AGREEMENT
Exhibit 99.1
EXECUTION VERSION
AGREEMENT
This Agreement (this “Agreement”) is made and entered into as of April 3, 2014, by and among LSB Industries, Inc. (the “Company”) and the entities and natural persons listed on Exhibit A hereto and their respective Affiliates and Associates (collectively, “Starboard”) (each of the Company and Starboard, a “Party” to this Agreement, and collectively, the “Parties”).
RECITALS
WHEREAS, the Company and Starboard have engaged in discussions and communications concerning the Company’s business, financial performance and strategic plans;
WHEREAS, Starboard is deemed to beneficially own shares of common stock of the Company (the “Common Stock”) totaling, in the aggregate, one million one hundred fifteen thousand (1,115,000) shares, or approximately four and nine tenths percent (4.9%), of the Common Stock of the Company issued and outstanding on the date of this Agreement;
WHEREAS, Starboard confidentially submitted a nomination letter to the Company on January 23, 2014 (the “Nomination Letter”) nominating director candidates to be elected to the Company’s board of directors (the “Board”) at the 2014 annual meeting of stockholders of the Company (the “2014 Annual Meeting”); and
WHEREAS, the Company and Starboard have determined to come to an agreement with respect to the election of members of the Board at the 2014 Annual Meeting, the election by the Board of a new director (replacing a director whose term would have expired at the 2015 annual meeting of stockholders of the Company (the “2015 Annual Meeting”)), certain matters related to the 2014 Annual Meeting and certain other matters, as provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
Section 1. Board Matters; Board Appointments; 2014 Annual Meeting.
(a) The Company agrees that the Board and all applicable committees of the Board shall take all necessary actions to nominate each of, and only, the following three individuals for election to the Board at the 2014 Annual Meeting: Xxxxxx X. Xxxxxxxxx (“Xx. Xxxxxxxxx”), Xxxxxxx X. Xxxxx (“Xx. Xxxxx,” and with Xx. Xxxxxxxxx, the “New Appointees”) and Xxxxxx X. Xxxxx, an incumbent director. Each New Appointee and Xx. Xxxxx shall be designated as a nominee for the class of directors with terms expiring at the 2017 annual meeting of stockholders (the “2017 Annual Meeting”). For avoidance of doubt, and to settle this matter, the Company agrees that it shall not nominate either of Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxx to stand for reelection to the Board at the 2014 Annual Meeting and that the New Appointees shall fill the resulting vacancies upon their election to the Board by the Company’s stockholders.
(b) The Company agrees that the Board and all applicable committees of the Board shall take all necessary actions to elect Xxxxxxx X. Xxxxxxx, Xx., to the class of directors with terms expiring at the 2015 Annual Meeting, effective the date of the 2014 Annual Meeting. For avoidance of doubt, the Company agrees that Xx. Xxxxxxx shall fill the vacancy created by Xxxx X. Xxxxxxx’x retirement, which shall be evidenced by a resignation that will be effective no later than the date of the 2014 Annual Meeting.
(c) The New Appointees, and Messrs. Xxxxx and Xxxxxxx, in addition to all current directors, will be required to: (i) comply with all policies, procedures, processes, codes, rules, standards and guidelines applicable to members of the Board; (ii) to keep confidential all Company confidential information and to not disclose to any third parties (including Starboard) discussions or matters considered in meetings of the Board or Board committees; and (iii) complete the Company’s standard director & officer questionnaire and other reasonable and customary director onboarding documentation (including a representation agreement) required by the Company in connection with the election of Board members.
(d) Upon the execution of this Agreement, Starboard irrevocably withdraws its Nomination Letter and Starboard agrees not to (i) nominate any person for election at the 2014 Annual Meeting, (ii) submit any proposal for consideration at, or bring any other business before, the 2014 Annual Meeting, directly or indirectly, or (iii) initiate, encourage or participate in any “withhold” or similar campaign with respect to the 2014 Annual Meeting, directly or indirectly, and shall not permit any of its Affiliates or Associates to do any of the items in this Section 1(d). Starboard agrees that it will not publicly or privately encourage or support any other stockholder or person to take any of the actions described in this Section 1(d).
(e) The Company agrees that it will recommend, support and solicit proxies for the election of the New Appointees at the 2014 Annual Meeting in the same manner as Xx. Xxxxx.
(f) The Company agrees that if either of the New Appointees or any Replacement Director (as defined below) is unable to serve as a director, resigns as a director or is removed as a director prior to the end of the Standstill Period (as defined below), and at such time Starboard beneficially owns in the aggregate at least the lesser of 3.0% of the Company’s then outstanding Common Stock and 676,039 shares of Common Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments) (the “Minimum Ownership Level”), the Company and Starboard shall discuss in good faith the mutual recommendation to the Nominating and Corporate Governance Committee of the Board (the “Governance Committee”) of the appointment of a substitute person to fill the resulting vacancy in the class of directors with terms expiring at the 2017 Annual Meeting, which person shall (i) be independent of Starboard, (ii) qualify as “independent” pursuant to NYSE listing standards, and (iii) have relevant financial and business experience. The appointment of any such person to the Board will be subject to the approval of the Governance Committee, in its discretion, after exercising its fiduciary duties in good faith, which approval shall not be unreasonably withheld (any such replacement nominee appointed in accordance with the terms of this Section 1(f) shall be referred to as a “Replacement Director”). In the event the Governance Committee does not accept a substitute person recommended by Starboard, Starboard will have the right to recommend additional substitute person(s), who will also be independent of Starboard, qualify as
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“independent” pursuant to NYSE listing standards, and have relevant financial and business experience, and whose appointment shall be subject to the approval of the Governance Committee, in its discretion, after exercising its fiduciary duties in good faith, which approval shall not be unreasonably withheld. Upon the acceptance of a Replacement Director nominee by the Governance Committee, the Board will appoint such Replacement Director to the Board no later than five (5) business days after the Governance Committee recommendation of such Replacement Director.
(g) Starboard agrees to appear in person or by proxy at the 2014 Annual Meeting and vote all shares of Common Stock beneficially owned by it (i) in favor of the election of each of the Company’s nominees for election to the Board and (ii) in accordance with the Board’s recommendation with respect to the Company’s “say-on-pay” proposal unless Institutional Shareholder Services Inc. recommends against the “say-on-pay” proposal.
(h) Starboard agrees that it will cause its Affiliates and Associates to comply with the terms of this Agreement. As used in this Agreement, the terms “Affiliate” and “Associate” shall have the respective meanings set forth in Rule 12b-2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or the rules or regulations promulgated thereunder (the “Exchange Act”) and shall include all persons or entities that at any time during the term of this Agreement become Affiliates or Associates of any person or entity referred to in this Agreement.
(i) As of the date of this Agreement, the New Appointees and Xx. Xxxxxxx are appointed as observers to the Board (the “Board Observers”) until the 2014 Annual Meeting. Each of the Board Observers will (i) receive copies of all notices and written information furnished to the full Board, reasonably in advance of each meeting to the extent practicable, and (ii) be permitted to be present at all meetings of the full Board . Notwithstanding the foregoing, (A) the Company shall be entitled to withhold any information and exclude the Board Observers from any meeting, or any portion thereof, as is reasonably determined by the Company to be necessary to protect the Company’s attorney-client privilege, or as otherwise may be appropriate until the New Appointees and Xx. Xxxxxxx are elected to the Board, and (B) the Board Observers shall execute a confidentiality agreement in form and substance reasonably acceptable to the Company with respect to the information and discussions to which the Board Observers will have access.
(j) The Company shall use its reasonable best efforts to hold the 2014 Annual Meeting no later than June 20, 2014.
(k) The Company agrees that prior to the 2015 Annual Meeting, the Board and all applicable committees of the Board shall not (i) increase the size of the Board to more than ten (10) directors or (ii) seek to change the classes on which the Board members serve.
(l) The Company agrees that promptly following the conclusion of the 2014 Annual Meeting, the Board will take all action necessary in furtherance of (i) the appointment of Xx. Xxxxx to the Compensation Committee of the Board and (ii) the appointment of Xx. Xxxxxxxxx to the Audit Committee of the Board.
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(m) The Company agrees that promptly following the conclusion of the 2014 Annual Meeting, the Board will take all action necessary in furtherance of the creation of an independent advisory committee of the Board which shall be entitled the “Strategic Committee” and shall consist of four members, two of whom shall be the New Appointees and two of whom shall be independent directors selected by the Board in its sole discretion. The responsibilities of the Strategic Committee will be as set forth in the Strategic Committee’s charter, the provisions of which shall be determined by the members of the Strategic Committee at its first meeting following the 2014 Annual Meeting, subject to approval by the Board (which approval will not be unreasonably withheld), and shall be limited to the evaluation of, and making a recommendation to the Board with respect to, the strategic matters set forth in clauses (ii) and (iii) of the second paragraph of Starboard’s letter to the Company dated January 23, 2014 accompanying the Nomination Letter and the same matters set forth in the open letter of Engine Capital LP to the Company’s stockholders dated December 30, 2013.
Section 2. Standstill Provisions.
(a) Starboard agrees that, from the date of this Agreement until the earlier of (i) the date that is fifteen (15) business days prior to the deadline for the submission of stockholder nominations for the 2015 Annual Meeting pursuant to the Company’s bylaws or (ii) the date that is one hundred thirty-five (135) days prior to the first anniversary of the 2014 Annual Meeting (the “Standstill Period”), neither it nor any of its Affiliates or Associates will, and it will cause each of its Affiliates and Associates not to, directly or indirectly, in any manner:
(i) engage in any solicitation of proxies or consents or become a “participant” in a “solicitation” as such terms are defined in Regulation 14A under the Exchange Act of proxies or consents (including, without limitation, any solicitation of consents that seeks to call a special meeting of stockholders), in each case, with respect to securities of the Company;
(ii) form, join or in any way participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the Common Stock (other than a “group” that includes all or some of the persons identified on Exhibit A, but does not include any other entities or persons not identified on Exhibit A as of the date hereof); provided, however, that nothing herein shall limit the ability of an Affiliate of Starboard to join the “group” following the execution of this Agreement, so long as any such Affiliate agrees to be bound by the terms and conditions of this Agreement;
(iii) deposit any Common Stock in any voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting of any Common Stock, other than any such voting trust, arrangement or agreement solely among the members of Starboard and otherwise in accordance with this Agreement;
(iv) seek or encourage any person to submit nominations in furtherance of a “contested solicitation” for the election or removal of directors with respect to the Company or seek, encourage or take any other action with respect to the election or removal of any directors; provided, however, that nothing in this Agreement shall prevent Starboard or its Affiliates or Associates from taking actions in furtherance of identifying director candidates in
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connection with the 2015 Annual Meeting so long as such actions do not create a public disclosure obligation for Starboard and are undertaken on a basis reasonably designed to be confidential and in accordance in all material respects with Starboard’s normal practices in the circumstances;
(v) (A) make any proposal for consideration by stockholders at any annual or special meeting of stockholders of the Company, (B) make any offer or proposal (with or without conditions) with respect to a merger, acquisition, recapitalization, restructuring, disposition or other business combination involving Starboard and the Company, or (C) publicly comment on any third party proposal regarding any merger, acquisition, recapitalization, restructuring, disposition or other business combination with respect to the Company by such third party prior to such proposal becoming public;
(vi) seek, alone or in concert with others, representation on the Board, except as specifically contemplated in Section 1;
(vii) seek to advise, encourage, support or influence any person with respect to the voting or disposition of any securities of the Company at any annual or special meeting of stockholders, except in accordance with Section 1; or
(viii) make any request or submit any proposal to amend the terms of this Agreement other than through non-public communications with the Company that would not be reasonably determined to trigger public disclosure obligations for any Party.
(b) Except as expressly provided in Section 1 or Section 2(a), each member of Starboard shall be entitled to:
(i) vote its or his shares on any other proposal duly brought before the 2014 Annual Meeting, or otherwise vote as each member of Starboard determines in its or his sole discretion; or
(ii) disclose, publicly or otherwise, how it intends to vote or act with respect to any securities of the Company, any stockholder proposal or other matter to be voted on by the stockholders of the Company and the reasons therefor; provided that, as applicable, all such activity is in compliance with the requirements of this Agreement.
(c) The Company agrees that it shall provide Starboard written notice of the date set for the 2015 Annual Meeting at least fifteen (15) business days prior to the date that is one hundred twenty (120) days prior to the 2015 Annual Meeting.
Section 3. Representations and Warranties of the Company. The Company represents and warrants to Starboard that (a) the Company has the corporate power and authority to execute this Agreement and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, and (c) the execution, delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree
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applicable to the Company, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.
Section 4. Representations and Warranties of Starboard. Starboard represents and warrants to the Company that (a) the authorized signatory of Starboard set forth on the signature page hereto has the power and authority to execute this Agreement and any other documents or agreements to be entered into in connection with this Agreement and to bind it thereto, (b) this Agreement has been duly authorized, executed and delivered by Starboard, and is a valid and binding obligation of Starboard, enforceable against Starboard in accordance with its terms, (c) the execution of this Agreement, the consummation of any of the transactions contemplated hereby, and the fulfillment of the terms hereof, in each case in accordance with the terms hereof, will not conflict with, or result in a breach or violation of the organizational documents of Starboard as currently in effect, (d) the execution, delivery and performance of this Agreement by Starboard does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to Starboard, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such member is a party or by which it is bound, and (e) as of the date of this Agreement, (i) Starboard is deemed to beneficially own in the aggregate one million one hundred fifteen thousand (1,115,000) shares of Common Stock and (ii) Starboard does not currently have, and does not currently have any right to acquire, any interest in any other securities of the Company (or any rights, options or other securities convertible into or exercisable or exchangeable (whether or not convertible, exercisable or exchangeable immediately or only after the passage of time or the occurrence of a specified event) for such securities or any obligations measured by the price or value of any securities of the Company or any of its Affiliates, including any swaps or other derivative arrangements designed to produce economic benefits and risks that correspond to the ownership of Common Stock, whether or not any of the foregoing would give rise to beneficial ownership (as determined under Rule 13d-3 promulgated under the Exchange Act), and whether or not to be settled by delivery of Common Stock, payment of cash or by other consideration, and without regard to any short position under any such contract or arrangement).
Section 5. Press Release. Promptly following the execution of this Agreement, the Company shall issue a mutually agreeable press release (the “Press Release”) announcing certain terms of this Agreement, in the form attached as Exhibit B. Prior to the issuance of the Press Release, neither the Company nor Starboard shall issue any press release or public announcement regarding this Agreement without the prior written consent of the other Party. Until the 2014 Annual Meeting, neither the Company nor Starboard nor the New Appointees shall make any public announcement or statement that is inconsistent with or contrary to the statements made in the Press Release, except as required by law or the rules of any stock exchange or with the prior written consent of the other Party.
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Section 6. Specific Performance. Each of Starboard, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the other party hereto would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury would not be adequately compensable by the remedies available at law (including the payment of money damages). It is accordingly agreed that Starboard, on the one hand, and the Company, on the other hand (the “Moving Party”), shall each be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof, and the other party hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity. This Section 6 is not the exclusive remedy for any violation of this Agreement.
Section 7. Expenses. The Company shall reimburse Starboard for its reasonable, documented out-of-pocket fees and expenses (including legal expenses) incurred in connection with the matters related to the 2014 Annual Meeting and the negotiation and execution of this Agreement, provided that such reimbursement shall not exceed eighty thousand dollars ($80,000) in the aggregate.
Section 8. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, 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. It is hereby stipulated and declared to be the intention of the Parties that the Parties would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable. In addition, the Parties agree to use their respective best efforts to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that is held invalid, void or enforceable by a court of competent jurisdiction.
Section 9. Notices. Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
LSB Industries, Inc.
00 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx, LLP
1700 One Leadership Square
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx,
Esq. Xxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Starboard or any member thereof:
Starboard Value and Opportunity Master Fund Ltd
c/o Starboard Value LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Olshan Frome Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 10. Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without reference to the conflict of laws principles thereof. Each of the Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising
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hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the Parties hereto hereby irrevocably submits, with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement in any court other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert in any action or proceeding with respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by applicable legal requirements, any claim that (A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 11. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party (including by means of electronic delivery or facsimile).
Section 12. Entire Agreement; Amendment and Waiver; Successors and Assigns; Third Party Beneficiaries. This Agreement contains the entire understanding of the Parties hereto with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings between the Parties other than those expressly set forth herein. No modifications of this Agreement can be made except in writing signed by an authorized representative of each the Company and Starboard, except that the signature of an authorized representative of the Company will not be required to permit an Affiliate of Starboard to agree to be listed on Exhibit A and be bound by the terms and conditions of this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors, heirs, executors, legal representatives, and permitted assigns. No Party shall assign this Agreement or any rights or obligations hereunder without, with respect to any member of Starboard, the prior written consent of the Company, and with respect to the Company, the prior written consent of Starboard. This Agreement is solely for the benefit of the Parties and is not enforceable by any other persons.
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Section 13. Mutual Non-Disparagement. Subject to applicable law, each of the Parties covenants and agrees that, during the Standstill Period, or if earlier, until such time as the other Party or any of its agents, subsidiaries, affiliates, successors, assigns, officers, key employees or directors shall have breached this Section 13, neither it nor any of its respective agents, subsidiaries, affiliates, successors, assigns, officers, key employees or directors, shall in any way publicly disparage, call into disrepute, or otherwise defame or slander the other Parties or such other Parties’ subsidiaries, affiliates, successors, assigns, officers (including any current officer of a Party or a Parties’ subsidiaries who no longer serves in such capacity following the execution of this Agreement), directors (including any current director of a Party or a Parties’ subsidiaries who no longer serves in such capacity following the execution of this Agreement), employees, stockholders, agents, attorneys or representatives, or any of their products or services, in any manner that would damage the business or reputation of such other Parties, their products or services or their subsidiaries, affiliates, successors, assigns, officers (or former officers), directors (or former directors), employees, stockholders, agents, attorneys or representatives. For purposes of this Section 13, the New Appointees (or, if applicable, the Replacement Director(s)) will not be deemed to be an affiliate of the Company or Starboard and no actions taken by any director, agent or other representative of a Party in any capacity other than as a representative of, and at the direction of, such Party will be covered by this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the Parties as of the date hereof.
| LSB INDUSTRIES, INC. | ||||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||||
| Name: Xxxx X. Xxxxxx | ||||||||
| Title: Chief Executive Officer | ||||||||
| STARBOARD: | ||||||||
| STARBOARD VALUE AND OPPORTUNITY MASTER | STARBOARD VALUE R GP LLC | |||||||
| FUND LTD | By: | Starboard Principal Co LP, its member | ||||||
| By: | Starboard Value LP, its investment manager | |||||||
| STARBOARD VALUE AND OPPORTUNITY S LLC | STARBOARD VALUE LP | |||||||
| By: | Starboard Value LP, its manager | By: | Starboard Value GP LLC, its General Partner | |||||
| STARBOARD VALUE AND OPPORTUNITY C LP | STARBOARD VALUE GP LLC | |||||||
| By: | Starboard Value R LP, its general partner | By: | Starboard Value Principal Co LP its member | |||||
| STARBOARD VALUE R LP | STARBOARD PRINCIPAL CO LP | |||||||
| By: | Starboard Value R GP LLC, its general partner | By: | Starboard Principal Co GP LLC, its general partner | |||||
| STARBOARD PRINCIPAL CO GP LLC STARBOARD VALUE A GP LLC STARBOARD VALUE R GP LLC | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||||||
| Name: Xxxxxxx X. Xxxxx | ||||||||
| Title: Authorized Signatory | ||||||||
[Signature Page to Agreement]
EXHIBIT A
STARBOARD
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD
STARBOARD VALUE AND OPPORTUNITY S LLC
STARBOARD VALUE AND OPPORTUNITY C LP
STARBOARD VALUE R LP
STARBOARD VALUE R GP LLC
STARBOARD VALUE LP
STARBOARD VALUE GP
STARBOARD PRINCIPAL CO LP
PRINCIPAL GP
XXXXXXX X. XXXXX
XXXX X. XXXXXXXX
XXXXX X. XXXX
EXHIBIT B
PRESS RELEASE
[See Attached]
LSB Industries and Starboard Value Reach Agreement
Company to Add Xxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx, Xx. to
Board of Directors in Connection with 2014 Annual Meeting; Board Size to Remain at Ten
OKLAHOMA CITY – April 3, 2014 – LSB Industries, Inc. (NYSE: LXU) (“LSB”) today announced that it will nominate Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxx for election to LSB’s Board of Directors at the Company’s upcoming 2014 Annual Meeting of Stockholders. In addition, Xxxxxxx X. Xxxxxxx, Xx. will be appointed to the Board, effective as of the date of the 2014 Annual Meeting, to fill a vacancy in the class of directors whose term expires at the 2015 Annual Meeting of Stockholders. Incumbent directors Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxx have informed the Company that they will not stand for reelection at the 2014 Annual Meeting and Xxxx X. Xxxxxxx, a director in the class whose term expires at the 2015 Annual Meeting, has informed the Company that he will retire from the Board, effective as of the date of the 2014 Annual Meeting.
“We are pleased to have reached agreement on the composition of the Board,” said Xxxx Xxxxxx, LSB’s Board Chairman and CEO. “We remain committed to enhancing stockholder value, and we believe the improvements we are making to increase capacity, upgrade facilities and stabilize operating performance will improve earnings, positioning LSB for enhanced growth and profitability.”
Xx. Xxxxxx continued, “On behalf of the entire Board, I would also like to thank Messrs. Xxxxxx, Xxxxx and Xxxxxxx for their dedicated service and contributions to the Board and LSB over many years.”
In connection with today’s announcement, LSB has entered into an agreement with Starboard Value LP (“Starboard”), which beneficially owns approximately 4.9% of the Company’s outstanding shares. Under the agreement, Starboard has agreed, among other things, not to solicit proxies or participate in any “withhold” campaign in connection with the 2014 Annual Meeting and to vote its shares in support of all of the Company’s director nominees. Starboard has also agreed to vote all of its shares in accordance with the Board’s recommendation with respect to the Company’s say-on-pay proposal, subject to the recommendation of Institutional Shareholder Services.
In addition, the Company will establish a Strategic Committee following the 2014 Annual Meeting, which will provide the Board with recommendations related to strategic matters. The Strategic Committee will be composed of four Board members, including Messrs. Xxxxxxxxx and Xxxxx and two members who will be selected by the Board.
Xxxx Xxxxx, CEO of Starboard, stated, “We are pleased to be able to work constructively with LSB and look forward to substantial improvement and value creation. We believe that the new members on the Board will bring new energy and ideas along with their substantial industry expertise in order to help the Company maximize value for LSB stockholders. Xxx Xxxxxxxxx’x and Xxxxxxx Xxxxxxx’ extensive operational and financial experience as senior executives of highly successful nitrogen fertilizer companies, and Xxxx Xxxxx’x experience as CEO of a leading
climate control company, will be of great value to the company as LSB focuses on improving performance. Additionally, we expect the strategic committee to immediately analyze strategic, structural, operational, and financial opportunities with a fresh perspective in order to recommend to the board the best opportunities to maximize value for shareholders.”
In connection with today’s announcement, Engine Capital and Red Alder (collectively, “Engine”), which beneficially own approximately 0.9% of the Company’s outstanding shares, entered into an agreement with the Company, whereby Engine has withdrawn its nominations notice and agreed to vote its shares in support of all of the Company’s director nominees.
Arnaud Ajdler, Managing Partner of Engine said, “We believe that the addition of these independent individuals to the LSB Board will benefit LSB stockholders.”
Messrs. Xxxxxxxxx and Xxxxx will be designated as nominees for the class of directors with terms expiring at the 2017 Annual Meeting of Stockholders. Xx. Xxxxxxx will become a member of the Board, effective as of the date of the 2014 Annual Meeting, in the class of directors with terms expiring at the 2015 Annual Meeting, to fill the vacancy created by Xx. Xxxxxxx’x retirement. The Company expects to hold the 2014 Annual Meeting no later than June 20, 2014.
Credit Suisse is serving as financial advisor to LSB and Wachtell, Lipton, Xxxxx & Xxxx and Xxxxxx & Xxxxxxx, LLP are acting as legal advisors.
About Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx, 51, has served as the Chief Financial Officer and Executive Vice President of Sabre Industries Inc., a private equity-held manufacturer of utility and cell towers, since April 2013. In his current position, Xx. Xxxxxxxxx focuses on operational change and value creation opportunities and is responsible for all financial aspects of a fast-growing manufacturing and service business. From January 2012 until March 2013, Xx. Xxxxxxxxx served as Senior Vice President and Chief Financial Officer of Tronox Limited, a leading global producer and marketer of titanium dioxide pigment. Prior to that, Xx. Xxxxxxxxx served as Corporate Controller and Senior Vice President and Chief Financial Officer of Terra Industries, Inc., from 2005 until its acquisition by CF Industries Holdings Inc. in April 2010. He also served on the Board of Directors of Terra Nitrogen Company, L.P., a Master Limited Partnership, from March 2008 until April 2010.
Xx. Xxxxxxxxx has over 20 years of industrial, financial and operational experience and has held various senior leadership positions at a number of public companies, including Xxxxxx Inc., Xxxxxx Companies Inc., and Sigma Chemical Company. He also served as Senior Manager of KPMG from 1985 to 1992. Xx. Xxxxxxxxx is a Certified Public Accountant. He received a Bachelor of Science degree in Accounting from Xxxxxx State University.
About Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, 72, has served as the Chairman of the Board of Directors of Comfort Systems USA, Inc. since June 2000. Xx. Xxxxx previously served as the Chief Executive Officer of Comfort Systems from June 2000 until December 2011. Over the course of his career, Xx. Xxxxx has served in a variety of senior leadership roles, including as President and CEO of Club
Quarters from 1999 to 2000, President, CEO, Co-Founder and Chairman of the Board of LandCare USA, Inc. from 1998 until it was acquired by The ServiceMaster Co. in 1999, President and CEO of General Investment and Development Company from 1989 through 1997. From 1981 to 1989, Xx. Xxxxx served as the Managing General Partner of the Xxxxxx Xxxxxxx Venture Capital Fund and its associated management company based in New York City. Xx. Xxxxx currently serves as a Director of UIL Holdings Corporation where he is Chair of the Compensation Committee and serves on the Audit Committee. Xx. Xxxxx also serves as a Director of Xxxxxx Aluminum Corporation, where he is Chair of the Compensation Committee and serves on the Nominating and Corporate Governance Committee.
In addition, Xx. Xxxxx serves on the Advisory Board of CapStreet Partners and is a former member of the Advisory Board of Chicago Growth Partners. He is also the Founder and former Chairman of Warrior Gateway (connecting Veterans with services), Vice-Chairman and a member of the Executive Committee of the Board of Business Executives for National Security (BENS) and a former member of the Board of Visitors for West Point. At West Point today, he is an emeritus member of the Board of Trustees of the West Point Association of Graduates and a principal and Chairman of the Hotel Xxxxxx and Chairman of its associated Xxxxxx Leader Development Group, which provides corporate executive leader development. Xx. Xxxxx holds a Bachelor of Science degree in Engineering from the U.S. Military Academy, West Point, and a Master’s degree in Business Administration from the Harvard Business School.
About Xxxxxxx X. Xxxxxxx, Xx.
Xx. Xxxxxxx X. Xxxxxxx, Xx., 57, served as Vice President of Manufacturing of Terra Industries Inc. from 2003 until the acquisition of Terra Industries by CF Industries Holdings, Inc. in April 2010. On completion of the transaction, he worked on the integration of manufacturing operations, and as Vice President Environmental Health and Safety, Engineering and Procurement. At Terra Industries Inc ., Xx. Xxxxxxx was responsible for Terra’s six manufacturing facilities’ overall operations including production operations, environmental health and safety, project engineering, and technical services. He was also responsible for Terra’s capital investment program of approximately $250 million per year, including major expansion projects. Xx. Xxxxxxx was Plant Manager of Terra’s Verdigris, Oklahoma nitrogen manufacturing complex for nine years prior to his role as Vice President of Manufacturing. Prior to Terra, Xx. Xxxxxxx served as Plant Manager at the Beaumont Methanol Corporation 800,000 GPD methanol manufacturing facility and in management and engineering positions for Agrico Chemical Company. Xx. Xxxxxxx has served as a Non-Executive Director of Open Joint Stock Company Mineral and Chemical Company EuroChem during 2013. Xx. Xxxxxxx earned a B.S. in Chemical Engineering from Louisiana State University in Baton Rouge in 1980.
About LSB Industries, Inc.
LSB is a manufacturing and marketing company. LSB’s principal business activities consist of the manufacture and sale of chemical products for the agricultural, mining, and industrial markets, and the manufacture and sale of commercial and residential climate control products, such as geothermal and water source heat pumps, hydronic fan coils and modular geothermal chillers, and large custom air handlers.
Forward-Looking Statements
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by use of the words “believes”, “expects”, “intends”, “anticipates”, “plans to”, “estimates”, “projects”, “should” or similar expressions, including, without limitation, statements regarding enhancing stockholder value, improving earnings, enhanced growth and profitability and matters relating to the 2014 Annual Meeting. These forward-looking statements speak only as of the date of this press release, and LSB expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in LSB’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Company Contact:
Xxxx X. Xxxxxx, Chief Financial Officer
(000) 000-0000
Or
Xxxx Xxxxxxx, Senior Vice President
(000) 000-0000 x00000
Investor Relations Contact:
Xxx Xxxxx / Xxxxx Xxxxxxx
XxxXxxxxx Partners Inc.
(000) 000-0000
Media Contact:
Xxx Xxxxx / Xxxxxx Xxxxx / Xxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxx Xxxxxxx Xxxxxxx
(000) 000-0000
