<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
LAWTER INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
[LOGO]
LAWTER INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 1995
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of Lawter
International, Inc., a Delaware corporation, will be held in the Auditorium on
the seventh floor of the Terra Museum of American Art, 664 North Michigan
Avenue, Chicago, Illinois on Monday, April 24, 1995, at 10:00 A.M., Chicago
time, for the purpose of considering and taking action upon the following:
1. The election of six directors of the Company to hold office until the
Annual Meeting of Stockholders in 1996 or until their successors are
elected and qualified.
2. A proposal to approve an amendment to the 1992 Non-Qualified Stock Option
Plan.
3. A proposal to approve the 1995 Non-Qualified Stock Option Plan for
Non-Employee Directors.
4. Such other matters as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on March 3, 1995, as
the record date for said meeting, and only holders of Common Stock of the
Company of record at that time will be entitled to notice of and to vote at said
meeting or any adjournment thereof.
The Annual Report of the Company for the year ended December 31, 1994, is
enclosed herewith.
By Order of the Board of Directors.
WILLIAM S. RUSSELL
SECRETARY
March 20, 1995
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO DATE,
SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
LAWTER INTERNATIONAL, INC.
990 SKOKIE BOULEVARD
NORTHBROOK, ILLINOIS 60062
PROXY STATEMENT
This Proxy Statement and the accompanying Proxy card are being mailed to
stockholders on March 20, 1995, in connection with the solicitation of proxies
by the Board of Directors of Lawter International, Inc. (hereinafter referred to
as the "Company") for use at the Annual Meeting of Stockholders of the Company
to be held on April 24, 1995, pursuant to the accompanying notice.
All proxies duly executed and returned will be voted. In the absence of
specific instructions to the contrary, proxies received will be voted in
accordance with the recommendations made herein with respect to the proposals
described in this Proxy Statement. Any stockholder who submits a proxy for said
meeting has the right to revoke it at any time prior to the voting thereof.
Each stockholder is entitled to one vote for each share of Common Stock of
the Company beneficially owned in his/her name at the close of business on March
3, 1995. As of said date, there were issued and outstanding 44,941,903 shares of
Common Stock of the Company and a majority of such shares, present in person or
represented by proxy, will constitute a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
PRINCIPAL HOLDERS OF COMMON STOCK
The following persons are known by the Company to be the beneficial owners
of more than 5% of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP % OF CLASS
- ----------------------------------------------------------- -------------------- -------------
<S> <C> <C>
Daniel J. Terra............................................ 12,114,688 shares 27.0%
990 Skokie Boulevard
Northbrook, Illinois 60062
James D. Terra............................................. 2,244,137 shares 5.0%
990 Skokie Boulevard
Northbrook, Illinois 60062
</TABLE>
ELECTION OF DIRECTORS
At the meeting, a full board of six directors is proposed to be elected.
Each of such directors will hold office until the annual meeting of stockholders
in 1996 or until the election and qualification of a successor. The Board of
Directors has nominated William P. Clark, Arthur A. Hartman, Leonard P. Judy,
Richard D. Nordman, Fred G. Steingraber and Daniel J. Terra for re-election to
the Board. It is intended that all shares represented at the meeting by validly
executed, unrevoked proxies solicited by the Board of Directors of the Company
will be voted for the election as directors of the nominees named below, except
as otherwise directed by stockholders in the accompanying form of proxy.
Directors are elected by a plurality of the votes cast by the holders of the
Common Stock of the Company at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker non-votes or otherwise) have no impact in the election of directors
except to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
1
<PAGE>
The names of the nominees of the Board of Directors, and certain information
with respect to each, are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
NAME, AGE, OCCUPATION ELECTED
AND BUSINESS EXPERIENCE A DIRECTOR
- ------------------------------------------------------------------------------------------------------ ----------
<S> <C>
WILLIAM P. CLARK, 63.................................................................................. 1985
Chief Executive Officer, Clark Company, private investments since 1985. He is a director of Pacific
Telesis Corporation, Dulles Access Rapid Transit (DART) and Morrison-Knudson Corp.(1) (2)
ARTHUR A. HARTMAN, 68................................................................................. 1994
Senior Consultant, APCO Associates, Inc., international business consultants, since 1989. He is a
director of ITT Hartford Insurance Group, Dreyfus Funds and First NIS Investment Fund.(1) (2)
LEONARD P. JUDY, 55................................................................................... 1993
Private investor, since August 1994. Chairman of the Board and Chief Executive Officer 1988-1994,
Rust-Oleum Corporation, manufacturer and marketer of premium coatings. He is a director of Bank One,
Chicago N.A., and Trustmark Insurance Co.(1) (2)
RICHARD D. NORDMAN, 48................................................................................ 1982
President and Chief Operating Officer of the Company, since 1986. He is a director of Kemper
Corporation.
FRED G. STEINGRABER, 56............................................................................... 1993
Chairman of the Board and Chief Executive Officer, since 1986, and Chief Executive Officer, since
1983, A.T. Kearney, Inc., international management consultants. He is a director of Maytag
Corporation, Mercury Finance Company, Southeastern Thrift and Bank Fund, and A.T. Kearney,
Inc.(1) (2)
DANIEL J. TERRA, 83................................................................................... 1958
Chairman of the Board and Chief Executive Officer of the Company, since 1958; Chairman of the Board,
Mercury Finance Company, consumer finance/insurance, since 1989. He is a director of Mercury Finance
Company.(2)
<FN>
- ------------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
</TABLE>
The Board of Directors of the Company held five meetings during 1994. The
Board has two committees, the Audit Committee and the Compensation Committee,
which held two meetings each during 1994. All of the directors attended at least
75% of the aggregate of such Board and Committee meetings, except Mr. Judy. The
Board does not have a nominating committee.
The functions of the Audit Committee are to recommend to the Board of
Directors the independent auditors to be selected for each year and to discuss
with the auditors the scope of the annual audit, the result thereof, and the
adequacy of the Company's accounting, financial and operating controls.
The functions of the Compensation Committee are to review the performance
and compensation of officers and to approve stock options granted to officers
and other key employees.
Each director and officer of the Company is required to report to the
Securities and Exchange Commission, by a specified date, his or her transactions
in the Common Stock of the Company. During 1994, all of the filing requirements
were satisfied. In making this statement, the Company has relied on written
representations of its directors and officers and copies of the reports that
they have filed with the Securities and Exchange Commission.
No authority under the enclosed proxy will be exercised to vote for any
person as a director who is not included in the nominees named above, unless any
of such nominees should become unable to serve, in
2
<PAGE>
which case it is intended that the proxy will be voted for a nominee or nominees
who will be designated by the Board of Directors. The Board has no reason to
believe that any of the above nominees will cease to be a candidate prior to the
meeting.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of March 3, 1995 as to
the beneficial ownership of the Company's outstanding Common Stock by the
directors and named executive officers of the Company and by all current
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY % OF
NAME OWNED(2) CLASS
- ------------------------------------------------------------ ------------------ -----
<S> <C> <C>
William P. Clark............................................ 12,000 (1)
Arthur A. Hartman........................................... -- --
John P. Jilek............................................... 82,441 (1)
Leonard P. Judy............................................. 19,000 (1)
Hermann Mueller............................................. 15,000 (1)
Richard D. Nordman.......................................... 330,857 (1)
John P. O'Mahoney........................................... 42,229 (1)
Fred G. Steingraber......................................... 10,000 (1)
Daniel J. Terra............................................. 12,114,688(3)(4) 27.0%
All current directors and executive officers as a group..... 12,795,642 28.5%
<FN>
- ------------------------
(1) Less than 1%.
(2) The numbers and percentages of shares owned as shown in the table assume
that currently unexercised stock options covering shares which were
exercisable within 60 days of March 3, 1995 had been exercised as follows:
Mr. Clark -- 10,000; Mr. Jilek -- 67,441; Mr. Judy -- 10,000; Mr. Mueller
-- 15,000; Mr. Nordman -- 173,333; Mr. O'Mahoney -- 33,333; Mr. Steingraber
-- 10,000; and all current directors and executive officers as a group --
388,994. Such persons and the members of such group disclaim any beneficial
ownership of the shares subject to such options.
(3) Does not include 877,152 shares beneficially owned by the Terra Foundation
for the Arts, which shares were gifted to the Foundation by Mr. Terra and
of which Mr. Terra is a Director and Chairman, and as to which beneficial
ownership of such shares is disclaimed by Mr. Terra.
(4) Does not include 39,166 shares owned by Mr. Terra's wife in which Mr. Terra
disclaims any beneficial interest.
</TABLE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee was composed of Mr. Clark, Mr. Hartman (since
February 15, 1994), Mr. Judy and Mr. Steingraber, the four independent,
non-employee directors, and Mr. Terra, Chairman and Chief Executive Officer of
the Company, at the time of the actions covered by this report. The Compensation
Committee meets at least annually to discuss and determine compensation for
executive officers. The Compensation Committee is solely responsible for
determining the executive officers' salary and long-term compensation granted in
the form of stock options.
The Compensation Committee's executive compensation policies are designed to
encourage superior performance and to provide levels of compensation that reward
above-average corporate performance, recognize individual initiative and
achievements, and assist the Company in attracting and retaining qualified
executives.
There are two elements to the Company's executive compensation: 1) Base
Salary Compensation and 2) Stock Option Grants. Using the process described
below, the Compensation Committee makes a subjective evaluation of the
performance of each executive in establishing base salary and determining the
amount, if any, of stock options to be granted to each executive.
3
<PAGE>
BASE SALARY
Base salary compensation is determined based on a subjective evaluation of
the individual's potential impact on the Company, the skill and experience
required for the job, the ongoing performance of the individual in the job and
ongoing corporate performance. In evaluating corporate performance, the
Compensation Committee considers various aspects of such performance, including
earnings per share, sales, profits, return on equity, return on sales, and the
Company's performance relative to both other companies in its industry and the
general economy. The Compensation Committee also considers additional factors,
as appropriate. The relative weights of corporate and individual performance may
vary among individuals, and from year to year for the same individual.
The Compensation Committee determined, effective January 1, 1994 (May 1,
1994 for Mr. O'Mahoney) to increase the salaries of the executive officers
listed in the Summary Compensation Table ("Named Officers") by amounts ranging
from 4% to 6%. This determination was based on the Compensation Committee's
subjective evaluation of the factors identified above, giving particular
attention, with respect to corporate performance (since their last increase), to
the sales volume increases, earnings, return on equity and return on sales (each
before the 1993 fourth quarter charges and foreign exchange effects) and the
Company's implementation of its modernization program, and on the lack of any
increase since January 1992 for Mr. Nordman and June 1992 for Mr. Jilek and Mr.
Mueller. Mr. O'Mahoney's previous increase had been effective May 1, 1993.
STOCK OPTION GRANTS
The Compensation Committee believes that stock options are very beneficial
to aligning management's and shareholders' interest in the enhancement of
shareholder value. In keeping with that philosophy, stock options are granted
under the 1992 Non-Qualified Stock Option Plan to executive officers and other
key employees of the Company based on a subjective evaluation of individual
performance and corporate performance. In doing so, the Compensation Committee
reviews the existing options held by each of the executive officers. The grant
of stock options is intended to encourage ownership of the Company's Common
Stock by officers and other key employees of the Company, to provide incentive
for superior performance by such individuals, to attract and maintain employees
of the highest caliber and, as a result, enhance shareholder value. Stock
options are granted at the fair market value of the Company's Common Stock on
the date of grant and will only have value if the Company's stock price
increases.
The Compensation Committee granted stock options to the Named Officers in
1994, based upon the process referred to above. The Compensation Committee, in
making such evaluation, noted the increasing sales and earnings in 1994 and the
strong return on equity and return on sales.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
The Company's Compensation Committee has been advised of the effect of
Section 162(m) of the Code, imposing a limitation on the deductibility for
federal income tax purposes of compensation paid to certain executive officers.
The Company believes its 1992 Non-Qualified Stock Option Plan qualifies as a
"performance-based" compensation plan that would not be subject to such
limitations. The other compensation currently paid to the Company's executive
officers is not expected to exceed the limitation in Section 162(m).
CHIEF EXECUTIVE OFFICER
Mr. Terra, the Chairman and Chief Executive Officer of the Company, founded
the Company and continues to be a significant stockholder of the Company. Mr.
Terra has been authorized to receive but has waived his annual salary from the
Company since 1982. In addition, Mr. Terra does not receive grants of stock
options under the Company's stock option plan. Accordingly, the Compensation
Committee has not specifically evaluated Mr. Terra's performance against
corporate performance during 1994. If Mr. Terra, in the future, decides not to
waive his annual salary, the Compensation Committee will, at that time, evaluate
Mr. Terra's performance against corporate performance.
Compensation Committee: Daniel J. Terra, Chairman Leonard P. Judy
William P. Clark Fred G. Steingraber
Arthur A. Hartman
4
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth the annual, long term and other compensation for
services in all capacities to the Company for the three years ended December 31,
1994 of those persons who were (1) the Chief Executive Officer and (2) the other
four most highly compensated executive officers of the Company in 1994 (the
Named Officers):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
---------------------------- ----------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS/SARS(#) COMPENSATION (2)
- -------------------------------------- --------- ------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Daniel J. Terra....................... 1994 $ --(1) $ -- -- $ --
Chairman and Chief Executive 1993 --(1) -- -- --
Officer 1992 --(1) -- -- --
Richard D. Nordman.................... 1994 372,000 -- 160,000 26,040
President and Chief Operating 1993 354,000 -- 40,000 24,780
Officer 1992 354,000 -- -- 24,780
John P. Jilek......................... 1994 152,000 -- 80,000 10,640
Vice President 1993 145,000 -- 20,000 10,150
1992 139,583 -- -- 9,771
Hermann Mueller....................... 1994 156,000 -- 60,000 10,920
Vice President 1993 150,000 -- 15,000 10,500
1992 147,083 -- -- 10,296
John P. O'Mahoney (4)................. 1994 140,755 44,110(3) 80,000 9,853
Vice President 1993 126,947 39,303(3) 20,000 8,886
<FN>
- ------------------------
(1) Mr. Terra was authorized to receive but waived cash compensation of
$450,000 for each of the past three years.
(2) The total amounts shown in this column consist of Company contributions for
the Growth Sharing Plan (the Company's defined contribution retirement
plan).
(3) These amounts represent educational expenses, paid by the Company, for Mr.
O'Mahoney's children who attend an English speaking international school as
a result of being transferred from Ireland to Belgium.
(4) Mr. O'Mahoney was elected an officer in April 1993.
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company who are not officers were paid an annual fee of
$11,000 plus $750 for each Board or Committee meeting attended in 1994.
During 1994, the Board of Directors adopted an amendment to the 1992
Non-Qualified Stock Option Plan. At the time of the adoption of the amendment,
Messrs. Clark, Judy and Steingraber each received a grant of options covering
10,000 shares and Mr. Hartman received a grant of an option covering 20,000
shares of Common Stock under the 1992 Plan at an exercise price of $12.25 per
share. This amendment was approved by the stockholders at the April 28, 1994
Annual Meeting.
On February 14, 1995, the Board of Directors adopted, subject to stockholder
approval, the 1995 Non-Qualified Stock Option Plan for Non-Employee Directors.
See "Proposal to Approve the 1995 Non-Qualified Stock Option Plan for
Non-Employee Directors."
5
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Mr. Clark, Mr. Hartman, Mr. Judy
and Mr. Steingraber, the four independent, non-employee directors, and Mr.
Terra, Chairman and Chief Executive Officer of the Company.
STOCK OPTIONS
Options are granted to officers and other key employees under the Company's
1992 Non-Qualified Stock Option Plan which is administered by the Compensation
Committee. Shown below is information with respect to the grant and exercise of
options during 1994 and the unexercised options held as of December 31, 1994 by
the Named Officers.
OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/ SARS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR OPTION TERM (3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) 1994(2) ($/SH) DATE 5%($) 10%($)
- -------------------------------- ------------- -------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Nordman.............. 40,000 3.63% $ 12.25 2-15-2004 $ 308,000 $ 780,800
40,000 3.63% 12.25 8-30-2004 308,000 780,800
40,000 3.63% 12.00 11-15-2004 302,000 764,800
40,000 3.63% 12.125 12-23-2004 305,000 773,000
John P. Jilek................... 20,000 1.82% 12.25 2-15-2004 154,000 390,400
20,000 1.82% 12.25 8-30-2004 154,000 390,400
20,000 1.82% 12.00 11-15-2004 151,000 382,400
20,000 1.82% 12.125 12-23-2004 152,500 386,500
Hermann Mueller................. 15,000 1.36% 12.25 2-15-2004 115,500 292,800
15,000 1.36% 12.25 8-30-2004 115,500 292,800
15,000 1.36% 12.00 11-15-2004 113,250 286,800
15,000 1.36% 12.125 12-23-2004 114,375 289,875
John P. O'Mahoney............... 20,000 1.82% 12.25 2-15-2004 154,000 390,400
20,000 1.82% 12.25 8-30-2004 154,000 390,400
20,000 1.82% 12.00 11-15-2004 151,000 382,400
20,000 1.82% 12.125 12-23-2004 152,500 386,500
<FN>
- ------------------------
(1) The option grants were non-qualified stock options. These options become
exercisable two years after grant date. The respective grant dates were
February 15, 1994, August 30, 1994, November 15, 1994 and December 23,
1994. If stockholders approve the amendment to the 1992 Non-Qualified Stock
Option Plan--Proposal 2, the vesting period will be reduced from two years
to one year.
(2) The percentages shown in the table are based on total options granted in
1994 of 1,101,500 shares of the Company's Common Stock.
(3) The potential realizable values shown in the table are based on assumed
annual rates of stock price appreciation compounded annually. The actual
value of the options will depend on the market value of the Company's
Common Stock on the dates the options are exercised. No realization of
value from the options is possible without an increase in the price of the
Company's Common Stock, which would benefit all stockholders
commensurately.
</TABLE>
6
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN
1994 AND YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT DECEMBER 31, 1994(#) AT DECEMBER 31, 1994 (1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Nordman.............. -- $ -- 133,000 200,000 $ 228,666 $ 5,000
John P. Jilek................... 9,000 40,635 47,441 100,000 158,629 2,500
Hermann Mueller................. -- -- -- 75,000 -- 1,875
John P. O'Mahoney............... -- -- 13,333 100,000 22,866 2,500
<FN>
- ------------------------
(1) The amounts reported here represent the mathematical differences before
taxes between the aggregate exercise price and the market value on the
actual dates of exercise or December 31, 1994 (if unexercised) rather than
any actual net gain. Such amounts do not take into consideration the cost
of funds used for purchase or additional taxes.
</TABLE>
INDEBTEDNESS OF MANAGEMENT
Under the terms of the stock option plan, officers may borrow funds from the
Company in order to exercise their stock options. Interest is charged on the
loans at the Company's effective rate to borrow funds, adjusted quarterly.
During 1994, the Company's weighted average interest rate on borrowed funds was
4.77%. The stock purchased is held as collateral by the Company. The loans are
repayable within eighteen months. During 1994, Mr. Nordman had a maximum amount
borrowed of $3,394,998, which was paid in full in 1994.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has employment agreements with certain employees that are
activated only on a change in control and, until then, these employees remain
subject to termination at will. The terms of the employment agreement with each
of Messrs. Hacker, Jilek, Mueller and Russell, provide that the agreement will
become effective upon a "change in control" (defined as (i) an event that would
be required to be reported as such pursuant to Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 or (ii) certain changes in
membership of the Board of Directors). Providing the employee is still serving
as such at the time of such a change in control, the agreement provides that the
Company will continue to employ the employee for a period of two years after
such change in control at a guaranteed minimum salary equal to the employee's
salary at the time thereof. The agreement also provides that the employee may
participate without discrimination in all of the Company's benefit plans
available to its officers, prohibits the employee from disclosing confidential
information during or after employment and prohibits the employee from working
for a competitor of the Company during and for a period of eighteen months
following the termination of employment. In the event that the location of the
Company's office is changed by more than 25 miles or the employee's position and
duties are changed following the agreement becoming effective upon a change in
control, the employee may terminate the agreement, whereupon the employee's
salary and benefits for the remainder of the term will become payable in a lump
sum. In addition, if an excise tax is imposed pursuant to the applicable
provisions of the Internal Revenue Code upon any payments to the employee by the
Company, the agreement provides that the employee will be paid an additional
amount calculated so as to provide the employee with the same compensation he
would have received had no excise tax been imposed. The Company also entered
into a comparable agreement with Mr. Nordman, except that this latter agreement
is for a period of four years, and the Company has agreed to use its best
efforts to cause Mr. Nordman to be elected a director of the Company throughout
the agreement's term. The agreement with Mr. Nordman also provides that upon a
change in control of the Company, Mr. Nordman may terminate his employment at
any time not less than six months nor more than one year following such a change
in control, in which event, Mr. Nordman's remaining salary also would become due
and payable.
7
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Shown below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite -- 500 Stock Index and a Specialty
Chemicals Peer Group for the period of five years commencing January 1, 1990 and
ending December 31, 1994, assuming the investment of $100 on January 1, 1990 and
the full reinvestment of all dividends. The Specialty Chemicals Peer Group is
composed of the following companies: Betz Laboratories, Inc., Cabot Corp.,
Chemed Corp., Ferro Corp., Grow Group, Inc., Guardsman Products, Inc.,
Intersystems, Inc/DE, Lawter International, Inc., Learonal, Inc., Loctite Corp.,
Morton International, Inc., Nalco Chemical Co., Pengo Industries, Inc., PPG
Industries, Inc., Pratt & Lambert, Inc., Sherwin-Williams Co., Specialty
Chemical Res., Univar Corp. and Valspar Corp.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG LAWTER INTERNATIONAL, INC., S&P 500 INDEX & SPECIALTY CHEMICALS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Lawter International, Inc...................................... 100.0 121.2 200.4 214.2 214.5 197.5
S&P 500........................................................ 100.0 96.9 126.4 136.1 149.8 151.7
Speciality Chemicals Peer Group................................ 100.0 111.8 150.0 168.2 196.2 194.3
</TABLE>
PROPOSAL TO APPROVE AN AMENDMENT TO THE
1992 NON-QUALIFIED STOCK OPTION PLAN -- PROPOSAL 2
On February 14, 1995, the Board of Directors of the Company adopted an
amendment (the "Amendment") to the Lawter International, Inc. 1992 Non-Qualified
Stock Option Plan (the "Plan"). The Amendment would reduce the minimum vesting
period for options received under the Plan (including outstanding options) from
two years to one year. The Amendment was adopted, subject to stockholder
approval. A description of the Plan, as proposed to be amended, is set forth
below.
The purpose of the Plan is to encourage ownership of Common Stock of the
Company by key employees of the Company and its subsidiaries and to provide
incentive for superior performance by such persons. The
8
<PAGE>
Board of Directors is of the opinion that the Plan advances the interests of the
Company, its subsidiaries and stockholders of the Company, by enhancing the
ability of the Company to attract and retain employees of the highest caliber.
The principal features of the Plan are summarized below.
The Plan is administered by a committee (the "Committee") of the Board of
Directors of the Company. Except for grants of options under the provisions of
the Plan providing for fixed grants to non-employee directors (which provisions
are proposed to be amended in connection with the adoption of the 1995 Non-
Qualified Stock Option Plan for Non-Employee Directors (the "Directors Plan") as
described under "Proposal to Approve the 1995 Non-Qualified Stock Option Plan
for Non-Employee Directors"), and options to be received under the Directors
Plan if such plan is approved by stockholders, no member of the Committee is
eligible to participate in the Plan or any other stock option, stock purchase or
stock participation plan of the Company. The Committee designates the employees,
including officers and directors who are employees of the Company, to receive
options and determines the number of shares to be optioned to each and such
other provisions of the options as it may deem necessary or desirable, subject
to the limitations contained in the Plan. In addition, the Plan currently
provides that each non-employee director elected on or after February 15, 1994
will receive a one-time grant of an option for 20,000 shares of Common Stock at
100% of the then fair market value of such stock. If the Directors Plan is
approved by stockholders, the Plan will be amended to delete the provision
providing for options to be granted to non-employee directors.
A maximum of 2,500,000 shares of Common Stock may be issued pursuant to
options granted under the Plan at a per share price of not less than 100% of the
fair market value thereof on the date options are granted. Appropriate
adjustments in the number of shares available for issuance or subject to
outstanding options under the Plan and in the purchase price for which such
options may be exercised shall be made to give effect to any stock split, stock
dividend, recapitalization, reclassification of shares or similar change in the
capital structure of the Company. Notwithstanding the foregoing, no options may
be granted under the Plan to any employee who owns, at the time the option is
granted, Common Stock representing more than 10% of the voting power of all
classes of stock of the Company, unless the option price per share is at least
110% of the fair market value of the optioned shares at the time the option is
granted.
Options granted under the Plan shall be exercisable in whole or in part
after the expiration of one year following the date of grant or upon the lapse
of such additional period of time as the Committee shall determine, provided
that no option granted under the Plan shall be exercisable after the expiration
of ten years from the date of grant. The duration of the option may be reduced
only upon termination of employment by the Company or the death of the optionee.
Options shall not be transferable other than by will or the laws of descent and
distribution. Upon the death of an optionee while in the employ of the Company,
his or her options shall be exercisable only within a period of six months
following death and then only by the person or persons to whom the deceased
optionee's rights have passed by will or the laws of descent and distribution
and if and to the extent that the optionee was entitled to exercise the option
at the date of death.
Options granted under the Plan shall be exercisable by the payment of the
exercise price in cash, and loans may be provided by the Company to optionees at
the discretion of the Committee for the purpose of financing the options and the
payment of related expenses and taxes, subject to the terms and conditions as
the Committee shall determine.
Under present Federal income tax laws and regulations, the granting of an
option will not result in Federal income tax consequences to either the Company
or the recipient. However, upon exercise of the option, a participant will
recognize ordinary income measured by the excess of the then fair market value
of the shares acquired upon exercise of the option over the option price.
The amount of income recognized by the participant will be deductible by the
Company in the taxable year in which ordinary income is recognized by the
employee, if the applicable withholding requirements are met.
9
<PAGE>
The participant's basis in the stock acquired will be the option price plus
any amount includable in the employee's gross income. If the employee retains
the shares for the requisite holding period prescribed by the Internal Revenue
Code, the gain or loss upon a subsequent sale or exchange will be long-term
capital gain or loss. Currently, the requisite holding period is more than one
year. This holding period will generally commence on the date of the exercise of
the option. For purposes of determining gain or loss realized upon a subsequent
sale or exchange, the participant's tax basis will be equal to the sum of the
option price paid and the amount of ordinary income recognized on the date of
exercise.
The Plan may be suspended, discontinued or amended by the Board of Directors
of the Company although certain amendments are subject to stockholder approval.
The Plan will terminate under the terms thereof on February 18, 2002, if not
sooner terminated by the Board of Directors.
As of March 3, 1995, the Company had options outstanding under the Plan for
an aggregate of 1,429,300 shares of Common Stock at an average exercise price of
$12.28 per share. The fair market value of the Common Stock on February 14, 1995
was $12.125. The following table sets forth certain information with respect to
such options held by the individuals and members of the groups listed below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ----------------------------------------------------------------------------------- -----------
<S> <C>
Daniel J. Terra--Chairman and CEO.................................................. --
Richard D. Nordman--President and COO.............................................. 200,000
John P. Jilek--Vice-President...................................................... 100,000
Hermann Mueller--Vice-President.................................................... 75,000
John P. O'Mahoney--Vice-President.................................................. 100,000
All executive officers as a group (8 persons)...................................... 590,000
All eligible employees who are not executive officers
as a group (98 persons)........................................................... 759,300
All non-employee directors as a group (4 persons).................................. 80,000
</TABLE>
Proxies will be voted for or against approval of the proposed Amendment in
accordance with the specification marked thereon, and will be voted in favor of
approval if no specification is made. Approval requires a favorable vote of the
holders of a majority of the shares of Common Stock present at the meeting in
person or by proxy, assuming that a quorum is present. Abstentions will have the
effect of a vote against approval and non-voted shares will have no effect
(assuming that a quorum is present).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENT TO THE 1992 NON-QUALIFIED STOCK OPTION PLAN.
PROPOSAL TO APPROVE THE 1995 NON-QUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS -- PROPOSAL 3
The Board of Directors has adopted and recommends that stockholders approve
the Company's 1995 Non-Qualified Stock Option Plan for Non-Employee Directors, a
copy of which is attached to this proxy statement as Appendix A (the "Directors
Plan"). The purpose of the Directors Plan is to benefit the Company by offering
certain present and future directors who are not employees, officers, senior
officers, or executive officers of the Company and its subsidiaries, a favorable
opportunity to become holders of Common Stock over time, thereby giving them a
stake in the growth and prosperity of the Company in order to enable them to
represent the viewpoint of other stockholders of the Company more effectively
and to encourage them to continue serving as directors of the Company.
The Directors Plan provides that, subject to stockholder approval of the
Directors Plan, each eligible director, upon his or her initial election by the
stockholders to the Board of Directors, shall be automatically granted an option
to purchase a total of 15,000 shares of Common Stock and, upon his or her next
election, shall be automatically granted one additional option to purchase
15,000 shares of Common Stock. An aggregate of 300,000 shares is available for
option grants under the Directors Plan. Such options are not intended to be
treated as incentive stock options as defined in Section 422 of the Internal
Revenue Code of
10
<PAGE>
1986. Upon adoption of the Directors Plan, options covering a total of 120,000
shares of Common Stock were awarded to eligible directors, subject to
stockholder approval of the Directors Plan. Subject to stockholder approval of
the Directors Plan, the Board of Directors has amended the 1992 Non-Qualified
Stock Option Plan (the "Plan") to delete the provisions of that Plan providing
for grants of options to non-employee directors.
Options granted under the Directors Plan have a term of ten years, subject
to earlier expiration if the optionee's service as a director terminates, and no
options under the Directors Plan may be granted after February 13, 2005. Options
may not be transferred other than by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order. Options
granted under the Directors Plan become exercisable one year after the date of
grant. If an option expires or is terminated or canceled unexercised as to any
shares, such unused shares may be optioned again. Shares subject to options may
be made available from unissued or reacquired shares of Common Stock.
The exercise price of options shall be the fair market value of the Common
Stock on the date of grant. The exercise price is payable in cash or by a
certified bank check payable to the order of the Company. In the event that
shares of Common Stock are changed by a stock dividend, split or combination of
shares, merger, consolidation, or reorganization of the Company with any other
corporation or corporations in which holders of the Common Stock receive other
securities, or any other relevant change in the capitalization of the Company, a
proportionate or equitable adjustment will be made in the number or kind of
shares subject to the Directors Plan and the exercise price.
The Company may require an optionee to satisfy the tax withholding
obligation by payment to the Company at the time of exercise of an amount equal
to the amount of the withholding tax. Where the Company determines that it is
necessary or desirable to list, register, or qualify the shares subject to an
option on any securities exchange or under any state or federal law or to obtain
consent or approval of any governmental regulatory body, the option may not be
exercised unless such listing, registration, qualification, consent, or approval
has been effected or obtained free of any conditions acceptable to the Company.
The Company may also require an optionee to agree not to dispose of the shares
acquired upon exercise of the option for a limited period.
The Board of Directors may amend or discontinue the Directors Plan at any
time, provided that no amendment or discontinuance may, without the consent of
the optionee, change or impair any option previously granted, or without the
approval of stockholders, materially increase the benefits accruing to
participants under the Directors Plan, materially increase the number of shares
which may be issued under the Directors Plan, or materially modify the
requirements as to eligibility for participation in the Directors Plan. In any
event, the Board of Directors may not amend provisions of the Directors Plan
relating to the amount and price of securities to be issued under the Directors
Plan, or the timing of such issuances, more than once every six months, other
than to comply with relevant changes in the law.
Under present Federal income tax laws and regulations, an optionee will not
recognize any taxable income, and the Company will not be entitled to a
deduction, upon the grant of a non-qualified stock option ("NQO"). Upon the
exercise of an NQO the optionee will recognize ordinary income equal to the
excess of the fair market value of the shares acquired over the option exercise
price. The amount of such excess is generally determined by reference to the
fair market value of the Common Stock on the date of exercise. An optionee's
basis in the stock received will equal such stock's fair market value on the
date of exercise. The Company will be entitled to a deduction equal to the
compensation taxable to the optionee.
Upon the sale of shares acquired pursuant to the exercise of an NQO, an
optionee will recognize capital gain or loss equal to the difference between the
selling price of the shares and the optionee's basis in the shares. Such capital
gain or loss will be long-term gain or loss if the optionee has held the shares
for more than one year. The Company will not be entitled to any deduction with
respect to any capital gain recognized by the optionee.
11
<PAGE>
As of February 14, 1995, the Company had options outstanding (subject to
stockholder approval of the Directors Plan) for an aggregate of 120,000 shares
of Common Stock at an exercise price of $12.125 per share (the fair market value
of the Common Stock on the date of the grant) pursuant to the Directors Plan.
The following table sets forth certain information with respect to options
outstanding under the Directors Plan:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
William P. Clark.................................................................. 30,000
Arthur A. Hartman................................................................. 30,000
Leonard P. Judy................................................................... 30,000
Fred G. Steingraber............................................................... 30,000
All directors who are not executive officers
as a group (4 persons)........................................................... 120,000
</TABLE>
Proxies will be voted for or against approval of the Directors Plan in
accordance with the specification marked thereon, and will be voted in favor of
approval if no specification is made. Approval requires a favorable vote of the
holders of a majority of the shares of Common Stock present at the meeting in
person or by proxy, assuming that a quorum is present. Abstentions will have the
effect of a vote against approval and non-voted shares will have no effect
(assuming that a quorum is present).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995
NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
EXPENSES OF SOLICITATION
The costs and expenses of solicitation of proxies will be paid by the
Company. In addition to the use of the mails, proxies may be solicited
personally by telephone or telegram by directors, officers and other employees
of the Company. No arrangements have been made or are presently contemplated for
the assistance of any professional proxy solicitors. The Company will reimburse
banks, brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the beneficial
owners of the Common Stock of the Company.
OTHER MATTERS
The Company expects to select the firm of Arthur Andersen LLP as its
independent public accountants for the next fiscal year. The selection is
normally based upon the Audit Committee's recommendation to the Board of
Directors. Representatives of Arthur Andersen LLP are expected to be present at
the stockholders' meeting to make a statement if they so desire and to be
available to respond to appropriate questions.
The management is not aware of any other matters to be presented for action
at the meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying form of Proxy to vote the
shares represented thereby in accordance with their best judgement.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1996
annual meeting of stockholders must be received by the Company not later than
November 21, 1995 for inclusion in the issuer's proxy statement and form of
proxy relating to that meeting. Any such proposal must relate to a matter which
is proper for consideration at such a meeting and not of the type which the
Company is specifically permitted to omit by the regulations of the Securities
and Exchange Commission.
WILLIAM S. RUSSELL
SECRETARY
12
<PAGE>
APPENDIX A
LAWTER INTERNATIONAL, INC.
1995 NON-QUALIFIED
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. STATEMENT OF PURPOSE. The principal purpose of this Non-Qualified Stock
Option Plan for Non-Employee Directors (the "Plan") is to benefit Lawter
International, Inc. (the "Company") through offering its directors who are not
employees, officers, senior officers or executive officers of the Company and
its subsidiaries, a favorable opportunity to become holders of the Common Stock
- -- $1.00 par value of the Company ("Common Stock"), thereby giving them a stake
in the growth and prosperity of the Company, in order to enable them to
represent the viewpoint of other stockholders of the Company more effectively
and to encourage them to continue serving as directors of the Company.
2. ELIGIBILITY. Options shall be granted under this Plan only to members
of the Board of Directors who are not employees, officers, senior officers or
executive officers of the Company and its subsidiaries.
3. GRANTING OF OPTIONS. Each director of the Company who is eligible to be
granted an option under the Plan shall receive an automatic grant of options for
15,000 shares upon his or her initial election by the stockholders as a director
of the Company and shall receive one additional automatic grant of options for
15,000 shares upon his or her next election as a director of the Company. Each
of the incumbent directors in office on February 14, 1995, shall receive on that
date, subject to stockholder approval of this Plan, a one-time grant of options
for 30,000 shares. Each option shall entitle the holder thereof to purchase a
total of one share of the Common Stock of the Company. The aggregate number of
shares which shall be available for such options under this Plan shall be
300,000 shares. Such number of shares, and the number of shares subject to
options outstanding under the Plan, shall be subject to adjustment as provided
in Paragraph 9. No option shall be granted under the Plan subsequent to February
13, 2005. Options granted under the Plan are intended not to be treated as
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
Notwithstanding any of the foregoing to the contrary, in the event an option
expires unexercised as to any shares, such shares may again be optioned. Shares
subject to options may be made available from unissued or reacquired shares of
Common Stock.
Nothing contained in the Plan or in any option granted pursuant thereto
shall, in itself, confer upon any optionee any right to continue serving as a
director of the Company or interfere in any way with any right of the Board of
Directors or stockholders of the Company, pursuant to the Certificate of
Incorporation or By-laws of the Company or applicable law, to remove such
director.
4. OPTION PRICE. Subject to adjustment under Paragraph 9, the option price
shall be the fair market value of the Common Stock at the time the option is
granted.
5. DURATION OF OPTIONS, TIME OF EXERCISE. Subject to the provisions of
Paragraph 7, each option shall be for a term of ten years and shall become
exercisable one year after the date of its grant.
6. EXERCISE OF OPTION. An option may be exercised by giving written notice
to the Company, attention of the Chief Financial Officer, specifying the number
of shares to be purchased, accompanied by the full purchase price for the shares
to be purchased, either in cash or by certified bank check, payable to the order
of the Company. The Company may provide loans for the purpose of financing the
exercise of options and the payment of the expenses and taxes, if any, with
respect thereto, subject to such terms and conditions as the Board of Directors
shall determine.
A-1
<PAGE>
At the time of any exercise of any option, the Company may, if it shall
determine it necessary or desirable for any reason, require the optionee (or his
or her heirs, legatees or legal representative, as the case may be) as a
condition upon the exercise thereof, to deliver to the Company, a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the optionee upon his or her exercise of part or all of the option and a
stop-transfer order may be placed with the transfer agent. Each option shall
also be subject to the requirement that, if at any time the Company determines,
in its discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state or Federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issue or
purchase of shares thereunder, the option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company.
At the time of the exercise of any option, the Company may require, as a
condition of the exercise of such option, that the optionee pay the Company an
amount equal to the amount of the tax, if any, the Company may be required to
withhold as a result of the exercise of such option by the optionee.
7. TERMINATION -- EXERCISE THEREAFTER. In the event an optionee ceases to
be a director of the Company for any reason other than death or permanent
disability, such optionee's rights to purchase shares pursuant to the option
shall terminate immediately; provided that if, having ceased to be a director,
such optionee immediately becomes an employee or consultant of the Company or a
subsidiary of the Company, termination for purposes of this sentence shall be
deemed to occur when such optionee ceases to be an employee or consultant.
In the event of death or permanent disability (as that term is defined in
Section 22(e)(3) of the Code, as now in effect or as it shall be subsequently
amended), an option may be exercised by the optionee or, if he is not living, by
his or her heirs, legatees, or legal representative, as the case may be, during
its specified term prior to six months after the date of death or permanent
disability, but only to the extent the option was exercisable at the date of
death or permanent disability.
8. NON-TRANSFERABILITY OF OPTION. During the lifetime of the optionee,
options shall be exercisable only by the optionee and options shall not be
assignable or transferable by the optionee other than by will or by the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by (a) the Code or (b) Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
9. ADJUSTMENT. The number of shares subject to the Plan and to options
granted under the Plan shall be adjusted as follows: (a) in the event that the
Company's outstanding Common Stock is changed by any stock dividend, stock split
or combination of shares, the number of shares subject to the Plan and to
options granted thereunder shall be proportionately adjusted; (b) in the event
of any merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable basis as
determined by the Board of Directors, for each share of Common Stock then
subject to the Plan, whether or not at the time subject to outstanding options,
the number and kind of shares of stock or other securities to which the holders
of Common Stock of the Company will be entitled pursuant to the transaction; and
(c) in the event of any other relevant change in the capitalization of the
Company, the Board of Directors shall provide for an equitable adjustment in the
number of shares of Common Stock then subject to the Plan, whether or not then
subject to outstanding options. In the event of any such adjustment, the
purchase price per share shall be proportionately adjusted.
A-2
<PAGE>
10. AMENDMENT OF PLAN. The Board of Directors may amend or discontinue the
Plan at any time; provided, however:
(a) that no amendment or discontinuance shall change or impair any
options previously granted without the consent of the optionee;
(b) that no amendment shall, without the affirmative vote of the holders
of a majority of the shares of all classes of stock of the Company voting in
person or by proxy, and entitled to vote at a duly held stockholders
meeting, or without the written consent of the holders of a majority of the
shares of all classes of stock entitled to vote, (i) materially increase the
benefits accruing to participants under the Plan, (ii) materially increase
the number of securities which may be issued under the Plan, or (iii)
materially modify the requirements as to eligibility for participation in
the Plan;
(c) that the provisions of the Plan relating to the amount and price of
securities to be issued under the Plan, or the timing of such issuances,
shall not be amended more than once every six months, other than to comply
with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.
11. EFFECTIVE DATE. This Plan has been adopted and authorized by the Board
of Directors for submission to the stockholders of the Company. If this Plan is
approved by the affirmative vote of the holders of a majority of the voting
stock of the Company voting in person or by proxy at a duly held stockholders'
meeting it shall be deemed to have become effective on February 14, 1995, the
date of adoption by the Board of Directors. Options may be granted under this
Plan prior, but subject, to the approval of this Plan by stockholders of the
Company and, in each such case, the date of grant shall be determined without
reference to the date of approval of this Plan by the stockholders of the
Company. Notwithstanding any other provision of this Plan to the contrary, no
option granted hereunder shall be exercisable prior to the date on which this
Plan is approved by the stockholders as herein contemplated.
12. HOLDING PERIOD. Anything contained in the Plan to the contrary
notwithstanding, any disposition of an option otherwise permitted by the terms
of the Plan, or of the Common Stock acquired upon exercise of an option, shall
be subject to compliance with the requirements of paragraph (c)(1) of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, applicable to
such disposition, and any date, period or procedure specified or referred to in
the Plan with respect to any such disposition, shall be adjusted, if necessary,
so as to give effect to this Section 12.
A-3
<PAGE>
APPENDIX B
LAWTER INTERNATIONAL, INC.
AMENDMENT TO
1992 NON-QUALIFIED STOCK OPTION PLAN
Pursuant to a Resolution duly adopted by the Board of Directors of
Lawter International, Inc. (the "Company") on February 14, 1995, the Company's
1992 Non-Qualified Stock Option Plan (the "Plan") is hereby amended as follows,
subject to approval of this amendment (the "Amendment") by the Company's
stockholders.
1. The first sentence of Section 6 of the Plan is hereby amended to read
in its entirety as follows:
"Any option granted under the Plan (including options granted prior to
February 14, 1995) shall be exercisable in whole or in part only after the
date of the latest of the following events: (a) one year after date of
grant, or (b) upon the lapse of such additional period or periods of time
as the Committee in its sole discretion may provide upon the granting
thereof; provided that no such option may be exercisable after the
expiration of ten years from the date on which such option was granted."
2. The fourth sentence of Section 13 of the Plan is hereby amended to
read in its entirety as follows:
"The Board of Directors of the Company may amend or discontinue the
Plan as it may deem proper and in the best interests of the Company,
provided that no such amendment or discontinuance shall affect or impair
options previously granted under the Plan without the consent of the
optionee, and provided further that (i) the total number of shares which
may be purchased under the Plan shall not be increased (except as provided
in Section 11 hereof) and (ii) the option price specified in Section 5
hereof shall not be decreased (except as provided in Section 11 hereof);
provided, however, that the Plan may not be amended more than once every
six months, other than to comply with changes in the Internal Revenue Code,
the Employee Retirement Income Security Act, or the rules thereunder."
This Amendment shall be deemed to have become effective on February
14, 1995 if it is approved by the affirmative vote of the holders of a majority
of the voting stock of the Company voting in person or by proxy at a duly held
stockholders' meeting.
Adopted by the Board of Directors of
the Company on February 14, 1995
<PAGE>
PROXY PROXY
LAWTER INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 24, 1995
The undersigned appoints Daniel J. Terra, Richard D. Nordman and William P.
Clark, or any of them, proxies for the undersigned, each with full power of
substitution, to attend the Annual Meeting of Stockholders of Lawter
International, Inc., to be held on April 24, 1995, at 10:00 a.m., Chicago time,
and at any adjournments or postponements of the Annual Meeting, and to vote as
specified in this Proxy all the Common Stock of the Company which the
undersigned would be entitled to vote if personally present. This proxy when
properly executed will be voted in accordance with your indicated directions.
If no direction is made, this Proxy will be voted FOR the election of
Directors and FOR proposals 2 and 3.
The Board of Directors recommends a vote FOR the election of Directors and
FOR proposals 2 and 3.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE
REVERSE SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
LAWTER INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. ///
FOR ALL
FOR WITHHELD EXCEPT
1. Election of Directors-- / / / / / /
NOMINEES: W. Clark, A. Hartman, L. Judy,
R. Nordman, F. Steingraber, D. Terra
_______________________________________
NOMINEE EXCEPTION
FOR AGAINST ABSTAIN
2. Proposal to amend the 1992 Non-Qualified / / / / / /
Stock Option Plan.
FOR AGAINST ABSTAIN
3. Proposal to approve the 1995 Non-Qualified / / / / / /
Stock Option Plan For Non-Employee
Directors.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and of the Proxy Statement.
Dated_____________, 1995
Signature(s)_______________________
___________________________________
Please sign exactly as your name appears. Joint owners should each sign
personally. Where applicable, indicate your official position or representation
capacity.
