LSB INDUSTRIES, INC. 1998 STOCK OPTION AND INCENTIVE PLAN INCENTIVE STOCK OPTION AGREEMENT
LSB INDUSTRIES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made this 8th day of July, 1999, between LSB INDUSTRIES, INC., a Delaware corporation, hereinafter called the "Company", and ___________________, hereinafter called "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:
I. Recitations. The Company or its Subsidiary is presently employing the Optionee as its employee and 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 Company in the form of this option to purchase certain shares of the Company's common stock, par value $.10 per share ("Common Stock"), which option hereunder is granted subject to and in accordance with the Company's 1998 Stock Option and Incentive Plan, as amended prior to this date (the "Plan"). The capitalized terms herein shall have the same meaning as set forth in the Plan, unless otherwise indicated.
II. Employment. This Agreement shall not impose upon the Company or its Subsidiary any obligation to retain Optionee in its employ or to retain Optionee at his present salary or position. If Optionee shall leave the employ of the Company or its Subsidiary for any reason, the option granted herein shall immediately terminate, except as otherwise expressly provided in Section IV hereof.
III. Grant of Option. The Company hereby grants to Optionee as of the close of business on this 8th day of July, 1999 (the "Date of Grant"), the right, privilege and option to purchase an aggregate of ______________ (______) shares of its Common Stock for a price of $1.25 per share (the "Exercise Price"), under and subject to the terms and conditions of the Plan to which reference is hereby made and a copy of which is attached to and made a part hereof, such Exercise Price being one hundred percent (100%) of the Fair Market Value of the Common Stock as determined pursuant to the Plan. Such option is hereinafter referred to as the "Option" and the shares of Common Stock purchasable upon the exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is intended by the parties hereto to be an incentive stock option, as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended.
IV. Exercise of Stock Options.
A. As an Employee. If the Option has not been terminated pursuant to
Section VII
hereof, the Option granted herein may be exercised by Optionee as
hereinafter provided.
Unless waived by the Board of Directors or a committee thereof
that administers the Plan
(the Board of Directors or a committee thereof is referred to
herein as the "Committee"),
the Optionee, while in the employment of the Company or
its Subsidiary, may exercise the
option as follows:
1. at any time after one (1) year of continuous employment by the Optionee from
the
Date of Grant, the Option may be exercised in whole or in part as to not
more than
twenty percent (20%) of the total number of Option Shares;
2. at any time after two (2) years of continuous employment by the Optionee from
the
Date of Grant, the Option may be exercised, in whole or in part, as to an
additional
twenty percent (20%) of the total number of Option Shares;
3. at any time after three (3) years of continuous employment by the Optionee
from the
Date of Grant, the Option may be exercised, in whole or in part, as to
an additional
thirty percent (30%) of the total number of Option Shares;
4. at a time after four (4) years of continuous employment by the Optionee from
the Date
of Grant, the Option may be exercised, in whole or in part, as to all of
the Option
Shares remaining subject to the Option.
The right to exercise the Option shall be cumulative. Employment by a
Subsidiary of
the Company shall be considered employment by the Company. The
Committee shall have
the sole right to accelerate the time when Optionee will become
entitled to exercise the
Option pursuant to the terms hereof and the Plan.
B. As a Former Employee. 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 Code ("Former 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 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
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representative of his 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:
1. the Optionee died while an employee of the Company or a Subsidiary; or
2. 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 from the Date of Grant.
D. Continuous Employment. The Committee 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, which
decision shall be binding for the purpose of this Agreement.
E. Acceleration upon Change in Control. The Option shall become
immediately
exercisable in full, notwithstanding the four (4) year vesting schedule
provided in Section
IV.A, upon a change in control of the Company. A "change in
control" shall be defined as
set forth in the Plan.
V. Notice of Exercise and Payment of Exercise Price. Subject to the terms of this Agreement, the Option shall be exercised by giving written notice of such exercise to the Company identifying the Option being exercised and specifying the number of Option Shares then being purchased. Such notice shall be accompanied by payment in full of the Exercise Price, which shall be in cash or in whole shares of Common Stock which are already owned by the Optionee, or partly in cash and partly in such Common Stock. Cash payments shall be made by wire transfer, certified check, bank check or personal check, in each case payable to the order of the Company; provided, however, that the Company shall not be required to deliver certificates for shares of Common Stock with respect to which the Option is exercised until the Company has confirmed the receipt of good and valuable funds in payment of the purchase price thereof. Payments in the form of Common Stock (which shall be valued at the Fair Market Value of a share of Common Stock on the date of exercise) shall be made by delivery of stock certificates in negotiable form (in form and content satisfactory to the Company) which are effective to transfer good and valid title thereto to the Company, free of any liens or encumbrances.
VI. Issuance of Shares. As soon as practicable after its receipt of such notice and payment, 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, however, the obligation of the Company to deliver such
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certificates shall be subject to the Company's compliance with any applicable federal and state securities laws as provided in Section 10 hereof.
VII. Termination of Option. This Agreement and the Option granted herein, to the extent not theretofore exercised, shall terminate and become null and void immediately upon the earlier of the following to occur:
A. Option No Longer Exercisable. At such time as the Option is no longer
exercisable
pursuant to the terms of Section IV hereof;
B. Surrender of Options. Upon the Optionee's surrender to the Company
for
cancellation of this Agreement and the Option granted herein; and,
C. Expiration of Term. Upon the tenth (10th) anniversary of the Date of Grant.
VIII. Restrictions. 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. 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.
IX. Adjustments. Pursuant to the terms of the Plan, in the event of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other change in the corporate structure or capitalization affecting the Corporation's common stock, a fair and equitable adjustment will be made in the number, kind, option price, etc., of shares subject to the Option to the extent that the proportionate interest of the holder of the Option will be maintained as before the occurrence of such event.
X. Compliance with Law and Approval of Regulatory Bodies. No shares of Common Stock 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 and regulations and in compliance with rules of stock exchanges on which the Company's shares may be listed. Any share certificate issued to evidence shares as to which the Option is exercised shall bear such restrictive legends and statements as the Committee shall deem advisable to assure compliance with federal and state laws and regulations. No shares of Common Stock will be issued or, in the case of treasury shares, transferred, upon exercise of the Option until the Company has obtained such consent or approval from regulatory bodies, federal or state, having jurisdiction over such matters as the Committee may deem advisable.
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XI. Investment Representations. Optionee, or his personal representative, may be required by the Committee to give a written representation that the shares subject to the Option will be acquired, or are being acquired, as the case may be, for investment and not with a view to a public distribution of them; provided, however, that the Committee in its sole discretion, may release the Optionee, or his personal representative, from such investment representations either prior to or subsequent to the exercise of the Option.
XII. Rights as a Shareholder. Optionee shall have no rights as a shareholder with respect to any shares covered by this Agreement or the Option 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.
XIII. Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.
XIV. Incorporation by Reference; Interpretation. The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option and this Agreement shall be interpreted in accordance with the Plan. The Committee shall construe and interpret the terms and provisions of the Plan and this Agreement and shall at its discretion make general and special rules and regulations for administering the Plan, which construction, interpretation, rules and regulations shall be binding and conclusive upon all persons granted an option pursuant to the Plan and this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed effective as of the Date of Grant.
ATTEST: LSB INDUSTRIES, INC.
____________________________________ By: _________________________________
_____________________________Secretary Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[S E A L]
"Optionee"
____________________________________
__________________________