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EXHIBIT 99.1
SHORT FORM MERGER OPTION AGREEMENT
SHORT FORM MERGER OPTION AGREEMENT, dated as of April 27, 1999 (the
"Agreement"), among Eastman Chemical Company, a Delaware corporation ("Parent"),
Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser"), and Lawter
International, Inc., a Delaware corporation (the "Company"). Capitalized terms
used and not defined in this Agreement shall have the meaning ascribed to them
in the Agreement and Plan of Merger, dated, as of April 27, 1999 (the "Merger
Agreement") by and among Parent, the Purchaser and the Company.
WHEREAS, concurrently with the execution of this Agreement, Parent, the
Purchaser and the Company are entering into the Merger Agreement, providing for
the making of a tender offer (the "Offer") to purchase all of the issued and
outstanding shares of the Company's common stock, par value $1.00 per share (the
"Shares"), at a price per Share equal to the Offer Price and, following the
completion of the Offer, the merger (the "Merger") of the Purchaser and the
Company, whereby each Share not purchased pursuant to the Offer (other than
Shares owned by Parent, the Purchaser or any other wholly owned subsidiary of
Parent, Shares held in the treasury of the Company and Dissenting Shares) will
be converted into the right to receive in cash the Offer Price in accordance
with the terms of the Merger Agreement; and
WHEREAS, the Company desires to induce Parent and the Purchaser to enter
into the Merger Agreement and to facilitate the prompt completion of the Merger
following the purchase of Shares pursuant to the Offer.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Purchaser an
irrevocable option (the "Option") to
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purchase up to that number of newly issued Shares (the "Option Shares") equal to
the number of Shares, that when added to the number Shares owned by the
Purchaser and its affiliates immediately following consummation of the Offer,
shall constitute 90% of the Shares then outstanding on a fully diluted basis
(giving effect to the issuance of the Option Shares) for a consideration per
Option Share equal to Offer Price; provided, however, that the number of Option
Shares shall not exceed that number equal to 19.9% of the Shares outstanding on
the date of this Agreement.
2. Exercise of the Option. The Option may be exercised by the
Purchaser at any time after the acceptance for payment by the Purchaser of
Shares pursuant to the Offer in accordance with the terms of the Merger
Agreement. In the event the Purchaser wishes to exercise the Option, the
Purchaser shall give written notice (the "Notice") of its exercise of the Option
and specifying the number of Shares owned by Purchaser and its affiliates
immediately following consummation of the Offer and a place and a time (which
shall not be less than three business days from the date of the Notice) for the
closing of such purchase. The Company shall, within two business days after
receipt of the Notice, deliver written notice to the Purchaser specifying the
number of Option Shares.
3. Payment and Delivery of Certificates. At the closing hereunder:
(i) the Company will deliver to the Purchaser a certificate or certificates
representing the number of Option Shares so purchased and (ii) the Purchaser
will make payment to the Company of the aggregate price for the Option Shares
being purchased, as stated in the Notice, by check or wire transfer in an amount
equal to the product of (x) the Offer Price and (y) the total number of Option
Shares delivered at the closing. The Company shall pay all expenses, and any and
all United States Federal, state and local taxes and other charges, that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under the Section 3.
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4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and the Purchaser as follows:
4.1. The Company has all requisite corporate power and authority to
enter into and perform all of its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company.
4.2. The Company has taken all necessary corporate action to authorize
and reserve for issuance, and at all times prior to the termination of this
Agreement shall have reserved, all of the Option Shares issuable pursuant to
this Agreement.
4.3. The Shares to be issued upon exercise of the Option, upon their
issuance and delivery in accordance with this Agreement as provided herein,
will be duly authorized, validly issued, fully paid and nonassessable, will be
delivered free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Purchaser's
voting rights, charges, adverse rights and other encumbrances of any nature
whatsoever (other than this Agreement) and will not be subject to any preemptive
rights. Upon the delivery to the Purchaser by the Company of a certificate or
certificates evidencing the Option Shares, the Purchaser will receive good,
valid and marketable title to the Option Shares.
5. Representations and Warranties of Parent and the Purchaser. Each
of Parent and the Purchaser hereby represents and warrants to the Company that
(i) it has all requisite power and authority to enter into and perform all of
its obligations under this Agreement; (ii) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of Parent and the Purchaser;
(iii) this Agreement has been duly executed and delivered by Parent and the
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Purchaser and, assuming the due and valid authorization, execution and delivery
by the Company, constitutes a valid and binding obligation of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and by general equitable principles; and
(iv) if and when the Purchaser exercises the Option, it will be acquiring the
Option Shares pursuant to this Agreement for its own account and not with a view
to any public distribution thereof.
6. Adjustment Upon Changes in Capitalization. In the event of any
change in the number of issued and outstanding Shares by reason of any stock
dividend, subdivision, merger, recapitalization, combination, conversion or
exchange of shares, or any other change in the corporate or capital structure of
the Company (including, without limitation, the declaration or payment of any
extraordinary dividend of cash or securities) which would have the effect of
diluting or otherwise adversely affecting the Purchaser's rights and privileges
under this Agreement, the number and kind of the Option Shares and the
consideration payable in respect of the Option Shares shall be appropriately and
equitably adjusted to restore to the Purchaser its rights and privileges under
this Agreement.
7. Termination. This Agreement will terminate upon the earlier to
occur of (i) termination of the Merger Agreement in accordance with its terms
and (ii) the Effective Time of the Merger.
8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agree-
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ment will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and permitted assigns.
9. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (and shall be deemed to
have been duly received if so given) if personally delivered or sent by
registered or certified mail, postage prepaid, or telecopy addressed to the
respective parties at their addresses specified in Section 8.4 of the Merger
Agreement.
10. Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach by the Company of this Agreement, Parent
and the Purchaser would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the Company will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law, and Parent and the Purchaser shall be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted in a court of
competent jurisdiction.
11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
12. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
13. Waiver. Any party hereto may (i) extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto or (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby. The failure of any party to
this Agreement to
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assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
14. Fees and Expenses. Except as otherwise provided herein or in
Section 8.1 of the Merger Agreement, all costs, fees and expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses.
15. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the partes hereto all as of the date first above written.
EASTMAN CHEMICAL COMPANY
By: /s/ Earnest W. Deavenport, Jr.
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Name: Earnest W. Deavenport, Jr.
Title: Chairman of the Board and
Chief Executive Officer
LIPSTICK ACQUISITION CORP.
By: /s/ Allan R. Rothwell
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Name: Allan R. Rothwell
Title: President
LAWTER INTERNATIONAL, INC.
By: /s/ John P. O'Mahoney
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Name: John P. O'Mahoney
Title: Chairman of the Board and
Chief Executive Officer
(219980)
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