As Filed with the Securities and Exchange Commission on September 3, 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)
Non-Qualified Stock Option Agreement - 1998 (Bernie Calkin)
Non-Qualified Stock Option Agreement - 1998 (Jerry Davis)
Non-Qualified Stock Option Agreement - 1998 (Gary Eck)
Non-Qualified Stock Option Agreement - 1998 (Larry Fitzwater)
Non-Qualified Stock Option Agreement - 1998 (Ralph Freeman)
Non-Qualified Stock Option Agreement - 1998 (Bob Giovando)
Non-Qualified Stock Option Agreement - 1998 (Phil Gough)
Non-Qualified Stock Option Agreement - 1998 (Kevin Harman)
Non-Qualified Stock Option Agreement - 1998 (George Hogg)
Non-Qualified Stock Option Agreement - 1998 (Warren Jones)
Non-Qualified Stock Option Agreement - 1998 (Paul Keeling)
Non-Qualified Stock Option Agreement - 1998 (Bill Manion)
Non-Qualified Stock Option Agreement - 1998 (Dick Milliken)
Non-Qualified Stock Option Agreement - 1998 (Oldrich Machacek)
Non-Qualified Stock Option Agreement - 1998 (Anne Rendon)
Non-Qualified Stock Option Agreement - 1998 (Andrew Rodgers)
Non-Qualified Stock Option Agreement - 1998 (Paul Rydlund)
Non-Qualified Stock Option Agreement - 1998 (Mike Samons)
Non-Qualified Stock Option Agreement - 1998 (Byron Smith)
Non-Qualified Stock Option Agreement - 1998 (Mike Wolfe)
Non-Qualified Stock Option Agreement - 1998 (Terry Wright)
____________________________________________________________
(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
_____________________________
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
_______________________________
Title of Proposed Proposed
securities Amount maximum maximum Amount of
to be to be offering price aggregate Registration
registered registered per share(1) offering price(1) fee
__________ __________ ______________ _______________ ____________
<S> <C> <C> <C> <C>
Common Stock to 75,000 $4.1875 $314,062 $93
be issued under
Non-Qualified
Stock Option
Agreements
_________________
<FN>
(1) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee on the basis of $4.1875, which is
the exercise price of the options granted under the Non-Qualified
Stock Option Agreements - 1998.
</FN>
</TABLE>
<PAGE>
<PAGE>
LSB INDUSTRIES, INC.
REGISTRATION STATEMENT ON FORM S-8
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Explanatory Note: The Section 10(a) Prospectus being delivered by
LSB Industries, Inc. (the "Company") to certain employees of the
Company pursuant to their individual Non-Qualified Stock Option
Agreements with the Company as required by Rule 428 under the
Securities Act of 1933, as amended (the "Act"), have been prepared
in accordance with the requirements of Form S-8 and relate to
shares of common stock, par value $.10 per share, of the Company
which have been reserved for issuance pursuant to the Non-Qualified
Stock Option Agreements. Information regarding the Non-Qualified
Stock Option Agreements required in the Section 10(a) Prospectus is
included in the documents being maintained and delivered by the
Company as required by Rule 428 under the Act. The Company will
provide to each of the employees who is a party to a Non-Qualified
Stock Option Agreement a written statement advising them of the
availability without charge, upon written or oral request, of
documents incorporated by reference herein, as required by Item 2
of Part I of Form S-8. Upon request, the Company will furnish to
the Securities and Exchange Commission or its staff a copy or
copies of all the documents included in such file.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
This Registration Statement incorporates herein by reference
the following documents and information which have been filed by
LSB Industries, Inc. (the "Company") with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"):
1. The Company's Annual Report on Form 10-K for the year
ending December 31, 1997.
2. The Company's Annual Report on Form 10-K/A for the year
ending December 31, 1997.
3. The Company's Quarterly Report on Form 10-Q for the three
months ending March 31, 1998.
4. The Company's Amended Quarterly Report on Form 10-Q/A for
the three months ending March 31, 1998.
II-1
<PAGE>
5. The Company's Quarterly Report on Form 10-Q for the three
months ending June 30, 1998.
6. The description of the Company's Common Stock contained
in the Company's Registration Statement on Form 8-A,
dated August 16, 1994, 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.
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.
II-2
<PAGE>
<PAGE>
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
_______ _________________
<S> <C>
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-5)
99.1 Non-Qualified Stock Option Agreement dated
April 22, 1998 between the Company and Bernie
Calkins for 3,000 shares ("Calkins Agreement").
Non-Qualified Stock Option Agreements, dated
April 22, 1998, between the Company and each
of (i) Jerry Davis for 3,000 shares, (ii) Gary
Eck for 3,000 shares, (iii) Larry Fitzwater
for 3,000 shares, (iv) Ralph Freeman for
3,000 shares, (v) Bob Giovando for 3,000
shares, (vi) Phil Gough for 5,000 shares,
(vii) Kevin Harman for 5,000 shares, (viii)
George Hogg for 3,000 shares, (ix) Warren
Jones for 3,000 shares, (x) Paul Keeling
for 3,000 shares, (xi) Oldrich Machacek for
5,000 shares, (xii) Bill Manion for 5,000
shares, (xiii) Dick Milliken for 5,000
shares, (xiv) Anne Rendon for 3,000 shares,
(xv) Andrew Rodgers for 3,000 shares, (xvi)
Paul Rydlund for 5,000 shares, (xvii) Mike
Samons for 3,000 shares, (xviii) Byron
Smith for 3,000 shares, (xix) Mike Wolfe
for 3,000 shares, and (xx) Terry Wright
for 3,000 shares (the "Agreements") are
substantially similar to the Calkins Agree-
ment, and copies of each of the Agreements
will be furnished to the Commission upon
request.
</TABLE>
II-3
<PAGE>
<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-4
<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 August 31, 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 August 31, 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-5
<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-6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
_______ ___________ ___________
<S> <C> <C>
5.1 Opinion of Conner & Winters,
A Professional Corporation 8
15.1 Letter of Acknowledgment 10
regarding unaudited interim
financial information
23.1 Consent of Ernst & Young, LLP 11
23.2 Consent of Conner & Winters,
A Professional Corporation
(contained in Exhibit 5.1)
24.1 Power of Attorney (see page
II-5)
99.1 Non-Qualified Stock Option Agreement 12
dated April 22, 1998 between the
Company and Bernie Calkins for 3,000
shares ("Calkins Agreement"). Non-Qualified
Stock Option Agreements, dated April 22, 1998,
between the Company and each of (i) Jerry Davis
for 3,000 shares, (ii) Gary Eck for 3,000 shares,
(iii) Larry Fitzwater for 3,000 shares, (iv)
Ralph Freeman for 3,000 shares, (v) Bob Giovando
for 3,000 shares, (vi) Phil Gough for 5,000
shares, (vii) Kevin Harman for 5,000 shares,
(viii) George Hogg for 3,000 shares, (ix)
Warren Jones for 3,000 shares, (x) Paul Keeling
for 3,000 shares, (xi) Oldrich Machacek for
5,000 shares, (xii) Bill Manion for 5,000
shares, (xiii) Dick Milliken for 5,000 shares,
(xiv) Anne Rendon for 3,000 shares, (xv) Andrew
Rodgers for 3,000 shares, (xvi) Paul Rydlund
for 5,000 shares, (xvii) Mike Samons for 3,000
shares, (xviii) Byron Smith for 3,000 shares,
(xix) Mike Wolfe for 3,000 shares, and (xx)
Terry Wright for 3,000 shares (the "Agreements")
are substantially similar to the Calkins
Agreement, and copies of each of the Agreements
will be furnished to the Commission upon request.
<PAGE>
</TABLE>
CONNER & WINTERS
A PROFESSIONAL CORPORATION
LAWYERS
ONE LEADERSHIP SQUARE
211 NORTH ROBINSON, SUITE 1700
OKLAHOMA CITY, OKLAHOMA 73102-7101
September 1, 1998
LSB Industries, Inc.
16 South Pennsylvania
Post Office Box 754
Oklahoma City, Oklahoma 73101
Re: LSB Industries, Inc.; Form S-8 Registration Statement
Non-Qualified Stock Option Agreement-1998; 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 75,000 shares
of the Company's common stock, $0.10 par value (the "Common
Stock"), to be issued by the Company pursuant to certain Non-
Qualified Stock Option Agreements-1998 granted to employees of the
Company or the Company's wholly owned subsidiaries (collectively,
the "Non-Qualified Agreements") 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) the Non-Qualified Agreements;
<PAGE>
LSB Industries, Inc.
September 1, 1998
Page 2
(d) Resolutions of the Board of Directors of the Company,
dated April 22, 1998;
(e) Certificate of Good Standing of the Company issued
by the Secretary of State of Delaware, July 23,
1998;
(f) Registration Statement; and
(g) Summary Information regarding the Non-Qualified Agreements.
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 any shares of the Company's
Common Stock to be issued under the Non-Qualified Agreements will
have been issued pursuant to the terms of the Non-Qualified
Agreements 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 75,000 shares of Common Stock which may be issued pursuant to
the Non-Qualified Agreements will constitute, when purchased and
issued pursuant to the terms of the Non-Qualified Agreements, 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 the Registration Statement and to the reference to Conner &
Winters, a Professional Corporation, in Item 5 "Interests of Named
Experts and Counsel" of the 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 75,000 shares of its common stock under certain
1998 Non-Qualified Stock Option Agreements of LSB Industries, Inc.
of our reports dated May 12, 1998 and August 14, 1998, relating to
the unaudited condensed consolidated interim financial statements
of LSB Industries, Inc. that are included in its Forms 10-Q, as
amended, for the quarters ended March 31, 1998 and June 30, 1998.
Pursuant to Rule 436(c) of the Securities Act of 1933, our reports
are 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
August 24, 1998
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8, No. 333-_________) pertaining to certain 1998
Non-Qualified Stock Option Agreements 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
August 24, 1998
NON-QUALIFIED STOCK OPTION AGREEMENT - 1998
This Non-Qualified Stock Option Agreement ("Option Agreement")
made the 22nd day of April, 1998, between LSB Industries, Inc., a
Delaware corporation, hereinafter called the "Company", and Bernie
Calkins hereinafter called "Optionee";
W I T N E S S E T H:
In consideration of the mutual covenants and conditions, the
parties agree as follows:
1. Recitations. The Company is presently employing the
Optionee as its employee at a Subsidiary (as defined below) of the
Company 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 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"). The Board of Directors
of the Company has adopted and granted this option on this 22nd day
of April, 1998.
2. Obligations. This Option Agreement shall not impose upon
the Company or any Subsidiary of the Company any obligation to
retain Optionee as an employee at his present salary or position or
to employ Optionee in any other position with or for the Company or
any Subsidiary of the Company. 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 and Option Price. Subject to the terms
and conditions hereof, the Company hereby grants to Optionee as of
the close of business on the 22nd day of April, 1998, the right,
privilege and option to purchase 3,000 shares of the Company's
common stock, par value $.10, at an option price of $4.1875 a share
(the "Exercise Price), such Exercise Price being one hundred
percent (100%) of the Fair Market Value of the Common Stock as
determined at the close of the business on the 22nd day of April,
1998. 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".
4. Time of Exercise of Option.
(a) As an Employee. If this option has not been
terminated pursuant to Section 6 hereof, subject to the terms
and conditions contained herein, the option herein granted may
be exercised by Optionee as hereinafter provided. Unless
waived by the Board of Directors or a Committee thereof
<PAGE>
(referred to herein as the "Committee"), the Optionee, while
in the employment of the Company, may exercise the option as
follows: at any time after one (1) year of continuous
employment as an employee for and on behalf of the Company or
any Subsidiary of the Company by the Optionee from the date of
this Option Agreement, it may be exercised by the Optionee as
to not more than twenty percent (20%) of the total number of
shares set forth in Section 3 hereof; at any time after two
(2) years of continuous employment by the Optionee as an
employee for and on behalf of the Company or a Subsidiary of
the Company from the date of this Option Agreement, it may be
exercised by the Optionee as to an additional twenty percent
(20%) of the total number of shares set forth in Section 3
hereof; at any time after three (3) years of continuous
employment by the Optionee as an employee for and on behalf of
the Company or a Subsidiary of the Company from the date of
this Option Agreement, it may be exercised by the Optionee as
to an additional thirty percent (30%) of the total number of
shares set forth in Section 3 hereof; and at any time after
four (4) years of continuous employment by the Optionee as an
employee for and on behalf of the Company or a Subsidiary of
the Company from the date of this Option Agreement, it may be
exercised by the Optionee, in whole or in part, as to the
remaining shares. The right to exercise the option granted
herein shall be cumulative.
(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 Internal
Revenue 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 this estate, or by a person who acquired the
right to exercise the Option by bequest, inheritance, or by
reason of the death of the Optionee, provided that:
(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.
2
<PAGE>
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) Acceleration and Continuous Employment. The Board
of Directors of the Company shall have the sole and absolute
discretion to accelerate the time when Optionee will become
entitled to exercise this option pursuant to the terms hereof.
The Board of Directors shall decide, in its sole and absolute
discretion, to what extent leaves of absence for government or
military service, illness, temporary disability or other
reasons, shall not interrupt continuous employment as an
employee for and on behalf of the Company or a Subsidiary of
the Company, which decision shall be binding for the purpose
of this Option Agreement.
5. Method of Exercise and Payment of Exercise Price.
(a) Subject to the terms and conditions hereof, the
option granted under this Option Agreement may be exercised by
written notice directed to the Company at its principal place
of business setting forth the exact number of shares under
this option that the Optionee is purchasing, which may not
exceed the number of shares that the Optionee is eligible to
purchase under this Option Agreement at the time of such
purchase, and enclosing with such written notice a certified
or cashier's check or cash, or the equivalent thereof
acceptable to the Company, in payment of the full option price
for the number of shares specified in such written notice and
shall comply with such other reasonable requirements as the
Board of Directors of the Company may establish. Subject to
the terms and conditions of this Option Agreement, the Company
shall make delivery of such shares within a reasonable period
of time after the giving of such notice; provided that if any
law or regulation requires the Company to take any action with
respect to the shares specified in such notice before the
issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to take such
action.
(b) The Optionee understands that, on the exercise of
this operation (or at the time a sale of the stock acquired by
such exercise at a profit would not longer subject Optionee to
suit under Section 16(b) of the Securities Exchange Act of
1934, as amended) the excess of the fair market value of the
common stock over it option price is taxable remuneration to
him subject to federal income tax withholding by the Company.
To facilitate withholding by the Company, if required,
Optionee hereby agrees that the exercisability of this option
is conditional on Optionee agreeing to such arrangements and
taking such actions as the Company determines are appropriate
3
<PAGE>
to insure that the amount required to be withheld will be
available for payment in money by the Company as required
withholding.
6. Termination of Option. This Option Agreement and the
option granted herein, to the extent not theretofore exercised,
shall immediately terminate and become null and void upon the
earlier of the following to occur:
(a) At such time as the Option is no longer exercisable
pursuant to the terms of Section 4 hereof; or
(b) Termination of the Optionee for any reason
whatsoever, with or without cause, as an employee for the
Company or any subsidiary of the Company; or
(c) On the tenth anniversary of the date of this
Agreement; or
(d) Upon the Optionee's surrender to the Company for
cancellation of this Agreement and the Option granted herein.
7. Restrictions.
(a) 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.
(b) Optionee shall have no right as a stockholder with
respect to any shares covered by this Option Agreement until
the date of issuance of a stock certificate to him for such
shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such
stock certificate is issued.
8. Stock Dividends, Reorganizations. If and to the extent
that the number of issued shares of common stock of the Company
shall be increased or reduced resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any
other increase or decrease in the number of such shares of common
stock of the Company effected without receipt of consideration by
the Company, the number of shares of common stock subject to this
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option and the option price therefor shall be proportionately
adjusted.
If the Company is reorganized or consolidated or merged
with another corporation, in which the Company is the non-surviving
corporation, Optionee shall be entitled to receive options covering
shares of such reorganized, consolidated or merged company in the
same proportion as optioned under this Option Agreement to Optionee
prior to such reorganization, consolidation or merger, at an
equivalent price, and subject to the same terms and conditions as
contained herein. For purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to
this option immediately after the reorganization, consolidation or
merger over the aggregate option price of such shares shall not be
more than the excess of the aggregate fair market value of all
shares subject to this option immediately before such
reorganization, consolidation or merger over the aggregate option
price of such shares, and the new option or assumption of this
option shall not give Optionee additional benefits which he did not
have under this option.
To the extent that the foregoing adjustments and
determinations relate to the shares of common stock of the Company
and/or fair market values of such shares, such adjustments and
determinations shall be made by the Board of Directors, whose
determination in that respect shall be final, binding and
conclusive.
Except as hereinabove expressly provided in this Section
8, the Optionee shall have no rights by reason of any subdivision
or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number
of share of stock of any class or by reason of any dissolution,
liquidation, merger, consolidation or reorganization or spin-off of
assets or stock of another corporation, and any issue by the
Company of share of stock of any class, or securities convertible
into shares of stock of any class, shall not affect and no
adjustment by reason thereof shall be made with respect to the
number or price of shares subject to this option.
The grant of this option shall not affect in any way the
right of power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or
assets.
9. Compliance with Law and Approval of Regulatory Bodies.
Notwithstanding anything in this Option Agreement to the contrary,
no shares will be issued, or, in the case of treasury shares
transferred, upon exercise of the option granted hereunder, except
in compliance with all applicable Federal and State laws, rules and
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regulations (including, but not limited to the Federal and State
securities laws, rules and regulations) and in compliance with
rules of stock exchanges on which the Company's shares of common
stock may be listed. Notwithstanding anything in this Option
Agreement to the contrary, no shares will be issued, or, in the
case of treasury shares transferred, upon exercise of the option
granted hereunder, until the Company has obtain such consent or
approval from any and all regulatory bodies, Federal or State, and
such stock exchanges having jurisdiction over such matters as the
Board of Directors of the Company may deem advisable.
10. Binding Effect and Amendments. This Agreement shall be
binding upon the heirs, executors, administrators and successors of
the parties hereto. This Agreement may not be amended except in
writing signed by all of the parties hereto.
11. Interpretation, Other Restrictions and Legends.
(a) The Board of Directors of the Company shall construe
and interpret the terms and provisions of this Option
Agreement, which construction and interpretation, shall be
binding and conclusive upon all parties hereto. This Option
Agreement shall be construed pursuant to the laws of the State
of Delaware.
(b) The Optionee represents and warrants that if he
acquires any of the shares under this Option Agreement he will
acquire such shares for his own account and for the purpose of
investment and not with a view to the sale or distribution
thereof, except for sales pursuant to an effective
registration statement under the Securities Act of 1933 (the
"Act") or pursuant to an exemption from registration under the
Act. The Optionee understands that the shares of common stock
covered by this Option Agreement have not as of the date
hereof and may not at the time that such are purchased be
registered under the Act (the Company being under no
obligation to effect such registration) and that such shares
must be held indefinitely unless a subsequent disposition
thereof is registered under the Act or is exempt from
registration. The Optionee further understands that the
exemption from registration afforded by Rule 144 under the Act
depends upon the satisfaction of various conditions and that,
if applicable, Rule 144 affords the basis for sale of such
shares only in limited amounts.
(c) The Optionee represents, covenants, and agrees that
he will not sell or otherwise dispose of the shares acquired
under this Option Agreement in the absence of (i) an effective
registration statement under the Act, (ii) an opinion
acceptable in form and substance to the Company from
Optionee's counsel satisfactory to the Company, or an opinion
of counsel to the Company, to the effect that no registration
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is required for such disposition, or (iii) a "no-action"
letter from the staff of the Securities & Exchange Commission
("SEC") to the effect that such a disposition takes place
without registration.
(d) The certificates representing shares covered by this
Option Agreement shall upon issuance thereof have stamped or
imprinted thereon or affixed thereto a legend to the following
effect:
"The registered holder hereof has acquired the
shares represented by this certificate for
investment and not for resale in connection
with a distribution thereof. Accordingly,
such shares have not been registered under the
Securities Act of 1933 and may not be sold,
transferred or otherwise disposed of except
pursuant to a currently effective registration
statement under said Act or otherwise in a
transaction exempt from the provisions of
Section 5 of said Act."
12. Definitions. For the purposes of this Option Agreement:
(a) The term "Subsidiary" or "Subsidiary Corporation"
means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of
the corporations other than the last corporation in the
unbroken chain own stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of
stock in one or the other corporations in such chain.
(b) The term "employee" means a person who has
contracted to perform work or services for another and to
perform such work or services not less than forty (40) hours
each week of the year.
IN WITNESS WHEREOF, the parties hereunto have caused this
Agreement to be executed the day and year first above written.
ATTEST: LSB INDUSTRIES, INC.
By: /s/ Jack E. Golsen
________________________ _________________________
Secretary Jack E. Golsen, President
[SEAL]
"OPTIONEE"
/s/ Bernie Calkins
______________________________
BERNIE CALKINS
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