NON-QUALIFIED STOCK OPTION AGREEMENT - 2006
This
Non-Qualified Stock Option Agreement (“Option Agreement”) is effective the 19th
day of June, 2006, between LSB Industries, Inc., a Delaware corporation,
hereinafter called the “Company”, and Xxx Xxxxx, hereinafter called
“Optionee”;
W
I T N E
S S E T H:
In
consideration of the mutual covenants and conditions, the parties agree as
follows:
1. Recitations. The
Optionee is presently an executive officer of a Subsidiary (as defined in
paragraph 16 below) and the Company considers it desirable and in its best
interest that Optionee be given an inducement to acquire an initial or
additional proprietary interest in the Company as an added incentive to advance
the interest of the of the Company, in the form of this option to purchase
certain shares of the Company’s common stock, par value $.10 per share (ACommon
Stock@). The
Compensation and Option Committee of the Board of Directors of the Company
(the
“Committee”) has adopted and granted this option on this 19th day of June, 2006
(the “Date of Grant”).
2. Grant
of Option and Option Price. Subject to the terms and conditions
hereof, the Company hereby grants to Optionee as of the close of business on
the
19th day of June, 2006, the right, privilege and option to purchase two hundred
fifty thousand (250,000) shares (“Total Option Shares”) of the Company’s Common
Stock, par value $.10, at an option price of $8.01 a share (the AExercise
Price), such Exercise Price being one hundred percent (100%) of the Fair Market
Value of the Common Stock as determined as the closing price on the 19th day
of
June, 2006. Such option is hereinafter referred to as the AOption@
and the shares of Common Stock purchasable upon the exercise of the Option
are
hereinafter sometimes referred to as the AOption
Shares@.
3. Obligations. This
Option Agreement shall not impose upon the Company or any Subsidiary any
obligation to retain Optionee as an employee at his present salary or position
or to employ Optionee in any other position with or for the Company or any
Subsidiary. If Optionee is no longer employed by the Company or a
Subsidiary for any reason, the option granted herein shall immediately
terminate, except as may be otherwise expressly provided in Section 4 and 6
hereof.
4. Time
of Exercise of Option.
(a) As
an Employee. If this option has not been terminated pursuant to
Section 6 hereof, subject to the terms and conditions contained herein, the
option herein granted may be exercised by Optionee as hereinafter
provided. Unless waived by the Board of Directors or a Committee
thereof (referred to herein as the “Committee”), the Optionee, while in the
employment of the Company or a Subsidiary, may exercise the
option
as
follows: at any time after one (1) year of continuous employment of the Optionee
as an employee following June 19, 2006 for and on behalf of the Company or
any
Subsidiary, the Option may be exercised by the Optionee as to not more than
ten
percent (10%) of the total number of shares set forth in Section 2 hereof;
and
for each following year thereafter of continuous employment by the Optionee
as
an employee of the Company or a Subsidiary, the Option may be exercised by
the
Optionee as to an additional ten percent (10%) of the total number of shares
set
forth in Section 2 hereof until the Total Option Shares have been
exercisable.
(b) As
a Former Employee. Except as provided in paragraph 6(c), the
Option granted herein may not be exercised after the Optionee is no longer
an
employee of the Company or any Subsidiary, except that if the Optionee ceases
to
be an employee on account of physical or mental disability as defined in Section
22(e)(3) of the Internal Revenue Code (AFormer
Employee@),
he may exercise the Option within twelve (12) months after the date on which
he
ceased to be an employee, for the number of Option Shares for which he could
have exercised at the time he ceased to be an employee. In no event
may the Option be exercised after the expiration of ten (10) years and ninety
(90) days from the Date of Grant.
(c) 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 this 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:
(i) the
Optionee died while an employee of the Company or a Subsidiary; or
(ii) the
Optionee ceased to be an employee of the Company or a Subsidiary on account
of
physical or mental disability and died within three (3) months after the date
on
which he ceased to be such employee.
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 ten (10) years and ninety (90)
days from the Date of Grant.
(d) Acceleration
and Continuous Employment. The Board of Directors of the Company
or the Committee shall have the sole and absolute discretion to
accelerate the time when Optionee will become entitled to exercise this Option
pursuant to the terms hereof. The Board of Directors shall decide, in
its sole and absolute discretion, to what extent leaves of absence for
government or military service, illness, temporary disability or other reasons,
shall not interrupt continuous employment as an employee for and on behalf
of
the Company or a Subsidiary, which decision shall be binding for the purpose
of
this Option Agreement.
5. Method
of Exercise and Payment of Exercise Price.
(a) Subject
to the terms and conditions hereof, the Option granted under this Option
Agreement may be exercised by written notice directed to the Company at its
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 the Optionee is eligible to purchase under this Option Agreement
at
the time of such purchase, and enclosing with such written notice a certified
or
cashier’s check or cash, or the equivalent thereof acceptable to the Company, in
payment of the full exercise price for the number of shares specified in such
written notice and shall comply with such other reasonable requirements as
the
Board of Directors of the Company may establish. Subject to the terms
and conditions of this Option Agreement, the Company shall make delivery of
such
shares within a reasonable period of time after the giving of such notice;
provided that if any law or regulation requires the Company to take any action
with respect to the shares specified in such notice before the issuance thereof,
then the date of delivery of such shares shall be extended for the period
necessary to take such action.
(b) The
Optionee understands that, on the exercise of this Option (or at the time a
sale
of the stock acquired by such exercise at a profit would not longer subject
Optionee to suit under Section 16(b) of the Securities Exchange Act of 1934,
as
amended) the excess of the fair market value of the Common Stock over the option
price is taxable remuneration to him subject to federal income tax withholding
by the Company. To facilitate withholding by the Company, if
required, Optionee hereby agrees that the exercisability of this Option is
conditional on Optionee agreeing to such arrangements and taking such actions
as
the Company determines are appropriate to insure that the amount required to
be
withheld will be available for payment in money by the Company as required
withholding.
6. Termination
of Option. Except as set forth below in paragraph 6(c) hereof,
this Option Agreement and the Option granted herein, to the extent not
theretofore exercised, shall immediately terminate and become null and void
upon
the earlier of the following to occur:
(a) At
such time as the Option is no longer exercisable pursuant to the terms of
Section 4 hereof; or
(b) Termination
of the Optionee for cause as an employee for the Company or any Subsidiary;
or
(c) Termination
of the Optionee (including voluntary termination by the Optionee if the Optionee
is not in violation or in breach of any of the provisions of paragraph 7 hereof
at the time of such voluntary termination) as an employee for the Company or
any
Subsidiary for any reason other than for cause, provided that the Option may
be
exercised within six (6) months after such termination of the Optionee for
any
reason other than for cause. The Option may be exercised only as to
the number of shares
for
which
the Optionee could have exercised on the date the Optionee terminated employment
with the Company. In no event may the Option be exercised after the
expiration of ten (10) years and ninety (90) days from the Date of
Grant.
(d) Ninety
(90) days following the tenth anniversary of the Date of Grant; or
(e) Upon
the Optionee=s
surrender to the Company for cancellation of this Agreement and the Option
granted herein.
7. Forfeiture
in the Event of Competition and/or Solicitation or other Detrimental
Acts. In consideration for the Option granted herein and the
Optionee’s continued employment with the Company or a Subsidiary, the
sufficiency of which is hereby acknowledged and agreed by the Optionee, the
Optionee hereby agrees and covenants as follows:
(a) Optionee
expressly agrees and covenants that during the Restricted Period (as defined
below), other than clause (iii) below that must occur during the period Optionee
is an employee of the Company or a Subsidiary of the Company, Optionee shall
not, without the prior consent of the Company, directly or
indirectly:
i) own
or
have any financial interest in a Competitive Business (as defined below), except
that nothing in this clause shall prevent Optionee from owning one percent
or
less of the outstanding securities of any entity whose securities are traded
on
a U.S. national securities exchange (including NASDAQ) or an equivalent foreign
exchange;
ii) be
actively connected with a Competitive Business by managing, operating,
controlling, being an employee or consultant (or accepting an offer to be an
employee or consultant) or otherwise advising or assisting a Competitive
Business in such a way that such connection might result in an increase in
value
or worth of any product, technology or service, that competes with any product,
technology or service upon which Optionee worked or about which Optionee became
familiar as a result of Optionee’s employment with the Company.
iii) take
any
action that might divert any opportunity from the Company or any Subsidiary
which has employed the Optionee or for whom the Optionee is, or has served
as,
an executive officer (the “Related Parties”) that is within the scope of the
present or future operations or business of the Company or the Related
Parties;
iv) employ,
solicit for employment, advise or recommend to any other person that they employ
or solicit for employment or form an association with any person who is employed
by the Company or Subsidiary or who has been employed by the Company or
Subsidiary within eighteen (18) months of the date Optionee’s employment with
the Company or Subsidiary ceased for any reason whatsoever;
v) contact
or solicit any customer, sales representatives, distributors or dealers of
the
Company or Subsidiary to which Optionee was employed by to attempt to divert
or
take away from such Company or Subsidiary the business of such customer, sales
representatives, distributors or dealers;
vi) solicit
the sale of goods, services or a combination of goods and services that are
competitive with the Company’s or any Subsidiary’s goods or services from
established customers of the Company or a Subsidiary; or
vii) engage
in
any activity that violates any policies adopted by the Board of Directors of
the
Company resulting in harm to the Company or a Subsidiary.
(b) Forfeiture. If
the Company determines that Optionee has violated any provisions of paragraph
7(a) above during the Restricted Period, then Optionee agrees and covenants
that:
i) any
portion of the Option (whether or not vested) that has not been exercised as
of
the date of such determination shall be immediately rescinded;
ii) Optionee
shall automatically forfeit any rights he may have with respect to the Option
as
of the date of such determination; and
iii) if
Optionee has exercised all or any part of the Option within the twelve-(12)
month period immediately preceding a violation of paragraph 7(a) above (or
following the date of any such violation), upon the Company’s demand, Optionee
shall immediately deliver to the Company a certificate or certificates for
shares of the Company’s Common Stock (along with a duly executed assignment of
each certificate) with a fair market value (determined on the date of such
demand) equal to the gain realized by Optionee’s upon such
exercise. Such “gain” is the amount of the fair market value of the
shares of the Company’s Common Stock received upon such exercise, minus the
exercise price applicable to such exercise. If Optionee does not own
the number of shares of the Company’s Common Stock representing the amount of
such gain that are required to be delivered to the Company pursuant to this
paragraph 7(b)(iii), then the Optionee will immediately (a) deliver to the
Company all shares of the Company’s Common Stock owned by Optionee directly or
through any entity controlled by Optionee, and (b) the dollar amount (in
currently available funds) equal to the amount of such gain, minus the fair
market value of the shares tendered to the Company.
(c) Definitions. For
purposes of this paragraph 7, the following definitions shall
apply:
i) The
Company and its Subsidiaries directly advertises and solicits business from
customers wherever they may be found and its business is thus worldwide in
scope. Therefore, “Competitive Business” means any person or
entity that engages or participates in any business activity that competes
with
the business or products of the Company or the Company’s air
conditioning-heating Subsidiaries (including, but not limited to, ClimateMaster,
Inc.) or their successors or assigns in any geographic area in which the Company
or its air conditioning-heating Subsidiaries engages in business, including,
without limitation, any state in the United States in which the Company or
its
air conditioning-heating Subsidiaries sell or offer to sell its products from
time to time.
ii) “Restricted
Period” means the period during which Optionee is employed by the Company
and eighteen (18) months following the date that Optionee ceases to be employed
by the Company for any reason whatsoever.
(d) Severability. Optionee
acknowledges and agrees that the period, scope and geographic areas of
restriction imposed upon Optionee by the provisions of paragraph 7 are fair
and
reasonable and are reasonably required for the protection of the Company and
its
Subsidiaries. In the event that any part of this Agreement,
including, without limitation, any provision of paragraph
7, is held to be unenforceable or invalid, the remaining parts of paragraph
7,
and this Agreement shall nevertheless continue to be valid and enforceable
as
though the invalid portions were not a part of this Agreement. If any
one of the provisions in paragraph 7 is held to be excessively broad as to
period, scope and geographic areas, any such provision shall be construed by
limiting it to the extent necessary to be enforceable under applicable
law.
(e) Additional
Remedies. Optionee acknowledges that breach by him of this
Agreement would cause irreparable harm to the Company and one or more of its
Subsidiaries, and that in the event of such breach, the Company shall have,
in
addition to monetary damages and other remedies at law, the right to an
injunction, specific performance and other equitable relief to prevent
violations of Optionee’s obligations hereunder.
8. Restrictions.
(a) The
Option will not be transferable 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. 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.
(b) Optionee
shall have no right as a stockholder with respect to any shares covered by
this
Option 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. Third
Party Transfers of Option Shares. Optionee may
transfer any or all of the Option Shares acquired upon the exercise of the
Option to a third party pursuant to the terms and conditions of this paragraph
9.
(a) Transfer
Notice. If Optionee desires to make a bona fide transfer of any
Option Shares acquired upon the exercise of the Option (“Offered Shares”) to any
person or entity other than the Company immediately prior to the transfer (a
“third party”), the Optionee will give the Company five (5) business days prior
written notice (a “Transfer Notice”) of such proposed transfer specifying: (a)
the name and address of the third party; (b) the number of shares of stock
proposed to be transferred; (c) if not equal to the bid price listed or quoted
on any exchange or quotation system on which the Common Stock is listed or
quoted, the price per share to be paid for the Offered Shares; and (d) the
terms
and conditions of the proposed transfer.
(b) Company’s
Option. At any time within five (5) business days after receipt
of the Transfer Notice, the Company will have the exclusive right to elect
to
purchase all, or any portion, of the Offered Shares, at the Purchase Price
(as
defined below) and on the terms pursuant to this paragraph 9.
(c) Election
to Purchase. The right of the Company to purchase the Offered
Shares is exercisable by delivery of written notice (a “Response Notice”) to the
Optionee prior to the expiration of the designated period. If the
Company elects to purchase the Offered Shares, or any portion thereof, closing
of the purchase of those Offered Shares the Company elects to purchase will
occur within thirty (30) days from the date of the Response Notice (the
“Closing”), and at the Closing the Optionee shall deliver to the Company those
Offered Shares so purchased by the Company, together with an assignment duly
executed by the Optionee (with such signature guaranteed by a national bank
or
investment banking firm), assigning those Offered Shares so purchased by the
Company to the Company, all in a manner and on terms satisfactory to the
Company, subject to the provisions of paragraph 7(e) hereof.
(d) Transfer
of Offered Shares. Subject to the provisions of paragraph 7 of
this Agreement, if the Company waives in writing the right to purchase the
Offered Shares, the Optionee will have the right for a period of ninety (90)
days after such waiver to transfer the Offered Shares on the terms specified
in
the Transfer Notice. If such transfer is not consummated within such
ninety (90) day period then no such transfer will be made, unless the Optionee
delivers to the Company a new Transfer Notice and complies with this paragraph
9
as if such transfer were a new proposed transfer.
(e) Purchase
Price. The Purchase Price for the shares of stock subject to a
transfer, pursuant to this paragraph 9, will be the average of the closing
price
of the Company’s common shares on the American Stock Exchange or such other
national exchange as may be applicable for the five (5) trading days preceding
the date of the Transfer Notice. If the Company elects to purchase
any of the Offered Shares pursuant to the terms hereof, the Company may, at
its
sole option, elect to pay the Purchase Price as follows.
i) at
the
Closing, the Company shall pay to the Optionee that portion of the Purchase
Price equal to the amount of (a) federal income taxes, if any, paid by the
Optionee prior to the Closing as a result of exercising this Option Agreement
relating to that portion of the Offered Shares that the Company elects to
purchase and (b) that portion of the Exercise Price paid by the Optionee to
the
Company pursuant to the terms hereof for those Offered Shares that the Company
has elected to purchase; and
ii) the
balance of the Purchase Price, if any, pursuant to the terms of a promissory
note payable in equal installments over a twelve (12) month period, plus
interest at annual interest rate equal to the New York prime rate of interest,
or in such other manner as the Company and the Optionee shall agree in writing;
except that if the Optionee has not paid prior to the Closing the amount of
federal income taxes as a result of exercising this Option Agreement as to
those
Offered Shares that the Company has purchased pursuant to this paragraph 9,
then
the Company shall prepay that portion of the Purchase Price to the Optionee
equal to amount of federal income tax that the Optionee is required to pay
as a
result of exercising this Option Agreement relating to the Offered Shares so
purchased by the Company when the Optionee is required to pay such
tax.
(f) Notwithstanding
the foregoing, Optionee may transfer any or all of the Optionee’s stock obtained
as a result of the exercise of all or a portion of this same non-qualified
option to Optionee’s spouse, children or grandchildren (the “Family
Transferees”), provided that such Family Transferees will be subject to all the
provisions of this Option Agreement, and that the Family Transferee recipient
(or such Family Transferee’s legal guardian) of such transferred shares shall
sign an acknowledgement of and agreement to such Option Agreement and its
provisions or such transfer shall be deemed null and void.
10. Option
to Purchase Stock. Upon the occurrence of any one or more of the
Call Events set forth in paragraph 10(a) below, the Company will have the right,
but not the obligation, to purchase the shares that Optionee has obtained as
a
result of the exercise of all or a portion of the same non-qualified option
on
the same terms and conditions as if such Optionee had made an offer to sell
such
stock pursuant to paragraph 9 of this Agreement (except that the exercise period
shall be extended to allow the Company to purchase the subject shares within
thirty (30) days after the applicable event occurs), but at the Purchase Price
determined as of the date of the Call Event in accordance with paragraph 10(a),
below.
(a) Call
Events. For purposes of this Agreement, the term Call Events
means any one or more of the following events or conditions:
i) the
Optionee or Family Transferee as defined in paragraph 9(f) above dies
or;
ii) the
termination by the Company of the Optionee’s employment with the Company For
Cause (as defined in paragraph 10(e) of this Agreement).
(b) Notice. Within
thirty (30) days of an occurrence of a Call Event, the Optionee, Family
Transferee, or the Optionee’s or Family Transferee’s personal representative,
executor, or other legal representative, as appropriate, will give written
notice of such Call Event to the Company specifying: (a) the date of the Call
Event; (b) a reasonably detailed description of the Call Event; and (c) the
number of shares of stock affected. This notice will be deemed to be
the Transfer Notice for purposes of paragraph 9 and the number of shares of
stock affected will be the Offered Shares. If the Company has not
received this notice on or before the expiration of the thirty (30) day period,
any person with knowledge of the Call Event may give the Company notice of
the
Call Event, and such notice will be deemed to be the Transfer
Notice.
(c) Purchase
Price. For purposes of this paragraph 10, the Purchase Price for
the Offered Shares will be the average of the closing price of the Company’s
common shares on the American Stock Exchange or such other national securities
exchange as may be applicable for the five (5) trading days preceding the date
of the Call Event.
(d) For
Cause. For purposes of this Agreement, the term “For Cause” means
(i) the material failure by the Optionee to reasonably perform Optionee’s duties
or obligations under the Non-Competition and Employment Agreement, dated
September 18, 1995 between the Optionee and a Subsidiary of the Company, as
may
be amended, modified or supplemented from time to time, which nonperformance
has
not been cured within thirty (30) days after written notice thereof has been
given by the Company to the Optionee (or such greater amount of time, if such
nonperformance can not be cured within thirty (30) days, sufficient to
reasonably permit the Optionee to diligently and vigorously cure such breach);
(ii) Optionee’s breach or failure to perform any of the material terms of this
Agreement and such breach or failure has not been cured within thirty (30)
days
after Optionee receives notice from the Company of such breach or failure;
(iii)
the reckless or willful engaging by the Optionee in misconduct which is
materially injurious to the Company and/or its Subsidiaries, monetarily or
otherwise; (iv) conviction of a crime under the laws of the United States or
of
any state within the United States involving a felony, moral turpitude or
dishonesty; (v) addition to, or continued misuse of, alcohol or any drug
materially affecting the mental processes of Optionee; (vi) failure of Optionee
to make good faith efforts to return to employment of the Company or its
Subsidiaries, whichever is applicable, after the sufferance of a disability;
or
(vii) material breach of any of Optionee’s fiduciary duties to the Company
and/or its Subsidiaries, as determined in good faith by the
Company.
(e) Without
Cause. For purposes of this Agreement, the term “Without Cause”
means any event or condition which is not included in the definition of
the term
“For Cause.”
11. Stock
Dividends, Reorganizations. If and to the extent that the number
of issued shares of common stock of the Company shall be increased or reduced
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend or any other increase or decrease in the number of such shares
of
common stock of the Company effected without receipt of consideration by the
Company, the number of shares of common stock subject to this option not yet
exercised and the option price therefor shall be proportionately
adjusted.
If
the
Company is reorganized or consolidated or merged with another corporation,
in
which the Company is the non-surviving corporation, Optionee shall be entitled
to receive options covering shares of such reorganized, consolidated or merged
company in the same proportion as optioned under this Option Agreement to
Optionee prior to such reorganization, consolidation or merger, at an equivalent
price, and subject to the same terms and conditions as contained
herein. For purposes of the preceding sentence, the excess of the
aggregate fair market value of the shares subject to this option immediately
after the reorganization, consolidation or merger over the aggregate option
price of such shares shall not be more than the excess of the aggregate fair
market value of all shares subject to this option immediately before such
reorganization, consolidation or merger over the aggregate option price of
such
shares, and the new option or assumption of this option shall not give Optionee
additional benefits which he did not have under this option.
To
the
extent that the foregoing adjustments and determinations relate to the shares
of
common stock of the Company and/or fair market values of such shares, such
adjustments and determinations shall be made by the Board of Directors or the
Committee, whose determination in that respect shall be final, binding and
conclusive.
Except
as
hereinabove expressly provided in this Section 11, the Optionee shall have
no
rights by reason of any subdivision or consolidation of shares of stock of
any
class or the payment of any stock dividend or any other increase or decrease
in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger, consolidation or reorganization or spin-off of assets
or
stock of another corporation, and any issue by the Company of share of stock
of
any class, or securities convertible into shares of stock of any class, shall
not affect and no adjustment by reason thereof shall be made with respect to
the
number or price of shares subject to this option.
The
grant
of this option shall not affect in any way the right of power of the Company
to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or to consolidate or to dissolve, liquidate
or
sell, or transfer all or any part of its business or assets.
12. Data
Privacy. By entering into this Option Agreement, Optionee
(a) authorizes the Company and any agent of the Company administering the
Option or providing recordkeeping services, to disclose to the Company or any
of
its subsidiaries such information and data as the Company or any such subsidiary
shall request in order to facilitate the grant of the Option and the
administration of the the Option under the terms of this Option Agreement;
(b) waives any data privacy rights Optionee may have with respect to such
information; and (c) authorizes the Company to store and transmit such
information in electronic form.
13. Compliance
with Law and Approval of Regulatory Bodies.
(a) Notwithstanding
anything in this Option Agreement to the contrary, no shares will be issued,
or,
in the case of treasury shares transferred, upon exercise of the Option granted
hereunder, except in compliance with all applicable Federal and State laws,
rules and regulations (including, but not limited to the Federal and State
securities laws, rules and regulations) and in compliance with rules of stock
exchanges on which the Company’s shares of common stock may be
listed. Notwithstanding anything in this Option Agreement to the
contrary, no shares will be issued, or, in the case of treasury shares
transferred, upon exercise of the option granted hereunder, until the Company
has obtain such consent or approval from any and all regulatory bodies, Federal
or State, and such stock exchanges having jurisdiction over such matters as
the
Board of Directors of the Company may deem advisable.
(b) If
the national securities exchange or NASDAQ on which the Company’s Common Stock
is listed for trading requires that the issuance of this Option Agreement or
the
shares of Common Stock issuable upon exercise of this Option Agreement be
approved by the shareholders of the Company, then the Optionee may not exercise
any portion of this Option Agreement until this Option Agreement has been
approved by the shareholders of the Company. The Company agrees to
use reasonable efforts to submit this Option Agreement for approval by its
shareholders on or before the Company’s 2007 annual meeting of
shareholders. The Date of Grant will be the date set forth above,
notwithstanding the date on which the shareholders of the Company may approve
this Option Agreement, if such approval is required.
14. Binding
Effect and Amendments. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties
hereto. This Agreement may not be amended except in writing signed by
all of the parties hereto. All decisions or interpretations of the
Board of Directors or its duly authorized Committee with respect to any question
arising under the Plan or under this Option Agreement shall be binding,
conclusive and final.
15. Interpretation,
Other Restrictions and Legends.
(a) The
Board of Directors of the Company or the Committee shall construe and interpret
the terms and provisions of this Option Agreement, which construction and
interpretation, shall be binding and conclusive upon all parties
hereto. This Option Agreement shall be construed pursuant to the laws
of the State of Delaware.
(b) The
Optionee represents and warrants that if he acquires any of the shares under
this Option 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 the shares
of common stock covered by this Option Agreement have not as of the date hereof
and may not at the time that such are purchased be 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.
(c) The
Optionee represents, covenants, and agrees that he will not sell or otherwise
dispose of the shares acquired under this Option Agreement in the absence of
(i)
an effective registration statement under the Act, (ii) an opinion acceptable
in
form and substance to the Company from Optionee’s counsel satisfactory to the
Company, or an opinion of counsel to the Company, to the effect that no
registration is required for such disposition, or (iii) a “no-action” letter
from the staff of the Securities & Exchange Commission (“SEC”) to the effect
that such a disposition takes place without registration.
(d) The
certificates representing shares covered by this Option 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.”
“Transfer,
sale or other disposal of these shares is subject to the provisions of the
Non-Qualified Option Agreement dated June 19, 2006 between Xxx Xxxxx and LSB
Industries, Inc.”
If
the
Company does not elect to purchase the Offered Shares pursuant to the terms
of
Section 9 hereof, then the Company agrees to have removed from the certificates
representing those Offered Shares that the Company has not elected to
purchase pursuant to the terms of Section 9 that portion of the legend that
reads, “Transfer, sale or other disposal of these shares is
subject
to the provisions of the Non-Qualified Option Agreement, dated June 19, 2006,
between Xxx Xxxxx and LSB Industries, Inc.”
16. Definitions. For
the purposes of this Option Agreement:
(a) The
term “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain own stock possessing
fifty
percent (50%) or more of the total combined voting power of all classes of
stock
in one or the other corporations in such chain.
(b) The
term “employee” means a person who has contracted to perform work or services
for another.
17. Waiver. The
waiver by the Company of any provision of this Option shall not operate as
or be
construed to be a subsequent waiver of the same provision or waiver or any
other
provision hereof.
18. Construction. This
Option shall be irrevocable during the Option period and its validity and
construction shall be governed by the laws of the State of
Delaware. The terms and conditions herein set forth are subject in
all respects to the terms and conditions of the Plan, which shall be
controlling.
IN
WITNESS WHEREOF, the parties hereunto have caused this Agreement to be executed
the day and year first above written.
LSB
INDUSTRIES, INC.
By: /s/
Xxxx X. Xxxxxx
Xxxx
X.
Xxxxxx,
Chief
Executive Officer
ATTEST:
/s/
Xxxxx X. Xxxxxx III
Asst. Secretary
Asst. Secretary
[SEAL]
“OPTIONEE”
By:
/s/ Xxx Xxxxx
Xxx
Xxxxx
