As Filed with the Securities and Exchange Commission on June 30, 1998
Registration No. 333-_________
======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LSB INDUSTRIES, INC.
____________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 73-1015226
___________________________ _______________________
(State of Incorporation) (I.R.S. Employer
Identification No.)
16 South Pennsylvania Avenue, Oklahoma City, Oklahoma 73107
____________________________________________________________
(Address of principal executive offices) (Zip Code)
1993 Stock Option and Incentive Plan
____________________________________
(Full Title of Plan)
Heidi L. Brown, Esquire Copy to:
Vice President and Irwin H. Steinhorn, Esquire
Managing Counsel CONNER & WINTERS
LSB INDUSTRIES, INC. One Leadership Square
16 South Pennsylvania Suite 1700
Post Office Box 754 211 North Robinson
Oklahoma City, Oklahoma 73101 Oklahoma City, Oklahoma 73102
(405) 235-4546
_____________________________
<TABLE>
<CAPTION>
Title of Proposed Proposed
securities Amount maximum maximum Amount of
to be to be offering price aggregate Registration
registered registered per share(1)(2) offering price fee
__________ __________ _______________ ______________ ____________
<S> <C> <C> <C> <C>
Common Stock to 850,000 $4 1/32-6 5/8 $3,712,573 $1,095
be issued under
the 1998 Stock
Option and
Incentive Plan
_________________
<FN>
(1) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee on the basis of the price at which
options granted under the 1993 Stock Option and Incentive Plan may
be exercised and, with respect to shares of Common Stock not
subject to outstanding options, on the basis of $4 1/32 per
share, such amount being the average high and low price of the
Common Stock as reported on the New York Stock Exchange on June 24,
1998.
<PAGE>
<PAGE>
(2) The maximum offering price per share and the maximum aggregate
offering price are based upon the following prices at which
outstanding options granted under the 1993 Stock Option Plan may be
exercised:
Number of Shares of Common Stock Exercise Price Per Share
Subject to Outstanding Options of Common Stock
________________________________ _________________________
310,000 $4.125
119,500 $4.1875
360,000 $4.538
32,000 $4.875
15,000 $5.362
2,000 $5.88
2,000 $6.625
9,500 $4.03125*
_______
850,000
*$4 1/32 is the average of the high and low price of the Common Stock as
reported on the New York Stock Exchange on June 24, 1998.
</TABLE>
<PAGE>
<PAGE>
LSB INDUSTRIES, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
There are hereby incorporated by reference in this
Registration Statement the following documents and information
heretofore filed with the Securities and Exchange Commission:
1. The Company's Annual Report on Form 10-K for the year
ending December 31, 1997, filed pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
2. The Company's Annual Report on Form 10-K/A for the year
ending December 31, 1997, filed pursuant to Section 13
of the Exchange Act.
3. The Company's Quarterly Report on Form 10-Q for the three
months ending March 31, 1998, filed pursuant to Section
13 of the Exchange Act.
4. The Company's Amended Quarterly Report on Form 10-Q/A for
the three months ending March 31, 1998, filed pursuant to
Section 13 of the Exchange Act.
5. The description of the Company's Common Stock contained
in the Company's Registration Statement on Form 8-A dated
August 16, 1994, filed pursuant to Section 12 of the
Exchange Act, including any amendment or report filed for
the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act on or after the date of
this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in
this Registration Statement and to be part hereof from the date of
filing of such documents.
Item 4. Description of Securities.
Not applicable.
II-2
Item 5. Interests of Named Experts and Counsel.
Counsel for the Company, Conner & Winters, A Professional
Corporation, One Leadership Square, Suite 1700, 211 North Robinson,
Oklahoma City, Oklahoma 73102, has rendered an opinion as to the
Common Stock offered hereby. As of the date of this Registration
Statement, Irwin H. Steinhorn, a member of Conner & Winters,
beneficially owned 6,250 shares of the Company's Common Stock.
Item 6. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware
law. Delaware law provides that directors of a company will not be
personally liable for monetary damages for breach of their
fiduciary duties as directors, except for liability (i) for any
breach of their duty of loyalty to the company or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) for
unlawful payments or dividends or unlawful stock repurchases or
redemptions as provided Section 174 of Delaware General Corporation
Law or (iv) for transactions from which the director derived an
improper personal benefit.
The Company carries officer and director liability insurance
with respect to certain matters, including matters arising under
the Securities Act of 1933, as amended (the "Securities Act").
Insofar as indemnification for liabilities arising under the
Securities Act is permitted to directors and officers of the
Corporation pursuant to the foregoing provisions, or otherwise, the
Company has been informed that in the opinion of the Commission
such indemnification is against public policy, as expressed in the
Securities Act, and is therefore unenforceable.
Item 7. Exemption from Registration Claimed.
Not Applicable.
II-3
<PAGE>
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
________ ___________
<S> <C>
4.1 1993 Stock Option and Incentive Plan, effective
August 5, 1993
4.2 Form of Incentive Stock Option Agreement
4.3 Form of Incentive Stock Option Agreement (10%
Shareholder)
4.4 Form of Substitute Incentive Stock Option Agreement
5.1 Opinion of Conner & Winters, A Professional
Corporation
15.1 Letter of Acknowledgment regarding unaudited
interim financial information
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Conner & Winters, A Professional
Corporation (contained in Exhibit 5.1)
24.1 Power of Attorney (see page II-6)
</TABLE>
II-4
<PAGE>
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective
amendment to this registration statement to
include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, as
amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be
a new registration statement relating to the
securities offered therein, and the offering
of such securities at that time shall be
deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto, duly authorized, in the City of
Oklahoma City, Oklahoma on June 25, 1998.
LSB INDUSTRIES, INC.
By /s/ Jack E. Golsen
________________________________
Jack E. Golsen, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Jack E. Golsen and
Heidi L. Brown, jointly and severally, his or her attorneys-in-
fact, each with the power of substitution, for him or her in any
and all capacities, to sign any amendments to this Registration
Statement on Form S-8 and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitution or substitutes,
may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed on June 25, 1998, by the
following persons in the capacities indicated:
/s/ Jack E. Golsen
_________________________ President, Chief Executive
Jack E. Golsen Officer, Chairman of the Board
and Director
(Principal Executive Officer)
/s/ Tony M. Shelby
_________________________ Senior Vice President of
Tony M. Shelby Finance and Director
(Principal Financial Officer)
/s/ Jim D. Jones
_________________________ Vice President, Controller and
Jim D. Jones Treasurer
(Principal Accounting Officer)
II-6
<PAGE>
/s/ Raymond B. Ackerman
_________________________ Director
Raymond B. Ackerman
/s/ Robert C. Brown
_________________________ Director
Robert C. Brown
/s/ Gerald J. Gagner
_________________________ Director
Gerald J. Gagner
/s/ Barry H. Golsen
_________________________ Director
Barry H. Golsen
/s/ David R. Goss
_________________________ Director
David R. Goss
/s/ Bernard G. Ille
_________________________ Director
Bernard G. Ille
/s/ Donald W. Munson
_________________________ Director
Donald W. Munson
/s/ Horace G. Rhodes
_________________________ Director
Horace G. Rhodes
/s/ Jerome D. Shaffer
_________________________ Director
Jerome D. Shaffer
II-7
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
_______ ___________ ___________
<S> <C> <C>
4.1 1993 Stock Option and Incentive
Plan, effective August 5, 1993
4.2 Form of Incentive Stock Option
Agreement
4.3 Form of Incentive Stock Option
Agreement (10% Shareholder)
4.4 Form of Substitute Incentive Stock
Option Agreement
5.1 Opinion of Conner & Winters,
A Professional Corporation
15.1 Letter of Acknowledgment regarding
unaudited interim financial information
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Conner & Winters,
A Professional Corporation
(contained in Exhibit 5.1)
24.1 Power of Attorney (see page
II-6)
</TABLE>
LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
The Board of Directors of LSB Industries, Inc., a
Delaware corporation (the "Company"), has adopted this 1993 Stock
Option and Incentive Plan (the "Plan"), effective the 5th day of
August, 1993, as follows:
1. Purpose. This Plan permits selected officers and key
employees, prospective employees, consultants and independent
contractors of the Company or any Subsidiary who bear a large
measure of responsibility for the success of the Company to acquire
and retain a proprietary interest in the Company and to participate
in the future of the Company as shareholders. The purpose of this
Plan is to advance the interests of the Company and its share-
holders by enabling the Company and the subsidiaries to offer to
its employee-directors, officers, key employees, consultants and
independent contractors, long-term performance-based stock and/or
other equity interests in the Company, thereby enhancing its
ability to attract, retain and reward such individuals, and by
providing an incentive for employee-directors, officers, key
employees to render outstanding service to the Company and to the
Company's shareholders.
2. Definitions. For purposes of the Plan, the following terms
shall be defined as set forth herein:
2.1 "Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute or statutes
thereto.
2.2 "Agreement" means the agreement between the Company and
the Holder setting forth the terms and conditions of an
award under the Plan.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change of Control" means a change of control of the
Company pursuant to Section 8.2 hereof.
2.5 "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute or
statutes thereto.
2.6 "Committee" means the Stock Option Committee of the
Board or any other committee of the Board which the
Board may designate. In all events, the Committee
shall consist only of non-employee directors of the
Company.
<PAGE>
2.7 "Common Stock" means the Common Stock of the Company,
par value $.10 per share.
2.8 "Disability" means disability as determined under the
procedures established by the Committee for purposes of
the Plan.
2.9 "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor
statute or statutes thereto.
2.10 "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations
issued thereunder, means, as of any given date:
2.10.1 the closing price of the Common Stock on the
last preceding day on which the Common Stock
was traded, as reported on a national
securities exchange; and,
2.10.2 if the fair market value of the Common Stock
cannot be determined pursuant to clause (i)
hereof, such price as the Committee shall
determine.
2.11 "Formula Price Per Share" means the highest gross price
(before brokerage commissions, soliciting dealers' fees
and similar charges) paid for any share of Common Stock
at any time during the ninety (90) day period immedi-
ately prior to the Change of Control (whether by way of
exchange, conversion, distribution, liquidation or
otherwise) paid or to be paid for any share of Common
Stock in connection with a Change of Control. If the
consideration paid or to be paid in any transaction
that results in a Change of Control consists, in whole
or in part, of consideration, other than cash, the
Board shall take such action, as in its judgment it
deems appropriate, to establish the cash value of such
consideration, but such valuation shall not be less
than the value, if any, attributed to such consider-
ation by any other party to such transaction that
results in a Change of Control.
2.12 "Holder" means an eligible employee-director, officer,
key employee, consultant or independent contractor of
the Company or a Subsidiary who has received an award
under the Plan.
2.13 "Incentive Stock Option" or "ISO" means any Stock
Option intended to be and designated as an "incentive
stock option" within the meaning of Section 422 of the
Code.
2.14 "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
- 2 -
<PAGE>
2.15 "SAR Value" means the excess of the Fair Market Value
of one share of Common Stock over the exercise price
per share specified in a related Stock Option in the
case of a Stock Appreciation Right granted in tandem
with a Stock Option and the Stock Appreciation Right
price per share in the case of a Stock Appreciation
Right awarded on a free-standing basis multiplied by
the number of shares in respect of which the Stock
Appreciation Right shall be exercised, on the date of
exercise.
2.16 "Section 16(b) Holder" means such officer or director
or ten percent (10%) beneficial owner of Common Stock
subject to Section 16(b) of the Exchange Act.
2.17 "Stock Appreciation Right" means the right, pursuant to
an award granted under Section 7 hereof, to recover an
amount equal to the SAR Value.
2.18 "Stock Option" means any Incentive Stock Option or Non-
Qualified Stock Option to purchase shares of Common
Stock which is awarded pursuant to this Plan.
2.19 "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in
Section 424(f) of the Code.
3. Administration.
3.1 Board; Committee. The Board shall create a committee
consisting of three members of the Board. The Board
may also appoint one member of the Board as an
alternate member of the Committee. Upon such appoint-
ment, the Committee shall have all the powers, privi-
leges and duties set forth herein. The Board may, from
time to time, appoint members of any such Committee in
substitution for, or in addition to, members previously
appointed, may fill vacancies in the Committee and may
discharge the Committee. The Committee shall select
one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem
advisable. A majority of its members shall constitute
a quorum and all determinations shall be made by a
majority of such quorum. Any determination reduced to
writing and signed by a majority of the members of the
Committee, shall be fully effective and a valid act of
the Committee as if it had been made by a majority vote
at a meeting duly called and held. The membership of
the Committee shall at all times be constituted so as
to not adversely affect the compliance of the Plan with
the requirements of Rule 16b-3 under the Exchange Act,
- 3 -
<PAGE>
to the extent it is applicable, or with the require-
ments of any other applicable law, rule or regulation.
3.2 Power and Authority. The Committee shall have full
power and authority to do all things necessary or
appropriate to administer this Plan according to its
terms and provisions (excluding the power to appoint
members of the Committee and to terminate, modify, or
amend the Plan, except as otherwise authorized by the
Board), including, but not limited to the full power
and authority (subject to the express provisions of
this Plan):
3.2.1 to award Stock Options and Stock Appreciation
Rights, pursuant to the terms of this Plan, to
eligible individuals described under Section 5
hereof;
3.2.2 to select the eligible individuals to whom
Stock Options or Stock Appreciation Rights, or
any combination thereof, if any, may from time
to time be awarded hereunder;
3.2.3 to determine the Incentive Stock Options, Non-
Qualified Stock Options, Stock Appreciation
Rights, or any combination thereof, if any, to
be awarded hereunder to one or more eligible
employees or persons;
3.2.4 to determine the number of shares to be
covered by each award granted hereunder;
3.2.5 to determine the terms and conditions not
inconsistent with the terms of the Plan, of
any award hereunder (including, but not
limited to, share price, any restrictions or
limitations, and any vesting, exchange, sur-
render, cancellation, acceleration, termin-
ation, exercise or forfeiture provisions, as
the Committee shall determine);
3.2.6 to determine any specified performance goals
or such other factors or criteria which need
to be attained for the vesting of an award
granted hereunder;
3.2.7 to determine the terms and conditions under
which awards hereunder are to operate on a
tandem basis and/or in conjunction with or
apart from other equity awarded under this
Plan and cash awards made by the Company or
any Subsidiary outside of this Plan;
- 4 -
<PAGE>
3.2.8 to determine the extent and circumstances
under which Common Stock and other amounts
payable with respect to an award hereunder
shall be deferred, which may be either
automatic or at the election of the Holder;
and
3.2.9 to substitute (i) new Stock Options for pre-
viously granted Stock Options, which previ-
ously granted Stock Options have higher option
exercise prices and/or contain other less
favorable terms, and (ii) new awards of any
other type for previously granted awards of
the same or other type, which previously
granted awards are upon less favorable terms.
3.3 Interpretation of Plan.
3.3.1 Subject to Sections 3.2 and 9 hereof, the
Committee shall have the authority at its
discretion to adopt, alter and repeal such
general and special administrative rules,
regulations, and practices governing the Plan
as it shall, from time to time, deem advis-
able, to construe and interpret the terms and
provisions of this Plan and any award issued
under this Plan (and to determine the form and
substance of all Agreements relating thereto),
and to otherwise supervise the administration
of this Plan.
3.3.2 Anything in this Plan to the contrary notwith-
standing, no term of this Plan relating to
Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion
or authority granted under this Plan be so
exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the
consent of the Holder(s) affected, to dis-
qualify any Incentive Stock Option under
Section 422 of the Code.
3.3.3 Subject to Sections 3.2 and 9 hereof, all
decisions made by the Committee pursuant to
the provisions of this Plan shall be made in
the Committee's sole discretion and shall be
final and binding upon all persons granted
options pursuant to the Plan.
- 5 -
<PAGE>
4. Shares Subject to Plan.
4.1 Number of Shares. The aggregate number of shares of
Common Stock reserved and available for distribution
under this Plan shall be 850,000 shares. If any shares
of Common Stock that are subject to a Stock Option or
Stock Appreciation Right cease to be subject to such
Stock Option or Stock Appreciation Right, or any such
award otherwise terminates without a payment being made
to the Holder in the form of Common Stock, such shares
shall again be available for distribution in connection
with future grants and awards under this Plan. The
number of shares available for distribution under this
Plan shall be reduced by the number of shares of Common
Stock issued under this Plan upon the exercise of a
Stock Option.
4.2 Character of Shares. The Company may elect to satisfy
its obligations to a Holder exercising a Stock Option
entirely by issuing authorized and unissued shares of
Common Stock to such Holder, entirely by transferring
treasury shares to such Holder, or in part by the issue
of authorized and unissued shares and the balance by
the transfer of treasury shares.
5. Eligibility.
5.1 General. Awards under this Plan may be made to: (i)
officers and other key employees of the Company or any
Subsidiary who are at the time of the grant of an award
under this Plan regularly employed by the Company or
any Subsidiary, including any full time salaried
officer or employee who is a member of the Board
(except as provided in the last sentence under Section
3.1); and, (ii) consultants or independent contractors
whom the Board believes have contributed or will
contribute to the success of the Company.
5.2 Multiple Awards. The Committee shall from time to time
designate such employees, consultants or independent
contractors to whom options are to be granted, and the
number of shares to be subject to each option. The
Committee may at any time grant one or more Stock
Options or Stock Appreciation Rights or a combination
thereof to an individual to whom a Stock Option or
Stock Appreciation Right has previously been granted
under this or any other stock option plan of the
Company, whether or not such previously granted Stock
Option or Stock Appreciation Right has been fully
exercised.
5.3 Ineligibility for Awards. No person designated by the
Board to serve on the Committee, effective at such
future time so that he qualifies as a "disinterested
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<PAGE>
person" within the meaning of Rule 16b-3(c) of the
Exchange Act, shall be eligible to receive any awards
under the Plan during the period from the date such
designation is made to the date such designation
becomes effective. Notwithstanding Section 5.1 hereof,
no member of the Committee, while serving as such,
shall be eligible to receive an award under the Plan.
6. Stock Options.
6.1 Grant and Exercise. Stock Options granted under the
Plan may be of two types: (i) Incentive Stock Options
and (ii) Non-Qualified Stock Options. Only full-time
salaried officers or employees may be granted Incentive
Stock Options. Any individual eligible to participate
under this Plan may be granted Non-Qualified Stock
Options. Any Stock Option granted under the Plan shall
contain such terms, not inconsistent with this Plan, as
the Committee may from time to time approve. The
Committee shall have the authority to grant to any
eligible individual Incentive Stock Options, Non-
Qualified Stock Options, or both types of Stock Options
and, in each case, may be granted alone, in tandem
with, or without, or in addition to Stock Appreciation
Rights. To the extent that any Stock Option (or
portion thereof) does not qualify as an Incentive Stock
Option, it shall constitute a separate Non-Qualified
Stock Option. Unless granted in substitution for
another outstanding award, Stock Options shall be
granted for no consideration other than services to the
Company or a Subsidiary.
6.2 Exercise Price.
6.2.1 Less Than 10% Shareholder. The exercise price
in any option granted under this Plan to an
individual who, at the time the Stock Option
is granted, does not own stock possessing more
than ten percent (10%) of the total combined
voting power of all classes of stock of the
Company or of any Subsidiary (computed in
accordance with the provisions applicable to
Section 422(b)(6) of the Code) (a "less than
10% Shareholder") shall be not less than the
Fair Market Value of the shares of Common
Stock subject to the Stock Option at the time
the Stock Option is granted, determined by the
Committee in accordance with the applicable
regulations and rulings of the Commissioner of
the Internal Revenue Service in effect at the
time the Stock Option is granted.
- 7 -
<PAGE>
6.2.2 10% Shareholder. The exercise price in any
option granted under the Plan to an individual
who is not a less than ten percent (10%)
Shareholder (a "10% Shareholder") shall be not
less than one hundred ten percent (110%) of
the Fair Market Value of the shares of Common
Stock subject to the Stock Option at the time
the Stock Option is granted, determined in
accordance with the applicable regulations and
rulings of the Commissioner of the Internal
Revenue Service in effect at the time the
Stock Option is granted.
6.3 Option Term. The term of each Stock Option shall be
fixed by the Board, but no Stock Option shall be exer-
cisable more than ten (10) years (five (5) years, in
the case of an Incentive Stock Option granted to a 10%
Shareholder) after the date on which the Stock Option
is granted.
6.4 Exercise of Non-Qualified Stock Options. Non-Qualified
Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall
be determined by the Committee; provided, however, that
no Non-Qualified Stock Option granted under this Plan
may be exercised until after the expiration of six (6)
months from the date the Stock Option is granted. If
the Committee provides, in its discretion, that any
Stock Option is exercisable only in installments, the
Committee may waive such installment exercise
provisions at any time at or after the time of grant in
whole or in part, based upon such factors as the
Committee shall determine; provided that the Committee
cannot waive the requirement that the Stock Option may
not be exercised until after the expiration of six (6)
months from the date the Stock Option is granted.
6.5 Exercise of Incentive Stock Options.
6.5.1 By an Employee. No Incentive Stock Option
granted under this Plan shall be exercisable
after the expiration of ten (10) years from
the date such ISO is granted, except that no
ISO granted to a person who is not a less than
10% Shareholder shall be exercisable after the
expiration of five (5) years from the date
such option is granted. Employment by a Sub-
sidiary shall be employment by the Company.
Unless such requirements are waived by the
Committee, the employee, while still in the
employment of the Company, may exercise the
options as follows:
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<PAGE>
6.5.1.1 at any time after one (1) year of
continuous employment from the date
such ISO is granted, as to twenty
percent (20%) of the shares subject
to the option;
6.5.1.2 at any time after two (2) years of
such continuous employment from the
date such ISO is granted, as to an
additional twenty percent (20%) of
the shares subject to the option;
6.5.1.3 at any time after three (3) years of
such continuous employment from the
date such ISO is granted, as to an
additional thirty percent (30%) of
the shares subject to the option;
and
6.5.1.4 at any time after four (4) years of
such continuous employment from the
date such ISO is granted, as to all
of the shares remaining subject to
the option.
The Committee may decide in each case to what
extent leaves of absence for government or
military service, illness, temporary dis-
ability, or other reasons, shall not interrupt
continuous employment.
6.5.2 Termination of Employment. Except as other-
wise expressly provided in Sections 6.5.3 and
6.5.4 of this Plan or in the Agreement, no
Stock Option may be exercised at any time
unless the Holder thereof is then an employee
of the Company or a Subsidiary.
6.5.3 By a Former Employee. No person may exercise
an ISO after he is no longer an employee of
the Company or any Subsidiary; except that if
an employee 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 ISO
within twelve (12) months after the date on
which he ceased to be an employee, for the
number of shares for which he could have
exercised at the time he ceased to be an
employee. No ISO granted under this Plan
shall in any event be exercised by such Former
Employee after the expiration of ten (10)
years from the date such ISO is granted,
except that no ISO granted to a person who is
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<PAGE>
a 10% Shareholder may be exercisable after the
expiration of five (5) years from the date
such ISO is granted.
6.5.4 In Case of Death. If any employee or Former
Employee who was granted an ISO dies prior to
the termination of such ISO, such ISO may be
exercised within twelve (12) months after the
death of the employee or Former Employee by
his estate, or by a person who acquired the
right to exercise such ISO by bequest or
inheritance, or by reason of the death of such
employee or Former Employee, provided that:
6.5.4.1 such employee died while an employee
of the Company or a Subsidiary; or
6.5.4.2 such Former Employee had 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.
Such ISO may be exercised only as to the
number of shares for which he could have
exercised at the time the employee or Former
Employee died. No ISO granted under this Plan
shall in any event be exercised in case of
death of an employee or Former Employee after
the expiration of ten (10) years from the date
such ISO is granted, except that no ISO
granted to a 10% Shareholder shall be exer-
cisable after the expiration of five (5) years
from the date such ISO is granted.
6.5.5 The Committee may, in its discretion, waive
the installment exercise provisions at any
time at or after the time of grant, in whole
or in part, based on such factors as the
Committee shall determine; provided that at
all times no ISO may be exercised until the
expiration of six (6) months from the date
that the Stock Option was granted.
6.6 Termination of Options. A Stock Option granted under
this Plan shall be considered terminated, in whole or
in part, to the extent that it can no longer be exer-
cised for shares originally subject to it, provided
that a Stock Option granted shall be considered
terminated at an earlier date upon surrender for
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<PAGE>
cancellation by the Holder to whom such Stock Option
was granted.
6.7 Notice of Exercise and Payment. Subject to any
installment, exercise and waiting period provisions
that are applicable in a particular case, Stock Options
granted under this Plan may be exercised, in whole or
in part, at any time during the term of the Stock
Option, by giving written notice of such exercise to
the Company identifying the Stock Option being exer-
cised and specifying the number of shares then being
purchased. Such notice shall be accompanied by payment
in full of the exercise price, which shall be in cash
or, unless otherwise provided in the Agreement, in
whole shares of Common Stock which are already owned by
the Holder of the Stock Option or, unless otherwise
provided in the Agreement, partly in cash and partly in
such Common Stock. Cash payments shall be made by wire
transfer, certified check or 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 a Stock 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 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.
6.8 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 pur-
chased to be delivered to the Holder or his or her
estate, as the case may be. No Holder or estate shall
have any of the rights of a shareholder with reference
to shares of Common Stock subject to a Stock Option
until after the Stock Option has been exercised in
accordance with Section 6.7 and certificates repre-
senting the shares of Common Stock so purchased by the
Holder pursuant to the Stock Option have been delivered
to the Holder or estate.
6.9 Partial Exercise. A Stock Option granted under this
Plan may be exercised as to any part of the shares for
which it could be exercised. Such a partial exercise
of a Stock Option shall not affect the right to exer-
cise the Stock Option from time to time in accordance
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<PAGE>
with this Plan as to the remaining shares of Common
Stock subject to the Stock Option.
6.10 $100,000 Per Year Limitation. To the extent that the
aggregate Fair Market Value of Common Stock with
respect to which Incentive Stock Options are exer-
cisable for the first time by a Holder during any
calendar year (under all of the Company's plans)
exceeds $100,000, such excess Stock Options shall be
treated as Non-Qualified Stock Options for purposes of
Section 422 of the Code.
6.11 Buyout and Settlement Provisions. The Committee may at
any time offer to buy out for cash or otherwise settle
a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish
and communicate to the Holder at the time that such
offer is made, including a settlement for exchange of
a different award under the Plan for the surrender of
the Stock Option.
7. Stock Appreciation Rights.
7.1 Grant and Exercise. Stock Appreciation Rights may be
granted in tandem with ("Tandem Stock Appreciation
Right") or in conjunction with all or part of any Stock
Option granted under this Plan or may be granted on a
free-standing basis. In the case of a Non-Qualified
Stock Option, a Tandem Stock Appreciation Right may be
granted either at or after the time of the grant of
such Non-Qualified Stock Option. In the case of an
Incentive Stock Option, a Tandem Stock Appreciation
Right may be granted only at the time of the grant of
such Incentive Stock Option. Unless granted in sub-
stitution for another outstanding award, Stock Apprec-
iation Rights shall be granted for no consideration
other than services to the Company or a Subsidiary.
7.2 Termination. A Tandem Stock Appreciation Right shall
terminate and shall no longer be exercisable upon the
termination or exercise of the related Stock Option,
except that, unless otherwise determined by the Board,
a Tandem Stock Appreciation Right granted with respect
to less than the full number of shares covered by a
related Stock Option shall not be reduced until after
the number of shares remaining under the related Stock
Option equals the number of shares covered by the
Tandem Stock Appreciation Right.
7.3 Method of Exercise. A Tandem Stock Appreciation Right
may be exercised by a Holder, in accordance with
Section 7.4 hereof, by surrendering the applicable
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<PAGE>
portion of the related Stock Option. Upon such exer-
cise and surrender, the Holder shall be entitled to
receive such amount in the form of payment determined
in the manner prescribed in Section 7.5 hereof. Stock
Options which have been so surrendered, in whole or in
part, shall no longer be exercisable to the extent
Tandem Stock Appreciation Rights have been exercised.
7.4 Exercisability. Tandem Stock Appreciation Rights shall
be exercisable only at such time or times and to the
extent that the Stock Options to which they relate
shall be exercisable in accordance with the provisions
of Section 6 hereof and this Section 7, and may be
subject to such additional limitations on exercis-
ability as shall be determined by the Committee and set
forth in the Agreement. Other Stock Appreciation
Rights shall be exercisable at such time or times and
subject to such terms and conditions as shall be deter-
mined by the Committee and set forth in the Agreement.
Notwithstanding anything to the contrary contained
herein (including the provisions of Section 8.1
hereof), any Stock Appreciation Right granted to a
Section 16(b) Holder to be settled wholly or partially
in cash (i) shall not be exercisable during the first
six (6) months of the term of such Stock Appreciation
Right, except that this special limitation shall not
apply in the event of death or disability of such
Holder prior to the expiration of the six (6) month
period, and (ii) shall only be exercisable during the
period beginning on the third business day following
the date of release for publication of the Company of
quarterly or annual summary statements of sales and
earnings and ending on the twelfth (12) business day
following such date.
7.5 Receipt of SAR Value. Upon the exercise of a Stock
Appreciation Right, a Holder shall be entitled to
receive up to, but not more than, an amount in cash
and/or shares of Common Stock equal to the SAR Value
with the Committee having the right to determine the
form of payment.
7.6 Shares Affected Under Plan. Upon the exercise of a
Tandem Stock Appreciation Right, the Stock Option or
part thereof to which such Tandem Stock Appreciation
Right is related shall be deemed to have been exercised
for the purpose of the limitation set forth in Section
4.1 hereof on the number of shares of Common Stock to
be issued under the Plan, but only to the extent of the
number of shares, if any, issued under the Tandem Stock
Appreciation Right at the time of exercise based upon
the SAR Value.
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<PAGE>
7.7 Limited Stock Appreciation Rights. The Committee may
grant "Limited Stock Appreciation Rights", i.e., Stock
Appreciation Rights that become exercisable upon the
occurrence of one or more of the events which trigger
a Change of Control as defined in Section 8.2 hereof,
and shall be settled in an amount equal to the Formula
Price Per Share, subject to such other terms and condi-
tions as the Committee may specify; provided, however,
if any Limited Stock Appreciation Right is granted to
a Section 16(b) Holder such Limited Stock Appreciation
Right (i) shall only be exercisable within sixty (60)
days after the event triggering the Change of Control;
and (ii) may not be exercised during the first six (6)
months after the date of grant of such Limited Stock
Appreciation Right (except in the event of death or
disability of such Holder prior to the expiration of
the six (6) month period); and (iii) shall only be
exercisable in the event that the date of the Change of
Control was outside the control of such Holder; and
(iv) shall only be settled in cash in an amount equal
to the Formula Price Per Share.
8. Acceleration.
8.1 Acceleration Upon Change of Control. Unless the award
Agreement provides otherwise or unless the Holder
waives the application of this Section 8.1 prior to a
Change of Control (as hereinafter defined), in the
event of a Change of Control, each outstanding Stock
Option, Stock Appreciation Right and Limited Stock
Appreciation Right granted under the Plan shall immedi-
ately become exercisable in full notwithstanding the
vesting or exercise provisions contained in the
Agreement.
8.2 Change of Control Defined. A "Change of control" shall
be deemed to have occurred upon any of the following
events:
8.2.1 The consummation of any of the following
transactions: any merger, reverse stock split,
recapitalization or other business combination
of the Company, with or into another corpor-
ation, or an acquisition of securities or
assets by the Company, pursuant to which the
Company is not the continuing or surviving
corporation or pursuant to which shares of
Common Stock would be converted into cash,
securities or other property, other than a
transaction in which the majority of the
holders of Common Stock immediately prior to
such transaction will own at least fifty
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<PAGE>
percent (50%) of the total voting power of the
then-outstanding securities of the surviving
corporation immediately after such trans-
action; or
8.2.2 A transaction in which any person (as such
term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), corporation or
other entity (other than the Company, or any
profit-sharing, employee ownership or other
employee benefit plan sponsored by the Company
or any Subsidiary, or any trustee of or
fiduciary with respect to any such plan when
acting in such capacity, or any group com-
prised solely of such entities): (i) shall
purchase any Common Stock (or securities con-
vertible into Common Stock) for cash, secur-
ities or any other consideration pursuant to a
tender offer or exchange offer, without the
prior consent of the Board, or (ii) shall
become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly (in one transaction or
a series of transactions), of securities of
the Company representing fifty percent (50%)
or more of the total voting power of the then-
outstanding securities of the Company ordi-
narily (and apart from the rights accruing
under special circumstances) having the right
to vote in the election of directors (cal-
culated as provided in Rule 13d-3(d) in the
case of rights to acquire the Company's
securities); or
8.2.3 If, during any period of two consecutive
years, individuals who at the beginning of
such period constituted the entire Board and
any new director whose election by the Board,
or nomination for election by the Company's
stockholders was approved by a vote of at
least two-thirds of the directors then still
in office who either were directors at the
beginning of the period or whose election or
nomination for election by the stockholders
was previously so approved, cease for any
reason to constitute a majority thereof.
8.3 General Waiver by Board. The Committee may, after
grant of an award, accelerate the vesting of all or any
part of any Stock Option, and/or waive any limitations
or restrictions, if any, for all or any part of an
award.
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<PAGE>
8.4 Acceleration Upon Termination of Employment. In the
case of a Holder whose employment or affiliation with
the Company or a Subsidiary is involuntarily terminated
for any reason (other than for cause), the Committee
may, at its option and in its sole discretion, accel-
erate the vesting of all or any part of any award
and/or waive, in whole or in part, any or all of the
remaining deferral limitations or restrictions imposed
hereunder or pursuant to the Agreement.
9. Amendments and Termination.
9.1 Amendments to Plan; Termination. The Board may at any
time, and from time to time, amend any of the pro-
visions of the Plan, and may at any time suspend or
terminate the Plan; provided, however, that no such
amendment shall be effective unless and until it has
been duly approved by the stockholders of the out-
standing shares of Common Stock if (i) such amendment
materially increases the benefits accruing to partici-
pants under this Plan; (ii) such amendment materially
increases the number of securities which may be issued
under this Plan; (iii) such amendment materially modi-
fies the requirements as to eligibility for partici-
pation in this Plan; or, (iv) the failure to obtain
such approval would adversely affect the compliance of
the Plan with the requirements of Rule 16b-3 under the
Exchange Act, or with the requirements of any other
applicable law, rule or regulation.
9.2 Amendments to Individual Awards. The Board may amend
the terms of any award granted under the Plan; pro-
vided, however, that subject to Section 11 hereof, no
such amendment may be made by the Board which in any
material respect impairs the rights of the Holder
without the Holder's consent.
10. Term of Plan.
10.1 Effective Date. The Plan shall be effective as of
August 5, 1993 ("Effective Date"), subject to the
approval of the Plan by the stockholders of the
Company within one year after the Effective
Date. Any awards granted under the Plan prior to such
approval shall be effective when made (unless otherwise
specified by the Committee at the time of grant) but
shall be conditioned upon, and subject to, such
approval of the Plan by the Company's stockholders and
approval of the Company's application to list the
shares of the Company's Common Stock covered by the
Plan on the American Stock Exchange (and no awards
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<PAGE>
shall vest or otherwise become free of restrictions
prior to such approvals).
10.2 Termination Date. No award shall be granted pursuant
to the Plan on or after the tenth (10th) anniversary of
the Effective Date, but awards granted prior to such
tenth (10th) anniversary may extend beyond that date.
The Plan shall terminate at such time as no further
awards may be granted and all awards granted under the
Plan are no longer outstanding.
11. Adjustment Upon Change of Shares. Subject to any required
action by the stockholders of the Company, the number of
shares of Common Stock for which Stock Options may thereafter
be granted, and the number of shares of Common Stock then sub-
ject to Stock Options previously granted, and the price per
share payable upon exercise of such Stock Option and the
number of shares and exercise price relating to Stock Appreci-
ation Rights, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a subdivision or consoli-
dation of shares of Common Stock or the payment of a stock
dividend (but only on the Common Stock) or any other increase
or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company.
11.1 If the Company is reorganized or consolidated or merged
with another corporation, in which the Company is the
non-surviving corporation, a Holder of an outstanding
Stock Option and/or Stock Appreciation Right granted
under this Plan shall be entitled (subject to the
provisions of this Section 11) to receive options
and/or stock appreciation rights covering shares of
such reorganized, consolidated or merged corporation in
the same proportion as granted to Holder prior to such
reorganization, consolidation or merger at an equiva-
lent exercise price, and subject to the same terms and
conditions as this Plan. For purposes of the preceding
sentence, the excess of the aggregate Fair Market Value
of shares subject to the option immediately after the
reorganization, consolidation or merger over the aggre-
gate exercise price of such shares shall not be more
than the excess of the aggregate Fair Market Value of
all shares of Common Stock subject to the option or
Stock Appreciation Right immediately before such reor-
ganization, consolidation or merger over the aggregate
exercise price of such shares of Common Stock, and the
new stock option or stock appreciation right or assump-
tion of the old Stock Option or old Stock Appreciation
Right by any surviving corporation shall not give the
Holder additional benefits which he did not have under
the old Stock Option or Stock Appreciation Right.
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<PAGE>
11.2 To the extent that the foregoing adjustments relate to
the shares of Common Stock of the Company, such adjust-
ments shall be made by the Committee, whose determin-
ation in that respect shall be final, binding and
conclusive, provided that each Incentive Stock Option
granted pursuant to this Plan shall not be adjusted in
a manner that causes the Incentive Stock Option to fail
to continue to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
11.3 Except as expressly provided in this Section 11, the
Holder shall have no rights by reason of any sub-
division 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, liquida-
tion, merger, consolidation, reorganization or spin-off
of assets or stock of another corporation, and any
issue by the Company of shares 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 of Common Stock subject to the Stock
Option or the number or price of Stock Appreciation
Rights granted under this Plan.
11.4 The grant of a Stock Option or Stock Appreciation Right
pursuant to this Plan shall 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 con-
solidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
12. General Provisions.
12.1 Investment Representations. The Committee may require
each person acquiring shares of Common Stock pursuant
to an award under this Plan to represent to and agree
with the Company in writing that the Holder is acquir-
ing the shares for investment without a view to dis-
tribution thereof.
12.2 Additional Incentive Arrangements. Nothing contained
in this Plan shall prevent the Board from adopting such
other or additional incentive arrangements as it may
deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of stock and
cash otherwise than under this Plan; and such arrange-
ments may be either generally applicable or applicable
only in specific cases.
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<PAGE>
12.3 No Right of Employment. Nothing contained in this Plan
or in any award hereunder shall be deemed to confer
upon any employee of the Company or any Subsidiary any
right to continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.
12.4 Withholding Taxes. Not later than the date as of which
an amount first becomes includible in the gross income
of the Holder for federal income tax purposes with
respect to any award under the Plan, the Holder 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. If per-
mitted by the Board, tax withholding or payment obli-
gations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the
Company under this Plan 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 Holder from the Company.
12.5 Governing Law. This Plan and all awards made and
actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of
Delaware (without regard to choice of law provisions).
12.6 Other Benefit Plans. Any award granted under this Plan
shall not be deemed compensation for purposes of com-
puting benefits under any retirement plan of the Com-
pany or any Subsidiary and shall not affect any bene-
fits under any other benefit plan now or subsequently
in effect under which the availability or amount of
benefits is related to the level of compensation
(unless required by specific reference in any such
other plan to awards under this Plan).
12.7 Employee Status. A leave of absence, unless otherwise
determined by the Board prior to the commencement
thereof, shall not be considered a termination of
employment. Any awards granted under this Plan shall
not be affected by any change of employment, so long as
the Holder continues to be an employee of the Company
or any Subsidiary.
12.8 Non-Transferability. Other than the transfer of a
Stock Option or Stock Appreciation Right by will or by
the laws of descent and distribution, no award under
this Plan may be alienated, sold, assigned, hypothe-
cated, pledged, exchanged, transferred, encumbered or
charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject
to the debts, contracts, liabilities or torts of the
person entitled to such benefit. Unless otherwise pro-
vided in this Plan or the Agreement, any Stock Option
or Stock Appreciation Right granted under this Plan is
only exercisable during the lifetime of the Holder by
the Holder or by his guardian or legal representative.
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<PAGE>
12.9 Applicable Laws. The obligations of the Company with
respect to all awards under this Plan shall be subject
to (i) all applicable laws, rules and regulations,
including, without limitation, the requirements of all
federal securities laws, rules and regulations and
state securities and blue sky laws, rules and regula-
tions, and such approvals by any governmental agencies
as may be required, including, without limitation, the
effectiveness of a registration statement under the
Act, and (ii) the rules and regulations of any national
securities exchange on which the Common Stock may be
listed or the NASDAQ National Market System if the
Common Stock is designated for quotation thereon.
12.10 Conflicts. If any of the terms or provisions of the
Plan conflict with the requirements of Rule 16b-3 under
the Exchange Act, or with the requirements of any other
applicable law, rule or regulation, and/or with respect
to Incentive Stock Options, Section 422 of the Code,
then such terms or provisions shall be deemed inoper-
ative to the extent they so conflict with the require-
ments of said Rule 16b-3, and/or with respect to
Incentive Stock Options, Section 422 of the Code. With
respect to Incentive Stock Options, if this Plan does
not contain any provision required to be included
herein under Section 422 of the Code, such provision
shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out
at length herein.
12.11 Written Agreements. Each award granted under this Plan
shall be confirmed by, and shall be subject to the
terms of the Agreement approved by the Committee and
executed by the Company and the Holder. The Committee
may terminate any award made under this Plan if the
Agreement relating thereto is not executed and returned
to the Company within sixty (60) days after the Agree-
ment has been delivered to the Holder for his or her
execution.
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<PAGE>
12.12 Indemnification of Committee. In addition to such
other rights of indemnification as they may have as
directors or as members of the Committee, the members
of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or
any of them may be a party by reason of any action
taken or failure to act under or in connection with the
Plan or any award granted thereunder, and against all
amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal
counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding
that such Committee member is liable for negligence or
misconduct in the performance of his duties; provided
that within sixty (60) days after institution of any
such action, suit or proceeding a Committee member
shall in writing offer the Company the opportunity, at
its own expense, to handle and defend the same.
12.13 Consideration for Common Stock. The Committee may not
grant any awards under this Plan pursuant to which the
Company will be required to issue any shares of Common
Stock unless the Company will receive consideration for
the shares of Common Stock sufficient under the laws of
the State of Delaware so that such shares of Common
Stock will be, when issued, validly issued and fully
paid and nonassessable when issued.
12.14 Common Stock Certificates. All certificates for shares
of Common Stock delivered under this Plan shall be sub-
ject to such stop-transfer orders and other restric-
tions as the Committee may deem advisable under the
rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, any applic-
able federal or state securities law and any applicable
corporate law, and the Committee may cause a legend or
legends to be put on any such certificates to make
appropriate reference to such restrictions. Notwith-
standing anything to the contrary contained herein,
whenever certificates representing shares of Common
Stock subject to an award are required to be delivered
pursuant to the terms of this Plan, the Company may, in
lieu of such delivery requirement, comply with the
provisions of Section 158 of the Delaware General
Corporation Law.
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<PAGE>
12.15 Unfunded Status of Plan. This Plan is intended to con-
stitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet
made to a Holder by the Company, nothing contained
herein shall give any such Holder any rights that are
greater than those of a general creditor of the
Company.
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LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made this ______ day of ______________,
199__, 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:
1. Recitations. The Company 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 1993 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.
2. Employment. This Agreement shall not impose upon the
Company 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 for any
reason, the option granted herein shall immediately
terminate, except as otherwise expressly provided in Section
4 hereof.
3. Grant of Option. The Company hereby grants to Optionee
as of the close of business on this _____ day of
____________________, 199__ (the "Date of Grant"), the
right, privilege and option to purchase an aggregate of
_______________ shares of its Common Stock for a price of
$___________ 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.
<PAGE>
<PAGE>
4. Exercise of Stock Options.
4.1 As an Employee. If the Option has not been
terminated pursuant to Section 7 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, may exercise the option
as follows:
4.1.1 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;
4.1.2 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;
4.1.3 at any time after three (3) years of
continuous employment by the Optionee from
the Date of Grant, the Option may be exer-
cised, in whole or in part, as to an
additional thirty percent (30%) of the total
number of Option Shares;
4.1.4 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.
4.2 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
-2-
<PAGE>
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.
4.3 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 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:
4.3.1 the Optionee died while an employee of the
Company or a Subsidiary; or
4.3.2 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.
4.4 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.
4.5 Acceleration upon Change in Control. The Option
shall become immediately exercisable in full,
notwithstanding the four (4) year vesting schedule
provided in Section 4.1, upon a change in control
of the Company. A "change in control" shall be
defined as set forth in the Plan.
5. 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 speci-
fying 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,
-3-
<PAGE>
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.
6. 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 certificates shall be subject to the Company's
compliance with any applicable federal and state securities
laws as provided in Section 10 hereof.
7. 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:
7.1 Option No Longer Exercisable. At such time as the
Option is no longer exercisable pursuant to the
terms of Section 4 hereof;
7.2 Surrender of Options. Upon the Optionee's
surrender to the Company for cancellation of this
Agreement and the Option granted herein; and,
7.3 Expiration of Term. Upon the tenth (10th)
anniversary of the Date of Grant.
8. 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.
9. Adjustments. Pursuant to the terms of the Plan, in the
event of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock
-4-
<PAGE>
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.
10. 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.
11. 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.
12. 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.
13. Binding Effect. This Agreement shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
14. 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
-5-
<PAGE>
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.
LSB INDUSTRIES, INC.
ATTEST:
_________________________ By:___________________________
Secretary Name:______________________
Title:_____________________
(SEAL)
"Optionee"
______________________________
(Signature)
______________________________
(Please Print Name)
-6-
LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made this ______ day of ______________,
199__, between LSB INDUSTRIES, INC., a Delaware corporation,
hereinafter called the "Company", and ** 10% SHAREHOLDER **, 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:
1. Recitations. The Company 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 1993 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.
2. Employment. This Agreement shall not impose upon the Company
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 for any reason, the option granted herein
shall immediately terminate, except as otherwise expressly provided
in Section 4 hereof.
3. Grant of Option. The Company hereby grants to Optionee as of
the close of business on this _____ day of ____________________,
199__ (the "Date of Grant"), the right, privilege and option to
purchase an aggregate of _______________ shares of its Common Stock
for a price of $___________ 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 ten
percent (110%) 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.
<PAGE>
<PAGE>
4. Exercise of Stock Options.
4.1 As an Employee. If the Option has not been terminated
pursuant to Section 7 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, may exercise the option as
follows:
4.1.1 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;
4.1.2 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;
4.1.3 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;
4.1.4 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.
4.2 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
-2-
<PAGE>
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 five (5) years from the Date of Grant.
4.3 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 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:
4.3.1 the Optionee died while an employee of the
Company or a Subsidiary; or
4.3.2 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 five (5) years
from the Date of Grant.
4.4 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.
4.5 Acceleration upon Change in Control. The Option shall
become immediately exercisable in full, notwithstanding
the four (4) year vesting schedule provided in Section
4.1, upon a change in control of the Company. A
"change in control" shall be defined as set forth in
the Plan.
5. 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
-3-
<PAGE>
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.
6. 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 certificates
shall be subject to the Company's compliance with any applicable
federal and state securities laws as provided in Section 10 hereof.
7. 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:
7.1 Option No Longer Exercisable. At such time as the
Option is no longer exercisable pursuant to the terms
of Section 4 hereof;
7.2 Surrender of Options. Upon the Optionee's surrender to
the Company for cancellation of this Agreement and the
Option granted herein; and,
7.3 Expiration of Term. Upon the fifth (5th) anniversary
of the Date of Grant.
8. 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.
9. Adjustments. Pursuant to the terms of the Plan, in the event
of a merger, consolidation, reorganization, recapitalization, stock
-4-
<PAGE>
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.
10. 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.
11. 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.
12. 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.
13. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties
hereto.
14. 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
-5-
<PAGE>
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.
LSB INDUSTRIES, INC.
ATTEST:
____________________________ By:___________________________
Secretary Name:______________________
Title:_____________________
(SEAL)
"Optionee"
______________________________
(Signature)
______________________________
(Please Print Name)
-6-
LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
________________________________
THIS AGREEMENT made this 22nd day of April, 1998, 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:
WHEREAS, on __________________ Optionee was granted an
option to purchase ______________________ shares of the Company's
common stock for a price of $_________ per share, which option was
granted subject to and in accordance with the Company's Plan (as
defined below) (the "Terminated Option"); and
WHEREAS, the Company and the Optionee desire to terminate
the Terminated Option, effective immediately, and to replace the
Terminated Option with the Option granted under this Agreement; and
WHEREAS, the Company and the Optionee desire to have the
Option granted under this Agreement vest according to the vesting
schedule of the option covered by the Terminated Option, and, for
purposes apply the vesting schedule set forth in Section IV.A of
this Agreement, the period of time elapsed from the Date of Grant
(as defined below) will include the period of time elapsed under
the Terminated Option; and
WHEREAS, the Plan allows the Stock Option Committee to
accelerate the vesting schedule of an option granted under the
Plan; and
WHEREAS, pursuant to the actions and resolutions of the
Company's Stock Option Committee, the Company hereby grants to
Optionee an option as set forth below as a replacement for the
Terminated Option; and
WHEREAS, pursuant to the resolutions of the Stock Option
Committee, the Stock Option Committee desires that the vesting
schedule of the option granted herein shall be consistent with the
vesting schedule of the Terminated Option.
<PAGE>
<PAGE>
NOW, THEREFORE, the Company and Optionee do hereby agree
as follows:
I. Recitations. The Company 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 1993 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 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 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 22nd day of April, 1998 (the
"Date of Grant", except that the use of the words "Date of Grant"
in Section IV hereof shall be ____________________, the right,
privilege and option to purchase an aggregate of
________________________ shares of its Common Stock for a price of
$4.1875 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. For the purposes of this Section IV
only, the "Date of Grant" shall be considered granted on
_______________________ which is the Date of Grant of the
Terminated Option. 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
2
<PAGE>
thereof is referred to herein as the "Committee"), the
Optionee, while in the employment of the Company, 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
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:
3
<PAGE>
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 vesting schedule provided in Section IV hereof, 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
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the Optionee or his or her estate, as the case may be; provided,
however, the obligation of the Company to deliver such certificates
shall be subject to the Company's compliance with any applicable
federal and state securities laws as provided in Section X 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
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<PAGE>
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.
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.
XV. Terminated Option. The Terminated Option is hereby
terminated and rendered null and void effective immediately.
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<PAGE>
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: Jack E. Golsen
Title: President
[S E A L]
"Optionee"
______________________________
_________________
7
CONNER & WINTERS
A PROFESSIONAL CORPORATION
LAWYERS
ONE LEADERSHIP SQUARE
211 NORTH ROBINSON, SUITE 1700
OKLAHOMA CITY, OKLAHOMA 73102-7101
June 29, 1998
LSB Industries, Inc.
16 South Pennsylvania
Post Office Box 754
Oklahoma City, Oklahoma 73101
Re: LSB Industries, Inc.; Form S-8 Registration
Statement; 1993 Stock Option and Incentive Plan;
Our File No. 7033.11
___________________________________________________
Ladies and Gentlemen:
We are delivering this opinion to you in connection with the
preparation and filing with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended
(the "Act"), of the Registration Statement on Form S-8 (the
"Registration Statement") of LSB Industries, Inc., a Delaware
corporation (the "Company"), for the registration of 850,000 shares
of the Company's Common Stock, $0.10 par value (the "Common Stock"),
to be issued by the Company pursuant to the Company's 1993 Stock
Option and Incentive Plan (the "Plan") from time to time to employees
of the Company and its subsidiaries.
In connection with this opinion, the undersigned has examined
and relied upon such corporate records, certificates, other
documents and questions of law, as we have considered necessary or
appropriate for the purposes of this opinion, including, but not
limited to, the following:
(a) Company's Certificate of Incorporation, as amended;
(b) Company's Bylaws, as amended;
(c) Plan;
(d) Resolutions of the Board of Directors of the Company,
dated August 5, 1993;
<PAGE>
LSB Industries, Inc.
June 29, 1998
Page 2
(e) Resolutions of the Board of Directors of the Company,
dated June 25, 1998;
(f) Certificate of Good Standing of the Company issued by
the Secretary of State of Delaware on June 26, 1998;
(g) Registration Statement; and
(h) Summary Information regarding the Plan.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all persons, the authenticity of
all documents submitted as originals, the conformity with the
original documents of all documents submitted as certified or
photostatic copies, and the authenticity of the originals of such
copies. We have further assumed that each recipient of shares of
the Company's Common Stock under the Plan is a Holder, as defined
in the Plan, and that any shares of the Company's Common Stock to
be issued under the Plan will have been issued pursuant to the
terms of the Plan and will have been registered in accordance with
the Act, absent the application of an exemption from registration,
prior to the issuance of such shares.
In reliance upon and based on such examination and review, we
are of the opinion that, when the Registration Statement becomes
effective pursuant to the rules and regulations of the Commission,
the 850,000 shares of Common Stock which may be issued pursuant to
the Plan will constitute, when purchased and issued pursuant to the
terms of such Plan, duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock of the Company.
We hereby consent to the filing of this opinion as Exhibit 5.1
to said Registration Statement and to the reference to Conner &
Winters, a Professional Corporation, wherever it appears in such
Registration Statement. However, in rendering this opinion, we do
not admit that we are acting within the category of persons whose
consent is required under Section 7 of the Act or the rules and
regulations of the Act.
Very truly yours,
CONNER & WINTERS,
a Professional Corporation
/s/ Conner & Winters, P.C.
IHS/MHB/plh
LETTER OF ACKNOWLEDGMENT RE: UNAUDITED FINANCIAL INFORMATION
The Board of Directors
LSB Industries, Inc.
We are aware of the incorporation by reference in the Registration Statement
(Form S-8 No. 333- ) of LSB Industries, Inc. for the registration of
850,000 shares of its common stock in the 1993 Stock Option and Incentive
Plan of LSB Industries, Inc. of our report dated May 12, 1998 relating to the
unaudited condensed consolidated interim financial statements of LSB
Industries, Inc. that are included in its Form 10-Q, as amended, for the
quarter ended March 31, 1998.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not
a part of the registration statement prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Oklahoma City, Oklahoma
June 29, 1998
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8, No. 333-________) pertaining to the 1993 Stock Option and
Incentive Plan of LSB Industries, Inc. of our report dated March 16, 1998,
except for the fourth paragraph of Note 5(A), as to which the date is
April 8, 1998, with respect to the consolidated financial statements and
schedule of LSB Industries, Inc. included in its Annual Report (Form 10-K),
as amended, for the year ended December 31, 1997, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Oklahoma City, Oklahoma
June 29, 1998
