80,000 16.34% $10.79 8/01/06 $544,000 $1,372,800
Jack E. Knott................... 40,000 8.17% 10.79 8/01/06 272,000 686,400
Jonathan R. Wheeler............. 40,000 8.17% 10.79 8/01/06 272,000 686,400
James M. Ruberto................ 20,000 4.08% 10.79 8/01/06 136,000 343,200
</TABLE>
- ---------------
(1) Options represent the right to purchase shares of Common Stock at a fixed
price per share. Fifty percent (50%) of the options become exercisable when
the market value of the Common Stock first reaches $16.185 per share, and
the balance of such options become exercisable when the market value of the
Common Stock first reaches $21.58 per share. In any event, all of the
options become exercisable on August 1, 2004 or upon the death, disability
or retirement of an optionee or upon a change of control of the Company.
(2) Based on the average trading price on the New York Stock Exchange of the
Common Stock for the preceding twenty trading days.
(3) Represents an assumed market price per share of Common Stock of $17.59.
(4) Represents an assumed market price per share of Common Stock of $27.95.
No named executive officer exercised options to purchase Common Stock in
1996. The following table sets forth certain information with respect to the
unexercised options to purchase Common Stock held at December 31, 1996 by each
of the Company's named executive officers.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 12/31/96 IN-THE-MONEY
(SHARES) OPTIONS AT 12/31/96
--------------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- --------------------- --------------------
<S> <C> <C>
Andrew J. Smith.................................. 68,666/103,334 389,533/309,342
Lavon N. Anderson................................ 45,916/13,334 313,668/66,103
Jack E. Knott.................................... 37,333/52,667 241,320/172,890
Jonathan R. Wheeler.............................. 33,333/50,667 214,877/159,673
James M. Ruberto................................. 37,333/32,667 241,320/116,190
</TABLE>
RETIREMENT PLANS
The Company has a trusteed non-contributory defined benefit pension plan
(the "Retirement Plan") for substantially all non-union employees. The normal
retirement age of participants is 65. An employee is entitled, subject to
various Internal Revenue Code limitations, to annual pension benefits equal to
0.9% of the employee's average annual base salary during the highest paid three
consecutive years of the employee's final ten calendar years of service ("Final
Average Pay") multiplied by years of service under the Retirement Plan, plus
0.5% of the employee's Final Average Pay which exceeds an average, computed
under Internal Revenue
25
<PAGE> 29
Service rules, of the employee's wages taken into account for social security
purposes, multiplied by the number of years of the employee's participation in
the Retirement Plan (up to a maximum of 35 years).
In October 1994, the Company adopted the Rexene Corporation Supplemental
Executive Retirement Plan (the "SERP"), which was amended in 1996. The purposes
of the SERP are to provide supplemental retirement and survivor benefits, in
addition to amounts payable under the Retirement Plan, for a certain select
group of management or highly compensated employees who complete a specified
period of service and otherwise become eligible under the SERP. The Company
intends to fund the SERP from time to time at the discretion of the Management
Development and Compensation Committee or the Board of Directors; the general
assets of the Company are the source of funds for the SERP. Participants of SERP
are entitled on or after age 60 and completion of 15 years of service from and
after the later to occur of January 1, 1988 and their employment commencement
date to receive monthly pension benefits which, when aggregated with benefits
payable under the Retirement Plan, equal 65% of the monthly average of Final
Average Pay multiplied by the participant's percentage of vesting and credited
service under SERP. Generally, participants vest 20% for each of the first five
years of service, commencing October 1, 1994. Upon a change in control of Rexene
(which will occur if the Wyser Pratte Nominees are elected at the Special
Meeting), each participant will be credited with full vesting and credited
service under the SERP. Such pension benefits will be paid to the extent
allowable under the Internal Revenue Code from the Retirement Plan and
thereafter from the SERP. Pension payments to be received by Dr. Anderson under
the SERP will be further reduced by any monthly pension benefits received under
a predecessor company retirement plan, but he will be totally vested and given
full service credit if he elects early retirement after August 1997. In
addition, benefits payable to participants in the SERP who have less than 15
years of service will be reduced at the rate of 6 2/3% per year. If a
participant elects to retire prior to age 60, he is eligible to receive benefits
upon reaching age 55 and in such event his benefits under the SERP may be
reduced in an amount not to exceed 10% for each year of early retirement. Under
the SERP, pension payments will be permitted in excess of the limit imposed by
the Internal Revenue Code under the Retirement Plan, which in 1996 provides that
the highest annual salary on which benefits can be calculated is $150,000.
Messrs. Smith, Anderson, Knott, Wheeler and Ruberto and two other executive
officers are the only current participants in the SERP.
The following table illustrates the amount of combined annual pension
benefits payable under the Retirement Plan and the SERP to participants in
specified average annual earnings and years of service classifications. Benefit
payments under the Retirement Plan are not subject to any reduction for social
security benefits or other offset amounts. Although the amounts set forth below
include benefits payable under the SERP assuming participant vesting of 100%,
all of the current participants in the SERP except one is only currently vested
to the extent of 40% of his accrued benefits in such plan.
<TABLE>
<CAPTION>
ANNUAL BENEFITS FOR YEARS OF SERVICE
--------------------------------------------------------
FINAL AVERAGE PAY 5 10 15 20 25
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000................................ $ 21,665 $ 43,336 $ 65,000 $ 65,000 $ 65,000
$150,000................................ 32,497 65,003 97,500 97,500 97,500
$200,000................................ 43,329 86,671 130,000 130,000 130,000
$300,000................................ 64,994 130,007 195,000 195,000 195,000
$400,000................................ 86,658 173,342 260,000 260,000 260,000
$500,000................................ 108,323 216,678 325,000 325,000 325,000
</TABLE>
For purposes of calculation of benefits under the Retirement Plan, only
years of service since 1984 count in the benefits formula. As of December 31,
1996, the named executive officers had the following credited years of service
under the Retirement Plan: Mr. Smith -- thirteen years; Dr. Anderson -- thirteen
years; Mr. Knott -- eleven years; Mr. Wheeler -- eight years and Mr.
Ruberto -- seven years. For purposes of calculation of benefits under SERP, the
years of credited service for each of the named executive officers as of
December 31, 1996 were as follows: Mr. Smith -- nine years; Dr. Anderson -- nine
years; Mr. Knott -- nine years; Mr. Wheeler -- eight years and Mr.
Ruberto -- seven years.
26
<PAGE> 30
EXECUTIVE SECURITY PLAN
The beneficiaries of two executive officers of the Company, Dr. Anderson
and Mr. Knott, are entitled to receive under the Executive Security Plan of the
Company (the "Security Plan") death benefits equal to lump sum of $300,000 in
the event of the death of Dr. Anderson or Mr. Knott while employed by the
Company. The Company purchases life insurance covering such benefits. At the
present time, it is not expected that any additional executive officers will be
selected for participation in the Security Plan.
COMPENSATION OF DIRECTORS
In 1996, each director who is not an employee of the Company received a fee
of $1,000 for each meeting of the Board attended, $1,000 for each committee
meeting attended which was not held on the same day as a Board meeting and an
annual fee of $10,000 payable in quarterly installments. In addition, on April
30, 1996, each director who is not an employee of the Company received options
to purchase an aggregate of 2,000 shares of Common Stock under the Company's
1995 Stock Option Plan for Outside Directors. Such 1996 options are exercisable
at $3.22 per share, equal to the average of the fair market value per share of
Common Stock for the last 20 trading days immediately preceding April 30, 1996,
less $10.00. The Company also reimburses directors for travel, lodging and
related expenses they may incur in attending Board and committee meetings.
STOCK OPTION PLANS
Certain executive officers of the Company have been granted options to
purchase shares of Common Stock pursuant to the terms of the Rexene Corporation
1994 Long-Term Incentive Plan (the "1994 Incentive Plan"). Pursuant to the terms
of the 1994 Incentive Plan, the Compensation Committee of the Board may, in its
sole discretion, in connection with a Change of Control (as defined in the 1994
Incentive Plan), (i) accelerate the time at which such options may be exercised
so that such options may be exercised in full for a limited period of time on or
before a specified date, (ii) require the mandatory surrender to the Company of
some or all of such options (whether or not such options are then exercisable
under the 1994 Incentive Plan) in exchange for an amount of cash per share of
Common Stock subject to such options equal to the excess, if any, of the Change
of Control Value (as defined in the 1994 Incentive Plan) of the Common Stock
over the per share exercise price(s) under such options for such shares, (iii)
make such adjustments to such options as it deems appropriate to reflect such
Change of Control or (iv) provide that, after the Change of Control, upon any
exercise of an option the 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.
Election of the Wyser-Pratte Nominees at the Special Meeting 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. Election of the Wyser-Pratte Nominees at
the Special Meeting would constitute a Change of Control under the 1993
Non-Qualified Option Plan.
TERMINATION AGREEMENTS
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,
27
<PAGE> 31
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. Election of the
Wyser-Pratte Nominees at the Special Meeting would constitute a change in
control under the termination agreements.
OWNERSHIP OF COMMON STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 31, 1997, information with
respect to each person who was known by the Company (based upon a review of
schedules and reports filed with the SEC) to be the beneficial owner of more
than 5% of the Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
-----------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES CLASS
------------------------------------ --------- ----------
<S> <C> <C>
Guy P. Wyser-Pratte and Spear, Leeds &
Kellogg............................... 2,483,800(1) 13.2%
c/o Guy P. Wyser-Pratte 63 Wall Street
New York, NY 10005
David C. Swalm.......................... 1,850,000(2) 9.8%
11102 Hedwig Lane Houston, Texas 77024
</TABLE>
- ---------------
(1) Based upon information reported in the Wyser-Pratte Proxy Statement.
According to the Wyser-Pratte Proxy Statement, Wyser-Pratte has sole voting
and investment power with respect to 1,369,700 shares of Common Stock
beneficially owned by him and Spear Leeds has sole voting and investment
power with respect to 1,114,100 shares of Common Stock beneficially owned by
it.
(2) Based upon information reported in Amendment No. 2 to Schedule 13D dated
February 28, 1997 filed by Mr. Swalm with the SEC. Mr. Swalm has sole voting
and investment power with respect to 350,000 shares of Common Stock he
beneficially owns. Mr. Swalm has shared voting and investment power with
respect to 1,500,000 shares he beneficially owns.
28
<PAGE> 32
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Common Stock as of March 31, 1997 by each director of the
Company, the executive officers of the Company and all current directors and
executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
--------------------------
NUMBER OF PERCENT OF
NAME SHARES(1)(2) CLASS
---- ------------ ----------
<S> <C> <C>
DIRECTORS
Lavon N. Anderson........................................... 54,383(3) *
James R. Ball............................................... 2,000 *
Harry B. Bartley, Jr........................................ 7,000 *
R. James Comeaux............................................ 7,000 *
William B. Hewitt........................................... 29,000 *
Ilan Kaufthal............................................... 29,000 *
Jack E. Knott............................................... 47,333(4) *
Charles E. O'Connell........................................ 4,000 *
Richard C. Perry............................................ 602,400(5) 3.2%
Andrew J. Smith............................................. 103,557 *
Stephen C. Swid............................................. 639,254 3.4%
EXECUTIVE OFFICERS (EXCLUDING ANY DIRECTOR NAMED ABOVE)
Bernard J. McNamee.......................................... 37,000 *
Geff Perera................................................. 17,670 *
James M. Ruberto............................................ 43,333 *
Jonathan R. Wheeler......................................... 38,500 *
All current directors and executive officers as a group (15
persons).................................................. 1,661,430 8.8%
</TABLE>
- ---------------
(*) Less than 1%
(1) All shares listed are directly held with sole voting and investment power
unless otherwise indicated.
(2) Includes shares subject to stock options which are exercisable within 60
days by the following individuals and group in the following amounts: Dr.
Anderson -- 52,583; Mr. Ball -- 2,000; Mr. Bartley -- 4,000; Mr.
Comeaux -- 4,000; Mr. Hewitt -- 2,000; Mr. Kaufthal -- 29,000; Mr.
Knott -- 43,333; Mr. McNamee -- 34,000; Mr. O'Connell -- 4,000; Mr.
Perera -- 17,670; Mr. Ruberto -- 43,333; Mr. Smith -- 77,000; and Mr.
Wheeler -- 38,000.
(3) Includes 100 shares owned by a corporation of which Dr. Anderson owns 50% of
the outstanding stock and shares voting and investment power.
(4) Includes 3,000 shares held by Mr. Knott's spouse in a custodial capacity
under the Uniform Gift to Minors Act.
(5) All shares are owned beneficially by Perry Corp., for the benefit of
investor accounts managed and controlled by Perry Corp. As controlling
stockholder of Perry Corp., Mr. Perry may be deemed a beneficial owner of
all or a portion of such shares.
29
<PAGE> 33
INFORMATION CONCERNING THE SOLICITATION
The costs of this solicitation will be borne by the Company. In addition to
solicitation by mail, directors, officers and regular employees of the Company
may solicit proxies in person, by telephone, by telegram, by personal interview,
by e-mail, or by telecopier, none of whom will receive additional compensation
for such solicitations. The Company will request banks, brokerage houses and
other custodians, nominees and fiduciaries to forward its solicitation materials
to the beneficial owners of the shares of Common Stock they hold of record and
obtain authorization for, and appropriate certification in connection with, the
execution of Proxy Cards. The Company will reimburse these record holders for
customary mailing expenses incurred by them in forwarding these materials. The
Company also has retained D.F. King & Co., Inc. to assist the Company in
connection with communications with stockholders and to provide other services
in connection with the solicitation of proxies. The fee of D.F. King & Co., Inc.
is estimated to be $250,000 plus reasonable out-of-pocket costs and expenses.
D.F. King & Co., Inc. will employ approximately 40 people in its efforts.
Pursuant to a letter agreement, dated July 21, 1996 (the "SW Letter
Agreement"), the Company has retained Schroder Wertheim to act as its financial
advisor with respect to potential businesses combinations and other transactions
involving the Company and third parties. Pursuant to the SW Letter Agreement,
the Company has agreed to pay to Schroder Wertheim certain fees and expenses and
to indemnify Schroder Wertheim against certain liabilities, including
liabilities under the federal securities laws.
The Company retained Smith Barney on January 15, 1997 to act as its
financial advisor with respect to any solicitation or proxy contest seeking to
remove some or all of the directors of the Company, including the solicitation
by the Wyser-Pratte Group, as well as certain unsolicited offers or proposals,
including transactions or recapitalizations involving the Company. Pursuant to
the terms of Smith Barney's engagement, the Company has agreed to pay to Smith
Barney in connection with such matters (i) a retainer/advisory fee of up to
$500,000, (ii) an opinion fee of $250,000, payable upon delivery by Smith Barney
to the Board of an opinion in connection with an unsolicited proposal or offer,
strategic transaction or recapitalization, (iii) an additional fee of $500,000,
payable upon the abandonment or withdrawal of an unsolicited proposal or offer,
including the solicitation by the Wyser-Pratte Group, and (iv) a transaction fee
(against which the fees specified in clauses (i) through (ii) above will be
credited), payable upon consummation of a strategic transaction or
recapitalization, equal to 1% of the transaction value (including liabilities
assumed) of such strategic transaction or recapitalization.
The Company has also agreed to reimburse Smith Barney upon request from
time to time for travel and other out-of-pocket expenses incurred by Smith
Barney in connection with its engagement, including fees and expenses of its
legal counsel, and to indemnify Smith Barney and certain related parties against
certain liabilities, including liabilities under the federal securities laws,
arising out of Smith Barney's engagement. In the ordinary course of business,
Smith Barney and its affiliates may actively trade the securities of the Company
for their own account and for the account of customers and accordingly may, at
any time, hold long or short positions in such securities.
The total costs of this solicitation are expected to be approximately
$750,000. The total costs incurred through March 31, 1997 in connection with
this solicitation are approximately $235,000.
Neither the Company nor, to the best of the Company's knowledge, any person
acting on its behalf has retained any other person to make solicitations or
recommendations to security holders on its behalf in connection with the
solicitation of proxies.
STOCKHOLDER PROPOSALS
In order to have been considered for inclusion in the Company's proxy
materials for the 1997 Annual Meeting of Stockholders, stockholder proposals
must have been received at the Company's principal executive offices in Dallas,
Texas no later than November 22, 1996.
30
<PAGE> 34
APPENDIX A
INFORMATION CONCERNING CERTAIN PARTICIPANTS
Under applicable resolutions of the SEC, each director and executive
officer of the Company, as well as certain other employees and advisors of the
Company, may be deemed to be "participants" in the Company's solicitation of
proxies. Set forth below is certain information concerning such employees and
advisors. For information concerning the directors and executive officers of the
Company, see "Information Concerning the Board of Directors and Executive
Officers" and "Ownership of Common Stock -- Security Ownership of Management."
CONRAD L. BRINGSJORD, age 36, has served as a Managing Director of Smith
Barney since 1994, as Co-Head of the Advisory Group of Smith Barney since 1995
and in various other capacities at Smith Barney since 1993. Before joining Smith
Barney, Mr. Bringsjord was a Vice President in the Advisory Department at Morgan
Stanley & Co. Incorporated from 1987 to 1993. Prior to joining Morgan Stanley &
Co. Incorporated, Mr. Bringsjord was a senior accountant at Deloitte, Haskins &
Sells. Mr. Bringsjord does not beneficially own any shares of Common Stock. Mr.
Bringsjord's address is c/o Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013.
JOHN E. CAPANO, age 28, has been an associate in Smith Barney's Advisory
Group since 1996. Previously, Mr. Capano was an audit and tax analyst at
American Home Products Corporation from 1991 to 1994. Mr. Capano does not
beneficially own any shares of Common Stock. Mr. Capano's address is c/o Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013.
NEIL J. DEVROY, age 49, has served as Vice President of Communications and
Support Services of the Company since March 1995. From November 1990 to February
1995 Mr. Devroy served as Director of Communications and Public Affairs of the
Company. Mr. Devroy beneficially owns 11,408 shares of Common Stock, which
includes 10,408 shares which Mr. Devroy has the right to acquire within 60 days
upon the exercise of options granted to him pursuant to the Company's stock
option plans. Mr. Devroy's address is c/o Rexene Corporation, 5005 LBJ Freeway,
Dallas, Texas 75244.
THOMAS E. REINHART, age 42, has served as a Managing Director and head of
Smith Barney's West Coast Financial Entrepreneurs Group since 1990. Prior
thereto, Mr. Reinhart worked at Drexel Burnham Lambert. Mr. Reinhart does not
beneficially own any shares of Common Stock. Mr. Reinhart's address is c/o Smith
Barney Inc., 350 California Street, Suite 2100, San Francisco, California 94104.
JAMES L. SHUMAN, age 30, has been a vice president of Schroder Wertheim
since 1996 and was an associate at the firm prior to such date. Mr. Shuman does
not beneficially own any shares of Common Stock. Mr. Shuman's address is c/o
Schroder Wertheim & Co. Incorporated, 787 Seventh Avenue, New York, New York
10019.
KENNETH SIEGEL, age 40, has been a Managing Director of Schroder Wertheim
since 1991 and served in various other capacities at such firm prior to such
date. Mr. Siegel does not beneficially own any shares of Common Stock. Mr.
Siegel's address is c/o Schroder Wertheim & Co. Incorporated, 787 Seventh
Avenue, New York, New York 10019.
GARY K. SILBERBERG, age 36, has been a Managing Director of Perry Corp.
since 1994. Prior thereto, Mr. Silberberg was a principal of Baker Nye
Investments from 1985. As a Managing Director of Perry Corp., Mr. Silberberg may
be deemed to beneficially own the 602,400 shares of the Common Stock
beneficially owned by Perry Corp. In addition, Mr. Silberberg beneficially owns
two shares of Common Stock. Mr. Silberberg's address is c/o Perry Corp., 599
Lexington Avenue, New York, New York 10022.
J. STUART WHITE, age 33, has been a vice president of Smith Barney since
January 1997 and was an associate at the firm since 1993. From 1989 to 1993, Mr.
White was an Assistant Vice President at Skopbank. Mr. White does not
beneficially own any shares of Common Stock. Mr. White's address is c/o Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013.
A-1
<PAGE> 35
The following table sets forth information with respect to all purchases
and sales of Common Stock by the participants in this solicitation during the
past two years.
<TABLE>
<CAPTION>
NUMBER OF SHARES
DATE OF TRANSACTION PURCHASED (SOLD)
------------------- ----------------
<S> <C> <C>
Harry B. Bartley........................................ July 19, 1995 1,000
June 17, 1996 2,000
R. James Comeaux........................................ July 24, 1995 1,000
July 28, 1995 2,000
William B. Hewitt....................................... May 9, 1996 8,250
Jack E. Knott........................................... May 24, 1995 1,000
June 20, 1996 1,000
Bernard J. McNamee...................................... May 24, 1995 1,000
June 21, 1996 1,000
Richard C. Perry/
Gary K. Silberberg...................................... July 24, 1996 43,000
July 25, 1996 142,500
July 26, 1996 263,000
July 29, 1996 85,000
July 30, 1996 15,000
July 31, 1996 17,000
August 1, 1996 (23,000)
August 2, 1996 (27,000)
August 5, 1996 (51,000)
August 9, 1996 (129,500)
August 13, 1996 (55,000)
August 15, 1996 (17,200)
August 16, 1996 (18,500)
August 20, 1996 78,200
August 21, 1996 47,600
August 23, 1996 7,000
August 23, 1996 (3,000)
January 6, 1997 65,000
January 7, 1997 73,200
January 8, 1997 35,500
January 14, 1997 25,000
January 15, 1997 14,600
March 12, 1997 (26,000)
March 12, 1997 26,000
Andrew J. Smith....................................... May 30, 1995 2,500
July 17, 1995 1,000
June 20, 1996 1,000
Stephen C. Swid....................................... November 11, 1995 (33,800)
December 7, 1995 (12,300)
December 17, 1996 (3,725)*
December 17, 1996 (7,450)*
January 24, 1996 (54,500)
March 10, 1997 (5,207)*
March 21, 1996 (24,000)
March 26-28, 1996 (31,250)
April 8, 1996 (135,500)
April 8, 1996 (1,000)
</TABLE>
- ---------------
(1) All purchases and sales were by Perry Corp.
* gift
A-2
<PAGE> 36
- --------------------------------------------------------------------------------
REXENE CORPORATION
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 30, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF REXENE CORPORATION
Each of the undersigned hereby constitutes and appoints Andrew J. Smith and
Lavon N. Anderson, 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 April 30, 1997 (the
"Special Meeting"), or at any adjournment or postponement of the Special
Meeting, as follows on the following matters which are described in the Proxy
Statement (the "Proxy Statement") of the Company, dated April 9, 1997, with all
capitalized terms used herein without definition having the meaning set forth
therein.
The Board recommends that stockholders vote "AGAINST" Proposals 1, 3, 4, 5
and 6 and "FOR" Proposals 2 and 7.
1. Director Removal Resolution
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Election of Directors Resolution
Election of Lavon N. Anderson, James R. Ball, Harry B. Bartley, Jr., R.
James Comeaux, William B. Hewitt, Ilan Kaufthal, Jack E. Knott, Charles E.
O'Connell, Richard C. Perry, Stephen C. Swid and Andrew J. Smith.
[ ] 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 Board, 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. Facilitating By-laws Resolutions
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Shareholder Rights Resolution
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Business Combination Statute Resolution
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Omnibus Resolution
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. Stock Repurchase Proposal
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE PROVIDED
[Proxy Continued On Reverse]
- --------------------------------------------------------------------------------
<PAGE> 37
- --------------------------------------------------------------------------------
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 Proposals described
above or to allow the solicitation of additional votes, if necessary, against
Proposals 1, 3, 4, 5 and 6 and for Proposals 2 and 7 described above, to vote
against proposals to recess or adjourn the Special Meeting, 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 "AGAINST" PROPOSALS 1, 3, 4, 5 AND 6 AND "FOR"
PROPOSALS 2 AND 7 DESCRIBED ABOVE. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT
OF THE PROXY STATEMENT OF THE COMPANY DATED APRIL 9, 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.
- --------------------------------------------------------------------------------
