SHAREHOLDER’S AGREEMENT
THIS
AGREEMENT made effective the 1st
day of
December, 1995, by and among Xxxxx X. Xxxxxx (“Shareholder and the member of
Group 1”) and Xxxxxx Xxxxxx and SBL Corporation (“Shareholders and the members
of Group 2”).
WHEREAS,
the Shareholder owns stock of LSB Industries, Inc. (“LSB”) and SBL Corporation
(“SBL”) (collectively referred to as the “Shares”); and
WHEREAS,
the Shareholders desire to promote and protect their mutual interest by imposing
certain restrictions and obligations on the Shares owned or to be acquired
by
the Shareholders or upon the sale of the Shares by the
Shareholders.
WHEREAS,
the parties shall be designated as follows:
Group
1
Xxxxx
X.
Xxxxxx
Group
2
Xxxxxx
Xxxxxx
SBL
Corporation
NOW,
THEREFORE, for mutual promises and adequate consideration, the parties desire
to
and do hereby enter into the following agreement.
| 1. |
Restriction
on Transfer of Share by Group 1.
No Shareholder in Group 1
|
or
transferee of a Shareholder in Group 1, or the estate or heirs of any
Shareholder in Group 1 or transferee thereof, shall dispose or transfer any
of
Shares to any person or entity not in Group 1 without Group 2 Shareholders’
prior written consent, unless all such Share are first offered for sale to
each
of the Shareholders in Group 2 in the manner provided below. Any purported
transfer or disposition of Shares in violation of the terms of this Agreement
shall be null and void.
Every
such offer shall be made in writing, and shall state that the Group 1 offeror
offers
to
sell all (or a portion of) the shares of LSB or SBL held or owned by him to
the
Shareholders in return receipt requested, to each of the parties to this
Agreement who are them Shareholders in Group 2.
| 2. |
Purchase
Price.
For the purposes of this Agreement, the purchase price of
|
shares
sold to Group 2 pursuant to the terms set forth herein shall be as
follows:
| a. |
In
the case of a sale of shares by Shareholder in Group 1 to Group
|
2
due to
involuntary transfer or legal proceedings, including divorce, within the ten
(10) years following the effective date of this Agreement, the purchase price
of
the shares from the disposing party shall be their book value as shown by the
balance sheet of the corporation as at the close of the calendar year preceding
the date of offer subject to the definition of the term “book value” hereinafter
set forth, less
an
amount equal to any investment in the corporation made by Shareholders in Group
2, less any amounts owed by Group 1 to any members of Group 2 and less a
discount of 30%.
| b. |
In
the case of a sale by Shareholder in Group 1 for any reason
after
|
ten
(10)
years from the effective date of this Agreement, the purchase price of the
shares shall be their “fair market value”, the determination of which will be
made pursuant to the terms hereinafter set forth.
| c. |
Notwithstanding
any other provision herein, the value of
LSB
|
shares
held by any of the parties hereto shall be the average daily closing price
of
LSB shares on the NYSE or successor national quotation service during the
previous twelve months prior to the date for which a value is being determined,
less a discount (“haircut”) of 30%. For the purpose of this calculation, only
business days shall be used to determine price and the number of days to be
considered.
| 3. |
Definition
of Book Value.
|
| a. |
For
the purposes of this Agreement, the book value of the shares
|
shall
be
determined by the corporation’s regular certified public accountant, pursuant to
the provisions of GAAP; however, there shall be no allowance of any kind shall
be made for the corporations’ goodwill, trade name, or intangible
assets.
| b. |
Notwithstanding
any other provision herein, the value of LSB
|
shares
held by any of the parties hereto shall be the average daily closing price
of
LSB shares on the NYSE or successor national quotation service during the
previous twelve months prior to the date for which a value is being determined,
less a discount (“haircut”) of 30%. For the purpose of this calculation only
business days shall be used to determine price and the number of days to be
considered.
The
book
value so determined by the certified public accountant shall be binding and
conclusive on all parties.
| 4. |
Definition
of Fair Market Value.
|
| a. |
For
purposes of this Agreement, the fair market value of the SBL
|
2
shares
shall be determined to be the price at which the shares could be sold to a
non-interested third party taking into account a discount (“haircut”) for a
minority interest, if applicable, This determination shall be made by a
certified appraisal service or accountant selected by the Shareholders in Group
2.
| b. |
Notwithstanding
any other provision herein, the value of LSB
|
Shares
held by any of the parties hereto shall be the average price of LSB shares
on
the NYSE or successor national quotation service during the previous twelve
months prior to the date for which a value is being determined, less a discount
(“haircut”) for restricted stock of 30%. For the purpose of this calculation
only business days shall be used to determine price and the number of days
to be
considered.
| 5. |
Payment
of Purchase Price.
The purchase price of the shares shall be
paid
|
in
cash
or a note over a period of five (5) or more years as determined by the
parties.
| 6. |
Option
to Purchase Shares.
Each shareholder entitled to purchase shall
|
have
a
period of ninety (90) from the time of such offer to accept all or part of
such
offer. The acceptance shall be in writing.
| 7. |
Failure
to Exercise Option.
If any of the Shares so offered for purchase by
|
Shareholder
in Group 1 are not accepted by Shareholders in Group 2 within the period of
time
prescribed herein, the provisions of this Agreement shall thereafter no longer
apply to the offerors unaccepted shares; provided, however, that if the
unaccepted shares are not sold to another party, then the provisions of this
Agreement will continue to apply to such shares. If, however, a shareholder
thereafter acquires any additional SBL or LSB shares, such shares shall be
subject to all the provisions of this Agreement.
| 8. |
Endorsement
on Share Certificate.
All shares of SBL and LSB issued and
|
Delivered
to Xxxxx X. Xxxxxx or held by Xxxxx X. Xxxxxx shall have endorsed thereon the
following statement:
“The
shares represented by this certificate are subject to the rights and limitations
of an agreement dated December 1, 1995, between Xxxxx X. Xxxxxx, Xxxxxx Xxxxxx
and SBL Corporation.”
Even
if
this endorsement is not made, the terms and conditions of this Agreement shall
still remain in effect.
| 9. |
Binding
Effect.
This Agreement shall bind the parties hereto, and their
|
respective
heirs, administrators, executors, successors, and assigns any person or entity
who purchases shares from a Shareholder, provided that if the Shareholders
in
Group 1 dispose of their shares to a party that is not a member of Group 2,
then
the transferee of the shares will be bound by this Agreement unless the
Shareholders in Group 2 agree to waive the provisions hereof in writing prior
to
such transfer.
3
10. Notices.
All
notices under this Agreement shall be mailed to the parties at the following
addresses:
Name Address
Xxxxx
X.
Xxxxxx 00000
Xxxxxxxxxx Xxxx
Xxxxxxxx
Xxxx, XX 00000
Xxxxxx
Xxxxxx 0000
Xxxxxxxxx Xxxxxxx
Xxxxxxxx
Xxxx, XX 00000
SBL
Corporation X.X.
Xxx
000
Xxxxxxxx
Xxxx, XX 00000
Any
party
may change his mailing address by serving written notice of such change and
of
such new address on all other parties.
| 11. |
Entire
Agreement.
This Agreement supersedes all agreements previously
|
made
between the parties relating to its subject matter. There are no other
understandings or agreements between the parties regarding the matters covered
herein. This Agreement may only be amended by a writing signed by those parties
agreeing to such amendment.
| 12. |
Non-Waiver.
No delay or failure by a party to exercise any right under
|
this
Agreement, and no partial or single exercise of that right, shall constitute
a
waiver of that or any other right, unless otherwise expressly provided
herein.
| 13. |
Headings.
Headings in this Agreement are for convenience only and shall
|
not
be
used in interpret or construe its provisions.
| 14. |
Governing
Law.
This Agreement shall be construed in accordance with,
|
and
governed by, the laws of the state of Oklahoma.
| 15. |
Counterparts.
This Agreement may be executed in two or more
|
counterparts,
each of which shall be deemed an original.
| 16. |
Severability.
If any of this Agreement shall be held unenforceable, the
|
rest
of
this Agreement nevertheless remain in full force and effect.
| 17. |
Specific
Enforcement.
The parties hereto hereby declare that it is
|
impossible
to measure in money the damages which will accrue to a party hereto or to any
of
its or his successors, heirs, personal representatives, or permitted assigns
by
reason of a failure to perform any of the obligations under this Agreement
and
agree that the terms of this Agreement shall be, specifically enforceable in
equity. If any party hereto or its or his successors, heirs, personal
representatives, or permitted assigns institutes any action or proceeding to
specifically enforce the provisions hereof, any person against whom such action
or proceeding is brought hereby waives the claim or defense therein
4
that
such
party or personal representative has an adequate remedy at law, and such person
shall not urge in any action or proceeding the claim or defense that such remedy
at law exists. It is, therefore, agreed that in the event that any breach or
threatened breach by any of the Shareholders of any of the terms and conditions
set forth herein, any of the other parties hereto shall be entitled, in addition
to any and all other rights and remedies which it or they may have in law or
in
equity, to apply for and obtain injunctive relief requiring the defaulting
party
or party threatening to default to be restrained from any such breach,
threatened breach or to refrain from a continuation of any actual or threatened
breach.
| 18. |
Securities
Law Compliance.
Notwithstanding any other provision hereof,
|
no
transfer shall be permitted or is intended to be permitted hereby which would
require any party to file any registration statement under the Securities Act
of
1933, as amended, or any state’s securities laws.
IN
WITNESS WHEREOF, the parties hereto have signed this Agreement and
intend
such Agreement to be in full force and effect the 1st
day of
December, 1995.
/s/
Xxxxx X. Xxxxxx /s/
Xxxxxx Xxxxxx
XXXXX
X.
XXXXXX XXXXXX
XXXXXX
SBL
CORPORATION
By:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx
X.
Xxxxxx, Vice President
