NON-QUALIFIED STOCK OPTION AGREEMENT
(Non-Employee Directors - 1998)
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement")
is made this 22nd day of April, 1998, between LSB Industries, Inc.,
a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxx (the
"Optionee");
W I T N E S S E T H:
In consideration of the mutual covenants and conditions
herein set forth and for good and valuable consideration, the
Company and the Optionee agree as follows:
1. Recitations. The closing price of the Company's common
stock, par value $0.10 per share (the "Common Stock") on April 22,
1998 was $4.1875. The "Date of Grant" of this Option is April 22,
1998. This option is not an "incentive stock option" as such term
is defined under Section 422 of the Internal Revenue code of 1986, as
amended. This option has been approved by the Board of Directors
of the Company.
2. Grant of Option. The Company hereby grants to Optionee,
as of the 22nd day of April, 1998, the right, privilege and option
to purchase an aggregate of Fifteen Thousand (15,000) shares of its
Common Stock at $4.1875 per share, under and subject to the terms
and conditions of this Agreement.
3. Time and Exercise Option.
3.1 Vesting of Exercise Rights. If this option has not
been terminated pursuant to Section 6 hereof, the option
herein granted may be exercised by Optionee as hereinafter
provided. The option granted hereunder may not be exercised
prior to the expiration of six (6) months from the date this
option is granted. At any time after the expiration of six
(6) months from the date this option is granted, the option
may be exercised, in whole or in part, at any time during the
remaining term of the option. No option may be exercised at
any time unless the Optionee is then a member of the Board of
Directors of the Company, except as provided for in paragraph
5.4 hereof.
4. Methods of Exercise and Payment of Exercise Price.
4.1 Notice and Payment. Subject to the terms hereof,
this option shall be exercised by the Optionee giving to the
Company written notice at the Company's principal place of
business setting forth the exact number of shares under this
option that the Optionee is purchasing, which may not exceed
the number of shares that Optionee is eligible to purchase
under this option. Such written notice shall be accompanied
by the payment to the Company of the full option price for
such number of shares Optionee desires to purchase as
specified in such written notice. Further, Optionee shall
comply with such other reasonable requirements as the
Committee may establish.
4.2 Method of Payment. Subject to the terms and
conditions of this Agreement, payment by the Optionee of the
option price may be made in cash or by wire transfer or
certified check or bank check or personal check, in each case
payable to the order of the Company.
4.3 Withholding. The Optionee understands that, on the
exercise of this option, the excess of the fair market value
of the Common Stock over its option price is taxable
remuneration to him subject to federal income tax withholding
by the Company. Not later than the date as of which an amount
first becomes includible in the gross income of the Optionee
for federal income tax purposes with respect to any award
under this Agreement, the Optionee shall pay to the Company,
or make arrangements satisfactory to the Company, regarding
the payment of any federal, state and local taxes of any kind
required by law to be withheld or paid with respect to such
amount. The obligations of the Company under this Agreement
shall be conditional upon such payment or arrangements and the
Company shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind
otherwise due to the Optionee from the Company.
4.4 Issuance of Shares. As soon as practicable after
its receipt of the notice and payment pursuant to this Section
4, the Company shall cause one or more certificates for the
shares so purchased to be delivered to the Optionee or his or
her estate, as the case may be; provided that if any law or
regulation requires the Company to take any action with
respect to the shares specified in such written notice before
the issuance thereof, then the date of issuance of such shares
shall be extended for a period necessary to take such action.
5. Termination of Option. This Agreement and option granted
hereunder, to the extent not theretofore exercised, shall terminate
as follows:
5.1 Cessation as Director. Except as otherwise provided
in Section 5.4 hereof, upon the cessation of Optionee as a
member of the Board of Directors of the Company; or
5.2 Surrender of Options. Upon the Optionee's surrender
to the Company for cancellation of this Agreement and the
option granted hereunder; or
5.3 Five-Year Term. Upon the fifth (5th) anniversary of
the date this option was granted, notwithstanding any
provision of this Agreement to the contrary, including, but
not limited to, Sections 5.1, 5.2 and 5.4 of this Agreement.
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5.4 In Case of Death. If the Optionee dies prior to the
termination of this Option, the Option may be exercised within
one (1) year after the death of the Optionee by the personal
representative of the Optionee's estate, or by a person who
acquired the right to exercise the Option by bequest,
inheritance, or by reason of the death of the Optionee,
provided that the Optionee died while a Director of the
Company. The Option may be exercised only as to the number of
shares for which the Optionee could have exercised at the time
the Optionee died. In no event may the Option be exercised
after the expiration of five (5) years from the Date of Grant.
6. Non-Transferability.
6.1 The option will not be transferrable otherwise than
by will or the laws of descent and distribution, and the
Option may be exercised, during the lifetime of the Optionee,
only by Optionee and upon the death of Optionee, as set forth
in Section 5.4 hereof. More particularly (but without
limiting the generality of the foregoing), the Option may not
be assigned, transferred (except as provided above), pledged,
or hypothecated in any way, will not be assignable by
operation of law and will not be subject to execution,
attachment, or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the
Option contrary to the provisions hereof, and the levy of any
execution, attachment or similar process upon the Option, will
be null and void and without effect.
6.2 Optionee shall have no right as a stockholder with
respect to any shares covered by this Agreement until the date
of issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends or other rights for
which the record date is prior to the date such stock
certificate is issued.
7. Adjustments In the event of a subdivision or
consolidation of shares of Common Stock of the Company, the payment
of a stock dividend (but only on the Common Stock), a
reorganization, consolidation, merger or any other increase or
decrease in the number of shares affected without receipt of
consideration by the Company, the number of shares of Common Stock
then subject to this option and the price per share payable upon
exercise of this option shall be proportionately adjusted by the
Board of Directors of the Company, whose determination of such
adjustment shall be final, binding and conclusive.
8. Rights as a Shareholder. Optionee shall have no rights
as a shareholder with respect to any shares covered by this
Agreement or the option granted under this Agreement until the date
of issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is
issued.
9. Investment Representations. The Optionee hereby
represents, warrants, covenants, agrees and acknowledges as
follows:
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9.1 Restricted Shares. The Optionee represents and
warrants that if he acquires any of the shares under this
Agreement he will acquire such shares for his own account and
for the purpose of investment and not with a view to the sale
or distribution thereof, except for sales pursuant to an
effective registration statement under the Securities Act of
1933 (the "Act") or pursuant to an exemption from registration
under the Act. The Optionee understands that these shares
have not and will not have been registered under the Act (the
Company being under no obligation to effect such registration)
and that such shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Act or
is exempt from registration. The Optionee further understands
that the exemption from registration afforded by Rule 144
under the Act depends upon the satisfaction of various
conditions and that, if applicable, Rule 144 affords the basis
for sale of such shares only in limited amounts.
9.2 Disposition of Restricted Shares. The Optionee
represents, covenants, and agrees that it will not sell or
otherwise dispose of the shares acquired under this Agreement
in the absence of (a) an effective registration statement
under the Act, (b) an opinion acceptable in form and substance
to the Company from Optionee's counsel satisfactory to the
Company, or an option of counsel to the Company, to the effect
that no registration is required for such disposition or (c)
a "no-action" letter from the staff of the Securities and
Exchange Commission ("SEC") to the effect that such staff will
not recommend any action to the SEC if such a disposition
takes place without registration.
9.3 Legend. The certificates representing shares
covered by this Agreement shall upon issuance thereof have
stamped or imprinted thereon or affixed thereto a legend to
the following effect:
The registered holder hereof has acquired the
shares represented by this certificate for
investment and not for resale in connection with a
distribution thereof. Accordingly, such shares
have not been registered under the Securities Act
of 1933 and may not be sold, transferred or
otherwise disposed of except pursuant to a
currently effective registration statement under
said Act or otherwise in a transaction exempt from
the provisions of Section 5 of said Act.
10. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties
hereto.
11. Subsidiary. The term "Subsidiary" means any present or
future subsidiary corporation of the Company, as such term is
defined in Section 424(f) of the Code.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
(without regard to choice of law provisions).
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13. Amendments. Subject to the terms of this Agreement, the
Board of Directors of the Company may amend any of the provisions
of this Agreement, and may at any time terminate this Agreement.
However, no amendment may be made to this Agreement which in any
material respect impairs the rights of the Optionee under this
Agreement without the Optionee's consent.
14. Interpretation. The Board of Directors shall construe
and interpret the terms and provisions of this Agreement and shall,
at its discretion, make general and special rules and regulations
for administering this Agreement, which construction,
interpretation, rules and regulations shall be binding and
conclusive upon all persons granted option pursuant to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
LSB INDUSTRIES, INC.
ATTEST:
______________________________ By:_________________________________
Assistant Secretary Xxxx X. Xxxxxx, President
[S E A L]
"Optionee"
__________________________________
Xxxxxx X. Xxxxx
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