NON-QUALIFIED STOCK OPTION AGREEMENT (LSB Industries, Inc. Outside Directors Stock Purchase Plan)
NON-QUALIFIED STOCK OPTION AGREEMENT
(LSB Industries, Inc. Outside Directors Stock Purchase Plan)
This Non-qualified Stock Option Agreement (the "Agreement") is made the 8th day of July, 1999, between LSB Industries, Inc., a Delaware corporation (the "Company"), and ____________________ (the "Participant"). In consideration of the mutual covenants and conditions set forth in this Agreement and for good and valuable consideration, the Company and the Participant agree as follows.
1. Recitations. The Participant is a member of the Board of Directors of the Company who is not an employee of the Company or any Subsidiary. The Company believes that the Participant should be provided an inducement to continue the Participant's association with the Company and to advance the interests of the Company. Accordingly, the Company desires to provide the Participant the opportunity to purchase certain shares of the Company's common stock, par value $.10 per share ("Common Stock"), pursuant to the Company's Outside Directors Stock Purchase Plan, as approved by the shareholders of the Company on June 24, 1999, and as may be amended (the "Plan"). A copy of the Plan has been delivered to the Participant. The option granted hereunder is granted pursuant and subject to the terms and provisions of the Plan, which is made a part of this Agreement. Unless otherwise indicated, capitalized terms in this Agreement have the same meaning as set forth in the Plan.
2. Grant of Option. Subject to the terms and conditions of this Agreement, the Company hereby grants to the Participant the right, privilege and option to purchase fifteen (15) shares of the Company's Common Stock (the "Option"). The purchase price for each share to be purchased under the Option is $1.25 (the "Exercise Price"). The Exercise Price represents 100% of the Fair Market Value (as defined in the Plan) of the Common Stock at the close of the business on the date of this Agreement and is subject to adjustment as provided in the Plan. The Option is not an "incentive stock option" as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
3. Exercise of Option. The Option may be exercised only pursuant to the following terms and conditions.
3.1 As a Director. While serving as a member of the Board of Directors of the Companyor any Subsidiary, the Participant may exercise the Option, in whole or in part, at any
time after the expiration of six months and one day from the date of this Agreement.
If the Participant's service as a member of the Board of Directors ceases by reason
of the death or Permanent Disability of the Participant, the Option will immediately
become exercisable for all shares subject to the Option, and the Option may be
exercised for all of shares subject to the Option as fully-vested shares. Upon the
Permanent Disability of the Participant, the Option may be exercised by the
Participant, the Participant's attorney-in-fact, or the Participant's duly appointed
guardian. Upon the death
of the Participant, the Option may be exercised by the
personal representative of
the Participant's estate, the person or persons to whom
the Option is transferred
pursuant to the Participant's will or in accordance with
the laws of descent and
distribution, or the Participant's designated beneficiaries
of such Option. The
Option may not be exercised after the termination of the
Option pursuant to
paragraph 5 of this Agreement.
3.2 As a Former Director. The Participant may exercise the Option if the
Participant
has ceased to be a member of the Board of Directors of the
Company or any
Subsidiary for any reason, other than death or Permanent
Disability, only as to the
number of shares for which the Participant could have
exercised at the time the
Participant ceased being a member of the Board of
Directors. If the Eligible
Director dies after ceasing to be a member of the
Board of Directors but prior to
the expiration of the Option, the personal
representative of the Participant's estate,
the person or persons to whom the
Option is transferred pursuant to the Participant's
will or in accordance with the
laws of descent and distribution, or the Participant's
designated beneficiaries of
such Option may exercise the Option as to all or any
part of the number of
shares for which the Participant could have exercised as of
the date of the
Participant's death. The Option may not be exercised after the
termination of
the Option pursuant to paragraph 5 of this Agreement.
discretion to (a) accelerate the time when the Participant will become entitled to
exercise all or any part of the Option and (b) waive any limitations or restrictions with
respect to all or any part of the Option. Unless the Participant waives the application
of this paragraph 3.3 prior to a Change of Control (as defined in the Plan), in the event
of a Change of Control, the Option will become exercisable in full immediately prior
to the effective date of the Change of Control notwithstanding the vesting provisions
contained in this Agreement and may be exercised for any or all of the shares subject
to the Option as fully-vested shares.
4. Method of Exercise and Payment of Exercise Price.
4.1 Exercise Notice. Subject to the terms and conditions of this Agreement, the
Option may
be exercised by written notice (an "Exercise Notice") delivered to
the Company at its
principal place of business setting forth the exact number of
shares under the Option
that the Participant is purchasing, which may not
exceed the number of shares that the
Participant is eligible to purchase under
this Agreement at the time of such purchase.
The Exercise Notice must be
accompanied by the payment to the Company of (a) the
full Exercise Price for
the number of shares Participant desires to purchase and (b) all
withholding
taxes pursuant to paragraph 4.3. The Participant agrees to comply with
such
other reasonable requirements as the Board of Directors of the Company may
establish.
4.2 Payment of Exercise Price. The Participant may pay the Exercise Price in (a)
cash or by
check, draft, money order, or wire transfer, in each case payable to
the order of the
Company,
(b) in whole shares of Common Stock which are
already owned by the
Participant, or (c) partly in cash and partly in such shares.
The Company will not be
required to deliver certificates for shares to be
acquired under the Option until the
Company has confirmed the receipt of good
and valuable funds in payment of the
Exercise Price. Payments in the form of
shares (x) will be valued at the Fair Market
Value (as defined in the Plan) on
the date of exercise, and (y) will be made by delivery
of stock certificates in
negotiable form which are effective to transfer good and valid
title thereto to the
Company, free of any liens or encumbrances, with signature
guaranteed by a
bank or investment banking firm.
Company receives full payment for any required state and federal withholding taxes.
Payment for withholding taxes will be made in cash or by check, draft, money order,
or wire transfer, unless the Board of Directors of the Company otherwise provides.
The foregoing sentence does not require payment of withholding taxes at the time of
exercise if payment of such taxes is deferred pursuant to any provision of the Code,
and actions satisfactory to the Company are taken to reasonably insure payment of
withholding taxes when due. The obligations of the Company under the Plan are
conditioned upon such payment or arrangements and the Participant agrees that the
Company may deduct any such taxes from any payment of any kind otherwise due
to the Participant from the Company to the extent permitted by law.
4.4 Delivery of Shares. Subject to the terms and conditions of this Agreement, the
Company will deliver the shares acquired upon the exercise of the Option within
a
reasonable period of time after the Company receives the Exercise Notice and
the
correct Exercise Price. Notwithstanding the foregoing, 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 of such shares, then the date
of delivery of such
shares shall be extended for the period necessary to take
such action.
(a) the expiration of three years from the date the Participant ceased to be a
member of the
Board of Directors of the Company or any Subsidiary;
(b) the tenth anniversary of the date of this Agreement; and
(c) the Participant's surrender to the Company for cancellation of this Agreement
and the
Option granted herein.
7. Rights as Stockholder. Participant shall have no right as a stockholder with respect to any shares covered by the Option until the exercise of the Option and the issuance of a stock certificate in accordance with this Agreement. No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
8. Stock Dividends, Reorganizations. If and to the extent 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 the Option and the Exercise Price will be proportionately adjusted in accordance with the terms and conditions of the Plan. The grant of the Option will not affect in any way the right or 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.
9. Compliance with Law and Approval of Regulatory Bodies. Notwithstanding anything in this Agreement to the contrary, no shares will be issued, or, in the case of treasury shares transferred, upon exercise of the Option, 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 Common Stock may be listed. Notwithstanding anything in this Agreement to the contrary, no shares will be issued, or, in the case of treasury shares transferred, upon exercise of the Option 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.
10. Additional Provisions. 10.1 Amendments. The Board of Directors of the Company may at any time, and
from time
to time, amend or modify any of the provisions of the Plan, and may
at any time
suspend or terminate the Plan. This Agreement may be amended
from time to time by
the Board of Directors of the Company, but no amendment
which in any material
respect impairs the rights of the Participant under this
Agreement will be effective as
to the Participant unless all of the parties hereto
agree in writing.
terms and provisions of this Agreement, which construction and interpretation, shall be
binding and conclusive upon all parties hereto.
10.3 Investment Intent. The Participant represents and warrants that all shares
acquired
under this Agreement will be acquired for the Participant's 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 Participant
understands that the
shares of Common Stock covered
by this Agreement have not been as of the
date hereof, and may be at the time
that such are purchased, 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
Participant 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.
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 Participant'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 (c) a "no-action" letter from the staff of the
Securities & Exchange Commission ("SEC") to the effect that such a disposition takes
place without registration.
10.5 Legend. The certificates representing shares covered by this Agreement will 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.
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.
10.7 Governing Law. This Agreement will be construed pursuant to the laws of the
State
of Delaware.
10.8 Binding Effect. This Agreement shall be binding upon the heirs, executors,
administrators and successors of the parties hereto.
IN WITNESS WHEREOF, the parties hereunto have caused this Agreement to be executed the day and year first above written.
LSB INDUSTRIES, INC.
By: _________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
(the "Company")
____________________________________
_______________________, Director
(the "Participant")