STOCK OPTION AGREEMENT Exhibit 2.1
This Stock Option Agreement ("Agreement") is made and entered into
effective as of the _____ day of ____________, 1995 ("Effective Date") by and
between ________________, an individual ("__________"), ______________, an
individual ("__________"), _____________________, an individual ("________") (
, , and are hereinafter collectively
referred to as the "Shareholders"), _____________, a ____________ corporation
("____"), and LSB Holdings, Inc., an Oklahoma corporation ("LSB").
R E C I T A L S:
WHEREAS, the Shareholders own one hundred percent (100%) of the equity
shares of ____;
WHEREAS, ____ is currently authorized to issue ________shares of common
stock and such common stock is the only class of stock issued and is the only
stock of ____ with voting rights;
WHEREAS, a total of ________ shares of ____ common stock are currently
issued and outstanding;
WHEREAS, _______ owns __________ percent (__%), _______ owns ________
percent (__%), and _______ owns ________ percent (__%), of ____;
WHEREAS, LSB desires to obtain an option to purchase a total of eighty
percent (80%) of the shares of ____, upon the terms and conditions set forth
in this Agreement, so as to allow LSB to become the owner of eighty percent
(80%) of all issued and outstanding common stock of ____;
WHEREAS, ____ and LSB Industries, Inc., an affiliate of LSB, have
executed that certain Loan Agreement dated September 15, 1994 as amended (the
"Loan Agreement"), under which Loan Agreement LSB Industries, Inc. may make
advances at its sole discretion to ____ up to $___ Million (the "Loan").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Shareholders and LSB agree as
follows:
1. Recitals. The recitals set forth above shall be deemed a part of this
Agreement and are incorporated herein by reference.
2. Option.
2.1 Purchase. Subject to the terms and conditions contained herein,
the Shareholders hereby grant to LSB the option (the "Option"),
exercisable at any time during the Option Period (hereinafter defined)
to purchase from the Shareholders ________ shares of ____'s common stock
(constituting 80% of the shares of ____) (hereinafter collectively
referred to as the "Subject Shares"), from the following individual
Shareholders in accordance with the following schedule:
Number of
____ ____ Shares
Shareholder Subject to Purchase
_______ _____
_______ _____
_______ _____
TOTAL (80% of all _____
outstanding shares)
For the purposes of this Agreement, the term "Participation Percentage"
shall mean the following percentages for each of the Shareholders:
Shareholder Participation Percentage
_______ 40%
_______ 40%
_______ 20%
____
TOTAL 100%
2.2 Option Period. This Option may be exercised by LSB at any time
after the Effective Date and before 7:00 p.m. (Oklahoma City, Oklahoma
time) on the date one (1) year after the Effective Date; provided,
however, that the period in which this Option may be exercised may be
extended for up to three (3) one-year periods (i.e., through the date
four (4) years after Effective Date) by LSB's payment of $______ (the
"Extension Payments") to the Shareholders in proportion to their
Participating Percentages on or before the end of each one-year period
(inclusively, the "Option Period"). Notwithstanding the preceding
sentence, the Option Period may be shortened by the Shareholders in the
event the "Preliminary Requirements" (hereinafter defined) have been met
during the Option Period and LSB has received written notice from _____
and the Shareholders that all Preliminary Requirements have been met
(the "Option Notice"). Only upon the occurrence of the Preliminary
Requirements and receipt of the Option Notice by LSB, LSB shall, at its
sole discretion, within ninety (90) days of receipt of the Option
Notice, either a) exercise this Option, or b) relinquish this Option.
2.3 Method of Exercising Option. This Option may be exercised at any
time during the Option Period by LSB delivering written notice of such
exercise to each Shareholder ("Exercise Notice"), which Exercise Notice
shall include the date, time and place of the closing of the Purchase of
the Subject Shares (the "Closing" or the "Closing Date"). The Closing
Date shall be within sixty (60) days after the date of the Exercise
Notice, but it need not be within the Option Period.
2.4 Closing. At the Closing of LSB's purchase of the Subject Shares,
the Shareholders shall deliver to LSB the certificate(s) evidencing the
Subject Shares, together with assignments separate from the
certificate(s) endorsed in favor of LSB or its designee. The Subject
Shares shall be duly authorized, non-assessable, validly issued and
delivered to LSB free and clear of all liens, restrictions, claims
and/or agreements of any kind. At the Closing, the Shareholders, ____
and LSB shall also fulfill all other obligations set forth herein as
items to occur at or before Closing.
2.5 Option Price. On the Effective Date, LSB shall pay Shareholders,
in proportion to their Participation Percentage, the total amount of
$_________. LSB shall thereafter pay Shareholders, in proportion to
their Participation Percentage, the total amount of $________ on or
before each of the last days of the third, sixth, ninth and twelfth
months after the execution of this Agreement by all parties (the "Option
Price"). In the event the Option on the Subject Shares is relinquished
by LSB, is not renewed, terminates for any reason or expires,
Shareholders shall repay to LSB so much of the Option Price and any Pre-
Payments (hereinafter defined) as LSB had paid to Shareholders, except
for the first $________, but not to exceed $_________ (the "Repayment
Obligation"). To secure such obligation, the Shareholders hereby grant
to LSB a security interest in and to the Subject Shares and all
remaining shares of ____ and a security interest in and to all the
shares of ____ and, to the extent not restricted by other agreements,
____ grants to LSB a security interest in the stock of
__________________ and ______, Inc. subsidiaries of ____ and the
interest of ____ and/or __________________ in ___________.
2.6 Exercise Price. Upon delivery to LSB at the Closing of the
certificate(s) evidencing the Subject Shares, and conditioned upon ____
and the Shareholders fulfilling all obligations to take place at or
before Closing, LSB agrees to pay the amount set forth below in Section
2.6.1 (the "Exercise Price"), payable as reflected in Section 2.6.2
below.
2.6.1 Exercise Price. The total Exercise Price to be paid to all
Shareholders under this Agreement shall be the total amount of
$____ Million (a) less the Option Price paid to Shareholders, (b)
less any other payment made to Shareholders prior to Closing, and
(c) less the $_________ advance payment made to Shareholders on or
about November 15, 1994 ((b) and (c) collectively referred to as
"Pre-Payments").
2.6.2 Payment of Exercise Price. LSB shall pay to the
Shareholders, in proportion to their Participation Percentage, the
total Exercise Price as follows:
(a) If the Option is exercised on or before one (1)
year after the Effective Date, $___ Million (less the
Option Price paid to Shareholders and less any Pre-
Payments) shall be paid at Closing. LSB shall also
deliver to Shareholders at Closing five (5) non-
negotiable promissory notes bearing interest at the rate
of seven percent (7%) per annum each in the principle
amount of $________. Such Notes shall require a single
payment of principle and all accrued interest on their
respective maturity dates. Such notes shall mature and
become due and payable one each on the first, second,
third, fourth and fifth anniversaries of the Closing
Date.
(b) If the Option is exercised on or before two (2)
years but later than one (1) year after the Effective
Date, $___ Million (less the Option Price paid to
Shareholders and less any Pre-Payments) shall be paid at
Closing. LSB shall also deliver to Shareholders at
Closing four (4) non-negotiable promissory notes bearing
interest at the rate of seven percent (7%) per annum each
in the principle amount of $________. Such notes shall
require a single payment of principle and all accrued
interest on each of their respective maturity dates.
Such notes shall mature and become due and payable one
each on the first, second, third and fourth anniversaries
of the Closing Date.
(c) If the Option is exercised on or before three
(3) years but less than two (2) years after the Effective
Date, $___ Million (less the Option Price paid to
Shareholders and less any Pre-Payments) shall be paid at
Closing. LSB shall also deliver to Shareholders at
Closing three (3) non-negotiable promissory notes bearing
interest at the rate of seven percent (7%) per annum in
the principle amount of $__________. Such notes shall
require a single payment of principle and all accrued
interest on each of their respective maturity dates.
Such notes shall mature and become due and payable one
each on the first, second and third anniversaries of the
Closing Date.
(d) If the Option is exercised on or before four (4)
years but less than three (3) years after the Effective
Date, $___ Million (less the Option Price paid to
Shareholders and less any Pre-Payments) shall be paid at
Closing. LSB shall also deliver to Shareholders at
Closing two (2) non-negotiable promissory notes bearing
interest at the rate of seven percent (7%) per annum in
the principle amount of $________. Such notes shall
require a single payment of principle and accrued
interest on each of their respective maturity dates.
Such notes shall mature and become due and payable one
each on the first and second anniversaries of the Closing
Date.
The promissory notes as referenced in subsections 2.6.2 (a)
through (d) above shall be dated and delivered to Shareholders at
Closing and may be separately issued, at the option of the
Shareholders, to _______, _______ and _______ in accordance with
their respective Participation Percentages(said promissory notes
shall be collectively referred to as the "Shareholders' Notes").
Notwithstanding anything that may appear to the contrary in this
Agreement, the Exercise Price, the Pre-Payments and the Option
Price shall under no circumstances exceed a total of $__ Million
plus interest on any promissory notes delivered as part of the
Exercise Price.
2.6.3 Replacement Notes. To the extent not paid or reduced by set
off or otherwise, LSB shall replace all unpaid non-negotiable
promissory notes to be delivered under 2.6.2(a), (b), (c) or (d)
above with negotiable promissory notes upon the following events
occurring at the same time:
(a) Tender of Notes. Shareholders tender all the unpaid
original non-negotiable notes to LSB for replacement (the
date of such tender is referred to herein as the "Tender
Date").
(b) ________________Project. The contracts associated
with ___________ Project or another project of equal or
greater value, that generates equal or greater net revenues
(the "Replacement Project"), including the financing
therefore from a bona fide lender, shall have been fully
closed as of the Tender Date, without any conditions
remaining to be fulfilled.
(c) Net Revenues. The "Interim Net Present Value"
(defined below) shall be $___ Million or greater, measured
as of one (1) month prior to the Tender Date, but not
earlier than one (1) year following completion of
construction of the ____________ Project or the Replacement
Project (the "Interim Measurement Date"). For purposes of
this Section 2.6.3.(c), "Interim Net Present Value" means
the present value of eighty percent (80%) of ____'s interest
in the net revenues attributable to _____________________
under the contracts on the ________ Project and the
__________Project (or the Replacement Project) calculated as
of the Effective Date using a ten percent (10%) discount
rate and using the _________________ attributable to the
respective contracts during the one (1) full year period
prior to the Interim Measurement Date as the basis for
determining the amount of _________________ for the
respective contracts after the Interim Measurement Date.
(d) Net Worth. As of the Tender Date, ____'s net worth is
a positive value.
(e) No Defaults. As of the Tender Date, no defaults exist
or are expected to exist under any material agreement to
which ____ or its affiliates are a party.
(f) Profit and Loss Statement. As of the Tender Date, ___
's consolidated profit and loss statement for the previous
twelve (12) months reflects a positive value.
3. Preliminary Requirements. For purposes of accelerating the Option
Period under Section 2.2 above, the following requirements (the
"Preliminary Requirements") must be met at the same time and evidenced
by copies of written documentation provided to LSB with the Option
Notice (the date LSB receives the Option Notice is referred to herein as
the "Option Date"):
3.1 ___________Project. The contracts associated with the ___________
Project (or the Replacement Project), including the financing
therefore from a bona fide lender, shall have been fully closed as
of the Option Date, without any conditions remaining to be
fulfilled.
3.2 Net Revenues. The "Option Net Present Value" (defined below)
shall be $___ Million or greater, measured as of one (1) month
prior to the Option Date, but not earlier than one (1) year
following completion of construction of the ____________ Project
or the Replacement Project (the "Option Measurement Date"). For
purposes of this Section 3.2, "Option Net Present Value" means the
present value of eighty percent (80%) of ____'s interest in the
net revenues attributable to the ___________________ under
contracts on the ___________ Project and the ____________ Project
(or the Replacement Project) calculated as of the Effective Date
using a ten percent (10%) discount rate and using the
_________________ attributable to the respective contracts during
the one (1) full year period prior to the Option Measurement Date
as the basis for determining the amount of _________________ for
the respective contracts after the Option Measurement Date.
3.3 Net Worth. As of the Option Date, ____'s net worth is a positive
value.
3.4 No Defaults. As of the Option Date, no defaults exist or are
expected to exist under any material agreement to which ____ or
its affiliates are a party.
3.5 Profit and Loss Statement. As of the Option Date, ____'s
consolidated profit and loss statement for the previous twelve
(12) months reflects a positive value.
4. Representations & Warranties of Shareholders and . The Shareholders
and jointly and severally represent and warrant to LSB as follows:
4.1 The Subject Shares. The Shareholders own and have full and valid
title to the Subject Shares free and clear of all liens, security
interests, claims and encumbrances, and have good right and
authority to sell the same.
4.2 ____ Stock. _____ is currently authorized to issue _______ shares
of common stock, and such shares of common stock are the only
stock of ____ which have voting rights. There are _________
shares of ____ common stock currently issued and such are all
outstanding in the names and amount stated in Section 2.1 above,
and such shall be the only outstanding shares of ____ common stock
as of the Closing Date.
4.3 No Subscriptions, etc. There are no outstanding subscriptions,
options, rights, warrants, calls, commitments or agreements
relating to the Subject Shares or any authorized but unissued
shares of ____.
4.4 Shareholder's Authority for Agreement. Each Shareholder has full
and requisite power and authority to deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the requisite
actions and this Agreement constitutes the valid and legally
binding obligation of each Shareholder enforceable against each of
the respective Shareholder in accordance with its terms. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not conflict with or
result in any violation of, or default under, any provision of the
formation documents of ____ or with any other agreement or
document to which any Shareholder is a party.
4.5 Corporate Status and Authority. ____ is a corporation duly
organized and existing and in good standing under the laws of the
State of ____________. ____ has full power and authority to own
and operate its properties and to carry on its business all as,
and in the places where, such properties are now owned or operated
or such businesses are conducted. ____ is duly qualified to do
business and is in good standing in every jurisdiction in which
the nature of the property owned or leased or the nature of the
business conducted by ____ makes such qualification necessary.
4.6 Subsidiaries. ____ is not a partner in any partnership or joint
venture and has only two subsidiaries: ___________________
("__________") being a ____________ corporation that is wholly
owned by ____; and, ______, Inc. ("_____"), being a ___________
corporation certified to do business in __________ that is wholly
owned by ____. ____'s interest in both _________ and _____ are
included in the Purchase Price, for no additional consideration.
_______, Inc. has no subsidiaries and is a partner in only one
partnership or joint venture: _____________________ a ___________
limited partnership in which _____ is a __% general partner and a
__% limited partner and, which interest is included in the
Purchase Price, for no additional consideration. ____ is also in
the process of forming a __________ corporation to be known as
____________ ("___________"), which will be a wholly owned
subsidiary of and which is included in the Purchase Price for
no additional consideration. ____________ is contemplating the
negotiation of a __% joint venturer/partnership with a wholly
owned subsidiary of _____________________ to be known as
____________________, when and if such joint venture/ partnership
is formed, which interest is included in the Purchase Price, for
no additional consideration; provided, however, Shareholders and
____ agree that the joint venture/partnership contemplated with
_______________________ shall not be formed or agreed to prior to
Closing without LSB's prior written approval of the terms of such
joint venture/partnership. All representations or warranties
under this Agreement also apply to those subsidiaries,
partnerships or joint ventures reflected above.
4.7 Financial Statements. ____ has heretofore delivered to LSB its
consolidated unaudited financial statements (the "Unaudited
Financials") of ____ and subsidiaries as of December 31, 1994,
including a Balance Sheet as of December 31, 1994 and statement of
operations for the six months ended December 31, 1994, and ____
will continue to furnish such financial information to LSB as of
the end of each month thereafter until the Closing. The Unaudited
Financials have been prepared by the management of ____ and fairly
present the financial position of ____ and its subsidiaries at
December 31, 1994 and the results of operations for the six months
then ended and as of the end of each subsequent month for which
such Unaudited Financials are provided.
4.8 Undisclosed Liabilities. On the Closing Date, ____ and its
subsidiaries and affiliates, will not be subject to any debts,
liabilities or obligations of any nature, whether accrued,
absolute, contingent or other, and whether due or to become due,
including, but not limited to, liabilities or obligations on
account of taxes (except ad valorem taxes accruing after December
31, 1994) constituting a lien but not yet due and payable, other
governmental charges, duties, penalties or fines, and there is no
valid basis for the assertion against ____ or its subsidiaries or
affiliates of any such debt, liability or obligation other than
those (i) reflected in the Unaudited Financials, (ii) which arise
under obligations disclosed herein or (iii) which are pursuant to
obligations arising in the ordinary course of the business of ____
or its subsidiaries or affiliates consistent with those
obligations reflected by the Additional Unaudited Financials
provided to LSB pursuant to Section 6.5 below.
4.9 Changes in Condition. There has not been since December 31, 1994,
(i) any change in the condition (financial or other) in or of the
properties, assets, liabilities, or business of ____ or its
subsidiaries or affiliates, except changes in the ordinary course
of business which have not in any one case or in the aggregate
been materially adverse, (ii) any damage, destruction or loss
(whether or not covered by insurance) materially and adversely
affecting the properties, assets, or business of ____ or its
subsidiaries or affiliates, (iii) any change in the accounting
methods or practices followed by ____ or its subsidiaries or
affiliates or any change in depreciation or amortization policies
or rates heretofore adopted, (iv) any sale, lease, abandonment or
other disposition by ____ or its subsidiaries or affiliates of any
interest in real property, or, other than in the ordinary course
of business, of any machinery, equipment or other operating
property or any sale, assignment, transfer, license or other
disposition by ____ of any intangible asset, (v) any declaration
setting aside or payment of any dividend or other distribution on
or in respect of the Subject Shares, or any direct or indirect
redemption, retirement, purchase or other acquisition by ____ of
any of the Subject Shares, or (vi) any change in the Articles of
Incorporation or By-laws of ____ or its subsidiaries or
affiliates, or (vii) any other occurrence, event or condition
which materially adversely affects or may materially adversely
affect the properties, assets, or business of ____ or its
subsidiaries or affiliates.
4.10 Taxes. ____ or its subsidiaries or affiliates have duly and
timely filed all tax returns required to be filed, and have paid
all taxes shown to be due and payable on all such returns, all
assessments notice of which has been received by any of them, and
all other taxes, governmental charges, duties, penalties, interest
and fines due and payable by any of them on or before the Closing
Date. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of
any tax returns by ____ or its subsidiaries or affiliates, or the
payment by, or assessment against, ____ or its subsidiaries or
affiliates of any tax, governmental charge, duty or deficiency.
There are no suits, actions, claims, investigations, inquiries or
proceedings threatened or now pending against ____ or its
subsidiaries or affiliates in respect to taxes, governmental
charges, duties or assessments, or any matters under discussion
with any governmental authority relating to taxes, governmental
charges, duties or assessments, or any claims for additional
taxes, governmental charges, duties or assessments asserted by any
such authority. The reserves made for taxes, governmental charges
and duties on the Financials and the Unaudited Financials are
sufficient for the payment of all unpaid taxes, governmental
charges and duties payable by ____ or its subsidiaries or
affiliates attributable to all periods ended on or before the date
of the Unaudited Financials. ____ and its subsidiaries and
affiliates have withheld or collected on each payment made to each
of its employees the amount of all taxes (including, but not
limited to, federal income taxes, Federal Insurance Contribution
Act taxes and state and local income and wage taxes) required to
be withheld or collected therefrom and has paid the same to the
proper tax receiving officers.
4.11 Real Property. Neither ____ nor its subsidiaries or affiliates
owns any real property or interest therein except ____ has a
leasehold interest of its office space at
____________________________________________.
4.12 Title to Personal Property. ____ and its subsidiaries and
affiliates have good and marketable title to all tangible personal
property which each owns, including, but not limited to, that
reflected on the Unaudited Financials (except as disposed of since
the date of the Unaudited Financials in the ordinary course of
business and without involving any misrepresentation or breach of
warranty or covenant under this Agreement).
4.13 Plant, Buildings, Machinery and Equipment. All buildings, offices,
shops and other structures and all machinery, equipment, software,
computer hardware and general intangibles, fixtures, vehicles and
other properties owned, leased or used by either ____ and its
subsidiaries and affiliates (whether under their control or the
control of others) are in good operating condition and repair and
are adequate and sufficient for all operations. ____ and its
subsidiaries and affiliates own all computer software and
hardware, furniture, fixtures, machinery, equipment and other
assets required in the business of _____ and its subsidiaries and
affiliates as now being conducted.
4.14 Regulatory Compliance. None of the real or personal properties
owned, leased, occupied or operated by ____ or its subsidiaries or
affiliates, or the ownership, leasing, occupancy or operation
thereof, is in violation of any law or any building, zoning,
environmental or other ordinance, code, rule or regulation, and no
notice from any governmental body or other person has been served
upon ____ or its subsidiaries or affiliates or upon any property
owned, leased, occupied or operated by ____ or its subsidiaries or
affiliates claiming any violation of any such law, ordinance,
code, rule or regulation or requiring, or calling attention to the
need for, any work, repairs, construction, alterations or
installation an or in connection with such property which has not
been complied with. ____ and its subsidiaries and affiliates have
the right to use their properties for all material operations
conducted by it. ____ and its subsidiaries and affiliates are in
compliance with all rules, regulations and laws that pertain to
the conduct of their business and ____ and its subsidiaries and
affiliates are not aware of or have received any notice charging
or its subsidiaries or affiliates with such violations.
Further, neither ____ nor its subsidiaries or affiliates, to the
best knowledge of the Shareholders, are under extraordinary
investigation by any governmental or industry regulatory body for
any reason.
4.15 Accounts. All account receivables of ____ and its subsidiaries
and affiliates which are reflected in the Unaudited Financials and
those owned by ____ and its subsidiaries and affiliates on the
Closing Date are and will be good and collectible except to the
extent charged off each month in accordance with its normal
accounting practices, consistently applied.
4.16 Inventory. All items, if any, contained in the inventory of ____
and its subsidiaries and affiliates, as reflected in the Unaudited
Financials and as owned on the Closing Date are of a quality and
quantity salable or usable in the ordinary course of ____'s and
its subsidiaries' and affiliates' business at customary retail or
wholesale prices; and the values of such inventory reflect
write-downs to realizable market value in the case of items which
had become obsolete or were unsalable except at prices less than
cost through regular distribution channels in the ordinary course
of ____'s and its subsidiaries' and affiliates' business.
4.17 Patents, Trademarks, Etc. Neither ____ nor its subsidiaries or
affiliates infringe on any patents, trademarks, trade names, brand
names or copyrights of any third party.
4.18 New Developments. There are no new developments in any business
conducted by or its subsidiaries or affiliates, nor any new
or improved methods, materials, products, processes or services
useful in connection with the business of ____ or its subsidiaries
or affiliates as presently conducted, which may adversely affect
the properties, assets or business of ____ or its subsidiaries or
affiliates.
4.19 Competition. Neither ____ nor its subsidiaries or affiliates nor
any of their officers or employees have entered into any agreement
relating to the business of ____ or its subsidiaries or affiliates
containing any prohibition or restriction of competition or
solicitation of customers with any person, corporation,
partnership, firm, association or business organization, entity or
enterprise which is now in effect.
4.20 Contractual Obligations. The Shareholders, ____ and their
respective subsidiaries or affiliates have or will have prior to
Closing furnished LSB for its examination (i) a list of all
written or oral contracts, commitments, agreements and other
contractual obligations (not otherwise described herein) to which
____ or its subsidiaries or affiliates are a party or by which
their properties or assets are bound, affecting either ____ or its
subsidiaries or affiliates, including, without limitation, all
labor agreements, employment contracts, leases, notes and other
evidence of indebtedness, pension and profit sharing and other
employee benefit plans or agreements, insurance policies and
contracts, and agreements obligating ____ to expend any
substantial amount of money or acquire or dispose of any
substantial amount of property, and (ii) a list of all
governmental or court approvals and third party contractual
consents required in order to consummate the transactions
contemplated by this Agreement.
4.21 Compliance with Obligations. Neither ____ nor its subsidiaries or
affiliates is, nor is either alleged to be, in default under, or
in breach of any term or provision of, any contract, agreement,
lease, license, commitment, loan, instrument or obligation. No
other party to any contract, agreement, lease, license,
commitment, loan, instrument or obligation to which _____ or its
subsidiaries or affiliates is a party is in default thereunder or
in breach of any term or provision thereof. There exists no
condition or event which, after notice or lapse of time or both,
would constitute a default by any party to any such contract,
agreement, lease, license, commitment, instrument or obligation.
4.22 Litigation. There is no suit, action or claim, no investigation or
inquiry by any administrative agency or governmental body, and no
legal, administrative or arbitration proceeding pending or
threatened against ____ or its subsidiaries or affiliates or any
of their properties, assets, or business or to which it is or
might become a party , and there is no valid basis for any such
suit, action, claim, investigation, inquiry or proceeding. There
is no outstanding order, writ, injunction or decree of any court,
any administrative agency or governmental body or arbitration
tribunal against or affecting ____ or its subsidiaries or
affiliates or any of the capital stock, properties, assets, or
business of ____ or its subsidiaries or affiliates.
4.23 Licenses and Permits. ____ and its subsidiaries and affiliates
have all governmental licenses and permits necessary to conduct
their business and to operate their properties and assets, and
such licenses and permits are in full force and effect. No
violations exist or have been recorded in respect of any
governmental license or permit of ____ or its subsidiaries or
affiliates. No proceeding is pending or threatened looking toward
the revocation or limitation of any such governmental license or
permit and there is no valid basis for any such revocation or
limitation. ____ and its subsidiaries and affiliates have
complied with all laws, rules, regulations, ordinances, codes,
orders, licenses, concessions and permits relating to any of their
properties or applicable to their business including, but not
limited to, the labor, environmental and antitrust laws.
4.24 Labor Disputes. Since June 30, 1994, there has not been any
matter under discussion with any labor union or any strike, work
stoppage or labor trouble relating to employees of ____ or its
subsidiaries or affiliates. Since June 30, 1994, there has not
been any change in the relationship or course of dealing between
____ or its subsidiaries or affiliates and any of their suppliers
or customers which has had or could have a material adverse effect
on their business.
4.25 Employee Compensation. An accurate list of (a) the name and the
current annual salary and other compensation or the rate of
compensation payable by ____ or its subsidiaries or affiliates to
each of their officers and each employee whose current total
annual compensation or estimated compensation (including, but not
limited to, normal bonus, profit sharing and other extra
compensation) is $_________ or more, and (b) each loan or advance
(other than routine travel advances repaid or formally accounted
for within 60 days and routine vacation advances and routine
credit card advances) made by ____ or its subsidiaries or
affiliates to any director, officer or employee of ____ or its
subsidiaries or affiliates outstanding and unpaid as of the date
of this Agreement and the current status thereof, will be provided
LSB by the Shareholders prior to the Closing Date. Since June 30,
1994 through the effective date of the list to be provided above,
there has not been any increase in the total compensation payable
or to become payable by ____ or its subsidiaries or affiliates to
each such person referenced in such list or any general increase,
in the total compensation or rate of total compensation payable or
to become payable by ____ or its subsidiaries or affiliates to
salaried employees other than those specified in such list or to
hourly employees ("general increase" for purposes of this Section
means any increase generally applicable to a class or group of
employees and not including increases granted to individual
employees for merit, length of service, change in position or
responsibility or other reasons applicable to specific employees
and not generally to a class or group thereof) other than as set
forth in ____'s or its subsidiaries' or affiliates' books and
records.
4.26 Insurance. ____ and its subsidiaries and affiliates maintain
adequate insurance on their properties, assets, business and
personnel. Neither ____ nor its subsidiaries or affiliates are in
default with respect to any provision contained in any insurance
policy, and they have not failed to give any notice or present any
claim under any insurance policy in due and timely fashion.
4.27 No Default. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder will not
(a) result in the breach of any of the terms or conditions of, or
constitute a default under, the Articles of Incorporation or the
By-Laws of or the formation documents of ____ or its subsidiaries
or affiliates or any contract, agreement, commitment, indenture,
mortgage, pledge agreement, note, bond, license or other
instrument or obligation to which ____ or its subsidiaries or
affiliates or any shareholder is now a party or by which ____ or
its subsidiaries or affiliates or any of the properties or assets
of ____ or its subsidiaries or affiliates may be bound or
affected, or (b) violate any law, or any rule or regulation of any
administrative agency or governmental body, or any order, writ,
injunction or decree of any court, administrative agency or
governmental body.
4.28 Customers and Suppliers. No facts are known indicating that any
customer or supplier of ____ or its subsidiaries or affiliates
intends to cease doing business with ____ or its subsidiaries or
affiliates or to materially alter the amount of business that they
are presently or have historically done with ____ or its
subsidiaries or affiliates.
4.29 Conflicts of Interest. No director, officer or employee of _____
or its subsidiaries or affiliates, including the Shareholders,
control or are an employee, officer, director, agent or owner of
any corporation, firm, association, partnership or other
businesses entity which is a competitor, supplier or customer of
____ or its subsidiaries or affiliates.
4.30 Full Disclosure. No representation or warranty of ____ or its
subsidiaries or affiliates under this Agreement contains or will
contain any untrue statement of a material fact or omits or will
omit any material fact necessary to make the statements herein not
misleading.
4.31 Value of__________and______________. Exhibit "A" accurately
reflects the net revenue expected to be derived from the
_____________ and __________ projects as well as ____'s share of
such net revenues from those projects.
4.32 _________Regulations. In the event any state or federal law, rule
or regulation addressing the use of ______ is adopted, ____ and
its subsidiaries and affiliates have not entered into any
agreement or understanding, and will not enter into any such
agreement or understanding prior to Closing, which would require
any of them to replace or make any modifications to any _____-
utilizing equipment which they may have sold or installed, intend
to sell or install or may be maintaining.
4.33 No Obligations to Repay Debts Related to____________Project.
______ and its subsidiaries (other than _____) or affiliates has
no responsibility, obligation or liability to pay any debts or
obligations of _____ including, without limitation, any debt to
any lender of _____ or to any partner of _____ related to the
_________ project.
4.34 Obligations. No officer, director, or shareholder of LSB,
LSB Industries, Inc. and their subsidiaries or affiliates
shall have any personal liability or obligation to or
its subsidiaries or affiliates, or any other person or
entity under the terms of this Agreement or under any
expressed or implied obligation, concept, principle or legal
theory.
5. Representations and Warranties of Buyer. LSB represents and warrants to
the Shareholders as follows:
5.1 Organization. LSB is an Oklahoma corporation duly organized,
validly existing and in good standing under the laws of the State
of Oklahoma and has the corporate power to enter into and to carry
out the terms and provisions of this Agreement.
5.2 Agreement Authorized. The execution, delivery and performance of
this Agreement by LSB has been authorized by all requisite
corporate action on the part of LSB and will not conflict with or
result in any breach in the terms, conditions or provisions of
LSB's corporate charter, by-laws or any other instrument to which
LSB is a party.
5.3 Securities Law Restrictions. LSB, will, within the meaning of the
Securities Act of 1933, acquire the Subject Shares for investment
and not with a view to the sale or distribution thereof.
6. Additional Agreements of Parties.
6.1 Changes in Directors of_____. On the Closing Date, the
Shareholders will cooperate with LSB in arranging to have
available immediately after the Closing the transfer books of ____
and its subsidiaries and affiliates and to cause such action to be
taken by the officers and directors of ____ and its subsidiaries
and affiliates as may be required in order that the Subject Shares
delivered hereunder may forthwith be transferred of record to LSB
or its designee and in order that LSB or its designee may cause
such changes to be effected in the Board of Directors and officers
of ____ and its subsidiaries and affiliates as LSB or its designee
may desire. During the period after the date of this Agreement
through the Closing Date, and upon the request of LSB, LSB shall
be allowed to appoint at least one-third of the number of
Directors of ____. During the period after the date of this
Agreement through the Closing Date, ____ shall not have more than
three (3) directors, unless authorized by LSB.
6.2 Conduct of Business. From June 30, 1994 to the Closing Date, the
Shareholders and ____ agree that ____, _____, _________ and their
respective subsidiaries and affiliates shall operate only in the
ordinary course and, in particular, shall not engage in any of the
following activities without LSB's prior written consent:
6.2.1 Cancel or permit any insurance to lapse or terminate, unless
renewed or replaced by like coverage;
6.2.2 Change its Certificate of Incorporation or Bylaws;
6.2.3 Default under any material contract, agreement, commitment
or undertaking of any kind;
6.2.4 Violate or fail to comply with all laws applicable to it or
its properties or business, to the extent that the violation
or failure to comply would have a materially adverse effect
on ____ or its subsidiaries or affiliates;
6.2.5 Commit any act or permit the occurrence of any event or the
existence of any condition prohibited by the terms of this
Agreement;
6.2.6 Enter into any material contract, agreement or other
commitment;
6.2.7 Fail to maintain and repair its assets in accordance with
good standards of maintenance and as required in any leases
or other agreements pertaining to its assets; or
6.2.8 Merge, consolidate or agree to merge or consolidate with or
into any other corporation.
6.2.9 Issue any stock to anyone other than LSB.
6.2.10 Create or assume any indebtedness.
6.2.11 Sell, encumber or otherwise dispose of, or grant any
security interest in or encumbrance on, any of their
assets.
6.2.12 Enter into or implement any employee benefit plan.
6.2.13 Enter into any employment, consulting or similar contract
for or on their behalf.
6.2.14 Increase the compensation, deferred compensation or
benefits payable to any employee, officer or commissioned
agent more than five percent (5%).
6.2.15 Take any action or, by inaction, permit any action to be
taken or event to occur, which would cause any
representation or warranty made in or pursuant to this
Agreement to be untrue as of the Closing.
6.2.16 Remove any assets other than those recorded in their
books and records as a sale in the ordinary course of
business at fair market value price.
6.2.17 Take any action that could impair the collectibility of
any of their accounts.
6.2.18 Shall not encumber, sell, convey, assign or otherwise
transfer to any person or entity whomsoever, other than
LSB, any of the shares of, or interest in, ____, or any
subsidiary or affiliate of _____ or any part or interest
therein.
6.2.19 Enter into any agreement with respect to any of the
foregoing.
6.3 Access to Information. From and after the date of this agreement,
the Shareholders, ____, ____, _________ and _____ shall give LSB,
its legal counsel, accountants and other representatives, upon
receipt of reasonable notice in writing, full and free access to
all of the employees, properties, books, contracts, commitments
and records of ____, _____, _________ and _____ in order to give
LSB the full opportunity to make an investigation of the affairs
of _____, _____, _________ and _____, as long as the investigation
occurs only during the regular business hours of ____, ____,
_________ and _____ and does not interfere unreasonably with the
operation of ____, ____, _________ and _____. Any investigation
(whether heretofore conducted or to be conducted) and the
information acquired therefrom shall not affect the
representations and warranties of Shareholders and ____ contained
in this Agreement.
6.4 Preservation of Business Organization. The Shareholders and ____
shall (i) use their best efforts to preserve for ____ and its
subsidiaries and affiliates the business organization, corporate
existence and qualification, and good standing in all states
necessary to conduct their business and own their property, (ii)
keep available to LSB the services of the respective officers and
employees of ____ and its subsidiaries and affiliates, and (iii)
preserve for LSB the existing relationship of ____ and its
subsidiaries and affiliates with all suppliers, customers and
others having business relations with ____ and its subsidiaries
and affiliates.
6.5 Additional Financial Statements. ____, not less than fifteen (15)
days of the date of this Agreement will deliver to LSB unaudited
financial statements of ____, including a Balance Sheet as of
February 28, 1995, and Statement of Operations for the eight (8)
months ended February 28, 1995 and shall continue to timely
provide the same as of the last day of each month thereafter until
Closing and shall provide such monthly financials on or before the
fifteenth (15th) day of the following month (collectively the
"Additional Unaudited Financials"). The Additional Unaudited
Financials will have been prepared in accordance with generally
accepted accounting principles, consistently applied, will have
been prepared by the management of ____ and will fairly present
the financial position and results of operations of ____ as of
February 28, 1995, and as of the end of each month thereafter.
6.6 Materiality. The parties hereto agree that for purposes of this
agreement, an occurrence, event or condition shall be deemed
"materially adverse" if it results in a reduction of stockholder's
equity of ____ or its subsidiaries or affiliates in excess of
$_________.
6.7 Confidential Information. Each Shareholder acknowledges and
agrees that ____ has developed and uses various proprietary and
confidential practices and methods of conducting business,
information and data, and computer software and data bases. In
particular, each Shareholder acknowledges that ____ has developed
specialized business methods, techniques, plans, know-how and
manners of operations; budgets, financing and accounting
techniques and projections; cost information on products and
services; advertising, proposals, applications, marketing
materials and concepts; customer files, customer lists and other
non-public information regarding customers; methods for developing
and maintaining business relationships with customers and
prospective customers; customer and prospect lists; copies of
previous insurance policies and renewal dates; procedure manuals;
and employee training and review programs and techniques. The
foregoing information, software, documents, practices, and methods
of conducting business shall hereinafter be referred to as the
"Confidential Information." Each Shareholder agrees that the
Confidential Information is a trade secret of ____, which shall
remain the sole property of ____, notwithstanding that each
Shareholder may have participated in the development of the
Confidential Information. During the term of this Agreement and
at all times thereafter for perpetuity, each Shareholder shall not
communicate, divulge, disclose, use to the detriment of ____ or
use for Shareholders own benefit or for the benefit of any other
person or entity, or misuse in any way, any Confidential
Information or any other trade secrets of ____ for any reason or
purpose whatsoever, nor shall any Shareholder make use of any
Confidential Information or any other trade secrets of ____ for
their own benefit or for the benefit of any other person or
entity.
6.7.1 Right to Injunctive and Equitable Relief. Shareholder's
obligations not to disclose or use Confidential Information
or any other trade secret of ____, are of a special and
unique character which gives them a peculiar value. LSB and
____ cannot be reasonably or adequately compensated in
damages in an action at law in the event Shareholders breach
such obligations. Therefore, Shareholders expressly agree
that LSB and _____ shall be entitled to injunctive and other
equitable relief without bond or other security and without
proof of actual damages in the event of such breach, in
addition to any other rights or remedies which they may
possess. Furthermore, the obligations of Shareholders and
the rights and remedies of LSB and/or ____ under this
Section 6.7 are cumulative and in addition to, and not in
lieu of, any obligations, rights or remedies created by
applicable law or this Agreement.
6.8 Prohibition on Interference with Contracts or Corporate
Opportunities and Covenant Not to Compete. For a period
commencing on the date of this Agreement and ending on the date
which is the later of (a) five (5) years after the Closing Date,
or (b) three (3) years after each Shareholder shall be no longer
employed by ____ or its subsidiaries or affiliates, each
Shareholder promises and agrees as follows with respect to the
United States of America or any territories or possessions of the
United States of America:
6.8.1 Contracts and Business Relationships. No Shareholder shall
directly or indirectly (either for themselves or for any
other person or entity) solicit any person or entity to
terminate or in any manner affect, interfere with, disrupt
or attempt to disrupt or interfere with any such person's or
entity's contractual and/or business relationship with ____
or its subsidiaries or affiliates, including, without
limitation, any contractual and/or business relationships
between ____ and any customer or prospective customer,
supplier, lessee or employee of ____, so long as ____
continues to engage in substantially the same or similar
business anywhere in any of the above named geographical
locations.
6.8.2 Covenant Not to Compete. ____ and each Shareholder
acknowledge that each have considerable specialized
knowledge and contacts in the business of ____ and its
subsidiaries and affiliates and that it is important to ____
and ____'s subsidiaries and affiliates that each Shareholder
agree not to compete with ____ and its subsidiaries and
affiliates in the business in which ____ and its
subsidiaries and affiliates engage in presently or in any
business that has any connection with _________________.
Each Shareholder therefore covenants that each shall not,
directly or indirectly (either as an employee, employer,
consultant, agent, principal, partner, stockholder,
corporate officer or director or in any other individual or
representative capacity) own, manage, operate, control,
engage, participate or be connected in any manner with the
ownership, management, operation or control of any person or
entity that engages in any business that is in competition
with ____ or its subsidiaries or affiliates so long as ____
continues to engage in substantially the same or similar
business anywhere in any of the above named geographical
locations, including, without limitations, any business that
uses, distributes, handles or has any connection with
_________________, provided, however, that each Shareholder
may invest in publicly traded securities of companies in
competition with _____ or its subsidiaries or affiliates or
mutual funds whose assets include securities of such
companies.
6.8.3 Corporate Opportunities. Each Shareholder shall be under an
obligation to present in writing, any business opportunity
relating to _____'s or its subsidiaries' or affiliates'
business of which he becomes aware as long as ____ continues
to engage in substantially the same or similar business
anywhere in any of the above named geographical locations.
Unless _____ or its subsidiaries or affiliates notifies such
Shareholder to the contrary in writing, _____ and/or its
subsidiaries or affiliates shall have the right to act in
its own interest and pursue any such business opportunity
and such Shareholder shall assist ____ or its subsidiaries
or affiliates as requested. Each Shareholder hereby waives
any rights to act on his own behalf with respect to such
opportunities unless ____ or its subsidiaries or affiliates
notifies him in writing that ____ will not be pursuing a
specific opportunity.
6.8.4 Severable Promises. The parties hereto intend that the
promises and agreements contained in this Section 6.8 shall
be construed as a series of separate promises for each
state, territory and possession in the United States of
America. Except for such geographic coverage, each such
separate promise shall be deemed identical in terms. It is
the desire and intent of the parties hereto that the
provisions of this Section 6.8 shall be enforced to the
fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement
is sought. If any particular provision or portion of this
Section 6.8 shall be adjudicated to be invalid or
unenforceable, this Section 6.8 shall be deemed amended to
delete therefrom such provision or portion adjudicated to be
invalid or unenforceable, such amendment to apply only with
respect to the operation of this Section 6.8 in the
particular jurisdiction in which such adjudication is made.
6.8.5 Injunctive Relief. Each Shareholder hereby acknowledges and
agrees that any default under this Section 6.8 will cause
damage to LSB and ____ in an amount difficult to ascertain.
Accordingly, in addition to any other relief to which LSB
and/or _____ may be entitled, LSB and/or ____ shall be
entitled to such injunctive relief as may be ordered by any
court of competent jurisdiction including, but not limited
to, an injunction restraining any violation of Sections
6.8.1, 6.8.2 or 6.8.3 hereof without bond or other security
and without the proof of actual damages. Each and all of
the several rights and remedies provided in this subsection,
or by law or in equity, shall be cumulative, and no one of
them shall be exclusive of any other right or remedy, and
the exercise of any one of such rights or remedies shall not
be deemed a waiver of, or an election to exercise or not
exercise, any other such right or remedy. No waiver of any
term or condition of this Section 6.8 shall be construed as
a waiver of any other term or condition; nor shall any
waiver of any default under this Section 6.8 be construed as
a waiver of any other default under this Section 6.8.
6.8.6 Consideration. Shareholders and LSB agree that $___________
of the Pre-Payments which were proportionately paid to all
Shareholders in their Participation Percentages, and
$__________ of each of the Extension Payments that may be
paid to all Shareholders in their Participation Percentages
under Section 2.2 above, and the first $__________ of the
Purchase Price that may be paid to each Shareholder at
Closing under Section 2.6 above shall constitute
consideration paid to each Shareholder for the covenants and
agreements contained in this Section 6.8.
6.8.7 Governing Law. Nothing contained in this Section 6.8 shall
be construed to require the commission of any act contrary
to law. Should there be any conflict between any provision
of this Section 6.8 and any present or future statute, law,
ordinance, regulation or other pronouncement having the
force of law, the latter shall prevail, but the provision of
this Section 6.8 affected thereby shall be curtailed and
limited only to the extent necessary to bring it within the
requirements of the law, and the remaining provisions of
this Section 6.8 shall remain in full force and effect.
Notwithstanding that the remainder of this Agreement shall
be governed by and construed in accordance with the laws of
the State of Oklahoma, this Section 6.8 is made under and
shall be construed in accordance with the laws of the State
of ____________ except when enforcement of the provisions of
this Section 6.8 is sought in another state, territory or
possession of the United States and the laws of such state,
territory or possession are more favorable to full
enforcement of all the provisions of this Section 6.8, in
which event this Section 6.8 shall be deemed made under and
shall be governed and construed in accordance with the laws
of such state, territory or possession.
6.9 Shareholder's Duties. Prior to Closing, Shareholders shall devote
their full time, attention, diligence, loyalty and efforts to the
success of ____, _____ and their subsidiaries.
6.10 Taxes and Other Obligations. Prior to Closing, ____ and
Shareholders, no later than ten (10) days after such payments
become due, shall: (a) file when due (including extensions) all
tax returns and other reports which it is required to file, pay
when due all taxes, fees, assessments and other governmental
charges against it or upon its Property, income, and franchises,
make all required withholding and other tax deposits, and
establish adequate reserves for the payment of all such items, and
shall provide to LSB, upon request, satisfactory evidence of its
timely compliance with the foregoing; and (b) pay all debt owed by
it within normal business terms and consistent with past
practices; provided, however, that ____ and Shareholders need not
pay any tax, fee, assessment, governmental charge, or debt, or
perform or discharge any other obligation, that it is contesting
in good faith by appropriate proceedings diligently pursued.
6.11 Maintenance of Property and Insurance. Prior to Closing, ____ and
Shareholders shall: (a) maintain all of_______'s and its
subsidiaries' and affiliates' property necessary and material in
its business in good operating condition and repair, ordinary wear
and tear excepted, and (b) maintain with financially sound and
reputable insurers such insurance with respect to such property
and business against casualties and contingencies of the types
(including, without limitation, business interruption, public
liability, product liability, general liability, automobile,
workers compensation and larceny, embezzlement or other criminal
misappropriation), and in the amounts as is customary for persons
of established reputation engaged in the same or a similar
business and similarly situated, naming LSB, at its request, as an
additional insured under each such policy.
6.12 Environmental Laws. Prior to Closing,_____ and Shareholders will
use all reasonable efforts to conduct ____'s and its subsidiaries'
and affiliates' business in substantial compliance with all
environmental laws applicable to it, including, without
limitation, those relating to the generation, handling, use,
storage, and disposal of hazardous and toxic wastes and
substances. ____ and Shareholders shall take prompt and
appropriate action to respond to any noncompliance with
environmental laws and shall regularly report to LSB on such
response. Without limiting the generality of the foregoing,
whenever there is potential noncompliance with any environmental
laws, ____ and Shareholders shall, at LSB's request and ____'s
expense: (a) cause an independent environmental engineer
acceptable to LSB to conduct such tests of the site where ____'s
and its subsidiaries' and affiliate's noncompliance or alleged
noncompliance with environmental laws has occurred and prepare and
deliver to LSB a report setting forth the results of such tests, a
proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof; and (b)
provide to LSB a Supplemental report of such engineer whenever the
scope of the environmental problems, or ____'s and its
subsidiaries' and affiliates' response thereto or the estimate
costs thereof, shall materially change.
6.13 Mergers, Consolidations, Acquisitions, or Sales. Prior to
Closing, neither Shareholders, ____, or ____'s subsidiaries or
affiliates shall enter into any transaction of merger,
reorganization, or consolidation or transfer, sell, assign, lease,
or otherwise dispose of all or substantially all of its property,
or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except sales in the ordinary course of its business.
6.14 Guaranties. Prior to Closing, ____ and its subsidiaries and
affiliates shall not make, issue, or become liable on any
guaranty, except guaranties in favor of LSB, and endorsements of
instruments for deposit, without LSB's written consent.
6.15 Debt. Prior to Closing, ____ and its subsidiaries and affiliates
shall not incur or maintain any debt exceeding $_________ other
than as may be permitted by LSB in writing, and other than in the
ordinary course of business.
6.16 Transactions with Affiliates. Prior to Closing, _____ shall not
sell, transfer, distribute, or pay any money or property to any
affiliate, or lend or advance money or property to any affiliate,
or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any
affiliate, or become liable on any guaranty of the indebtedness,
dividends, or other obligations of any affiliate, except nothing
contained herein shall limit or restrict ____, from (a) performing
any agreements entered into with an affiliate prior to the date
hereof, or (b) engaging in other transactions with affiliates in
the normal course of business, in amounts and upon terms disclosed
to LSB, and which are no less favorable than would be obtainable
in a comparable arm's length transaction with a third party who is
not an affiliate.
6.17 Distributions and Restricted Investments. Prior to Closing, _____
shall not (a) directly or indirectly declare or make, or incur any
liability to make, any distribution or dividends, or (b) make any
investments or loans that are not approved by LSB in writing.
6.18 Further Assurances. Both prior to and after Closing, _____ and
Shareholders shall execute and deliver, or cause to be executed
and delivered, such documents and agreements, and shall take or
cause to be taken such actions, as LSB may, from time to time,
reasonably request to carry out the terms and conditions of this
Agreement.
7. Conditions Precedent to Obligations of LSB. After the exercise of this
Option, the obligations of LSB to pay the Purchase Price and otherwise
perform under this Agreement is subject, at LSB's option, to (a) the
condition that all representations and warranties and other statements
of ____ and the Shareholders herein are, as of the Closing, true and
correct and (b) the condition that ____ perform all of its obligations
hereunder to be performed at or prior to the Closing, and (c) the
following additional conditions (collectively, "LSB'S Conditions
Precedent"):
7.1 Certificates. There shall have been furnished or caused to be
furnished to LSB at the Closing, certificates of appropriate
officers of _____ and each Shareholder in form and substance
satisfactory to LSB as to the continuing accuracy at and as of the
Closing of the representations and warranties of ____ and the
Shareholders and to the performance by ____ and the Shareholders
of all their obligations hereunder to be performed at or prior to
the Closing, together with such other certificates as LSB may
reasonably request in connection with the Closing.
7.2 Delivery of Subject Shares. Certificates evidencing the Subject
Shares, duly executed for transfer to LSB or its designee shall
have been delivered to LSB and duly transferred to it on the books
of _____.
7.3 Board of Directors. The members of the Board of Directors of ____
and its subsidiaries and affiliates shall resign their
directorships effective as of the Closing, and LSB's designees
shall have been elected to such Board of Directors effective as of
the Closing.
7.4 Counsel to Buyer. All corporate proceedings and related matters
in connection with the organization and good standing of ____ and
its subsidiaries and affiliates the execution and delivery of this
Agreement and the consummation of the transactions herein
contemplated, and the performance by it of its obligations
hereunder shall have been satisfactory to counsel to LSB and such
counsel shall have been furnished with such papers and information
as he may reasonably have requested to enable him or her to pass
on the matters referred to in this section.
7.5 Opinion of Counsel to_____. Counsel to ____ shall have furnished
to LSB their written opinion in form satisfactory to LSB to the
effect that:
7.5.1 _____, _________ and ________ have been duly incorporated
and are validly existing as a corporation in good standing
under the laws of the State of ___________;
7.5.2 This agreement has been validly authorized, executed and
delivered on the part of ____ and is a valid and binding
agreement of _____ in accordance with its terms;
7.5.3 All of the issued and outstanding shares of ____, including
the Subject Shares, have been duly authorized, validly
issued and are fully paid, nonassessable shares.
7.5.4 ____ has no responsibility, obligation or liability to pay
any debts or obligations of _____ , including, without
limitation, any debt to any lender of _____ or to any
partner of ______ related to the ___________ project.
7.6 No Litigation. No suit or action, investigation, inquiry or
request for information by any administrative agency, governmental
body or private party, and no legal or administrative proceeding
shall have been instituted or threatened which questions or
reasonably appears to portend subsequent questioning of the
validity or legality of this agreement or the transactions
contemplated by this agreement, or which materially and adversely
affects or questions the title of ____ or its subsidiaries or
affiliates to any of its properties or its ability to conducts its
business.
7.7 Consents. All consents from third parties required to consummate
the transactions provided for in this agreement shall have been
obtained.
7.8 No Change. There shall have been no material adverse change in
the condition or obligations of ____ or its subsidiaries or
affiliates (financial or otherwise).
7.9 Loss. _____ or its subsidiaries or affiliates will not have
sustained a substantial loss (whether or not insured) as a result
of fire, flood or other casualty which in the sole judgment of LSB
affects materially or interferes with the continuous conduct of
its business.
7.10 Subsequent Information. All exhibits, lists, contracts and other
documents furnished to LSB after December 31, 1994 by Shareholders
or ____ or discovered by LSB, including copies of pleadings and
rulings relating to litigation and administrative proceedings, and
any other information relating to the business and affairs of ____
or its subsidiaries or affiliates shall be acceptable to LSB.
7.11 Loan Agreement. The Loan Agreement and the Loan Documents (as
that term is defined in the Loan Agreement) have been fully
executed and no Default or Event of Default exists under the Loan
Agreement or the Loan Documents.
7.12 Termination of Shareholders' Agreement. On or before Closing,
that certain Shareholders' Agreement dated April 11, 1991 by and
between ________, _______, _______ and ____ shall be terminated in
writing and of no force or effect.
Notwithstanding any knowledge by LSB of any failure of any of LSB's
Conditions Precedent, no waiver of any of LSB's Conditions Precedent
shall be inferred from LSB's exercise of the Option granted herein or
LSB's execution of this Agreement.
8. Conditions for the Benefit of the Shareholders. The obligations of the
Shareholders hereunder at the Closing shall be subject, at their option
to the following conditions:
8.1 Representations and Warranties. All representations and
warranties and other statements of LSB herein are at and as of the
Closing materially true and correct.
8.2 Performance of Obligations. LSB shall have performed all of its
obligations hereunder to be performed at or prior to the Closing.
8.3 No Suits. At the Closing Date, there shall not have been
instituted any suit, action, or other proceeding or any
investigation in any court or governmental agency in which it is
sought to restrain or prohibit the consummation of the
transactions contemplated by this Agreement.
9. Survival of Representations and Warranties. Except the representations
and warranties of LSB (which shall not survive the Closing), all of the
representations and warranties of ____ and the Shareholders hereunder
shall survive the Closing for a period of one (1) year from the Closing
Date; provided, however, ____ and the Shareholders shall have no
liability with respect thereto unless LSB's loss occasioned thereby
exceeds $____________, and provided further, representations and
warranties regarding the payment of taxes shall remain in force and
effect as long as liability therefor remains in effect.
10. Expenses. Except as otherwise herein provided, each party hereto will
bear and pay its or his own expenses of negotiating and consummating the
transactions contemplated hereby.
11. Notices.
11.1 All notices, requests, demands, instructions or other
communications called for hereunder or contemplated hereby, shall
be in writing, shall be deemed to have been given if delivered in
person, by overnight carrier or facsimile, or if mailed, by
registered or certified mail, return receipt requested, to the
parties at the addresses set forth below. The date of delivery in
person, by overnight carrier or facsimile shall be the date of
receiving the notice or if any notice, request, demand,
instruction or other communication is given or made by mail in the
manner prescribed above such shall be deemed to have been given
three (3) business days after the date of mailing. Any party may
change the address to which notices are given, by giving notice in
the manner herein provided.
11.1.1 Notices to LSB shall be addressed as follows:
LSB Holdings, Inc.
16 South Pennsylvania
Oklahoma City, Oklahoma 73107
Attention: President
with a copy to:
LSB Holdings, Inc.
16 S. Pennsylvania
Oklahoma City, OK 73107
Attention: Office of General Counsel
11.1.2 Notices to ____ shall be addressed as follows:
_________________________
_________________________
_________________________
_________________________
11.1.3 Notices to the Shareholders shall be addressed as
follows:
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
11.2 The mailing of any notice, request, demand, instruction or other
communication hereunder shall be accomplished by placing such
writing in an envelope addressed to the party entitled thereto as
provided above and deposited in the United States mail, properly
stamped for delivery as a registered or certified letter.
12. LSB's Right of First Refusal on Non-Subject Shares. Prior to Closing,
Shareholders agree that they shall not encumber, sell, convey, assign or
otherwise transfer to any third party or entity whomsoever, the shares
of ____ owned by them, or any part or interest therein. If, at any time
after the Closing, or from time to time after the Closing, should any
Shareholder elect to sell, convey, assign, or otherwise transfer to any
third party or entity whomsoever the shares of ____ owned by them that
are not subject to this Agreement as part of the Subject Shares ("Non-
Subject Shares"), or any part or interest therein, each Shareholder
hereby grants to LSB the first and preferential right and option to
purchase fee simple title to the Non-Subject Shares or to the part or
interest therein which such Shareholder intends to sell, convey, assign,
or otherwise transfer, under the same terms and conditions proposed by
or to such third party or entity as contained in a bona fide offer or
conditional acceptance of offer from such third party or entity. With
respect to any proposed sale, conveyance, assignment, contract or other
transfer of the Non-Subject Shares after the Closing, each Shareholder
seeking to sell Non-Subject Shares shall comply with the following
requirements:
12.1 Notice by Shareholder. Each Shareholder seeking to sell Non-
Subject Shares shall give LSB written notification of such
proposal, offer or conditional acceptance of any such offer that
has been made and accepted (subject to Buyer's first and
preferential right and option to purchase), and each Shareholder
seeking to sell Non-Subject Shares shall attach to the said
notification the tendered contract, or a true copy thereof, that
contains all necessary elements and information to constitute a
legally binding contract obligating the transferee to perform,
said contract being signed and acknowledge by said transferee, who
is ready, willing and able to perform.
12.2 Transfer of Right of Refusal. LSB shall have the right to
transfer, convey and assign to any third party whomsoever such
first and preferential right and option to purchase the Non-
Subject Shares, and the holder of such right of first refusal by
any assignment shall have the full right, power and authority to
exercise on its own behalf or for the account of itself or its
designee or assignee, any and all rights and privileges incident
thereto.
12.3 Exercise of Right. LSB shall notify in writing within fifteen
(15) business days of said written notification from each
Shareholder seeking to sell Non-Subject Shares as to LSB's
election to exercise its first and preferential right and option
to purchase the Non-Subject Shares. If LSB has not given said
notification within fifteen (15) business days, each Shareholder
seeking to sell Non-Subject Shares may proceed to close the sale
or other transfer to said third party or entity, provided that
said sale or other transfer is consummated at the same sum and
under the same terms and conditions contained in the contract
attached to said notification and on the closing dates set out
therein. If LSB (or its designee or assignee) should elect to
exercise its option to purchase, by written notification to each
Shareholder seeking to sell Non-Subject Shares within said fifteen
(15) business days, the transfer to LSB shall be consummated on
the closing date and under the same terms and conditions contained
in the contract from said third party or entity.
12.4 Continuing Right. The first and preferential right and option to
purchase shall be effective and shall apply at all times to any
and all proposed sales, conveyances, assignments, contracts and
other transfers by any Shareholder of their Non-Subject Shares or
any interest therein for a period of ten (10) years from the date
of the Closing. Any sale, conveyance, assignment, contract or
transfer by any Shareholder of their Non-Subject Shares or any
interest therein within ten (10) years from the date of the
Closing shall be made expressly subject to the provisions of this
right of first refusal. Such first and preferential right and
option to purchase shall terminate on the date which is ten (10)
years from the date of the Closing with respect to rights which
have not accrued by that date.
13. LSB's Sale of Stock. If, LSB should elect to sell the shares of ____
stock to be acquired by LSB under this Agreement (collectively the
"LSB's Shares"), or any part or interest therein, LSB agrees that it
shall provide each Shareholder that may then still own any of the Non-
Subject Shares the opportunity for their Non-Subject Shares to be
included in any such sale on the same terms and conditions afforded to
LSB to the extent of their Sharing Percentage (as that term is defined
below). The "Sharing Percentage" of any Shareholder shall mean that
percentage of the total number of Shares of ____ Stock to be sold which
is to be contributed by that particular Shareholder, which percentage
shall be the same percentage that the number of Non-Subject Shares owned
by that particular Shareholder bears to the total number of all LSB's
Shares and Non-Subject Shares then outstanding. With respect to any
proposed sale of LSB's Shares, each Shareholder and LSB shall comply
this the following requirements:
13.1 Notice. LSB shall give each Shareholder then owning any of the
Non-Subject Shares, written notification of such proposal, offer
or conditional acceptance that has been made and LSB shall attach
to the said notification the tendered contract, or a true copy
thereof.
13.2 Exercise of Right. Each Shareholder shall notify LSB in writing
within fifteen (15) business days of said written notification as
to their election to exercise their right for their Non-Subject
Shares to be included in the sale. If any Shareholder has not
given said notification within fifteen (15) business days, LSB may
proceed to close the sale without participation of that
Shareholder, provided that said sale or other transfer is
consummated at the same sum and under the same terms and
conditions contained in the contract attached to said
notification.
13.3 Continuing Right. The right for the Non-Subject Shares to be
included in any such sale shall be effective and shall apply at
all times to any and all proposed sales by LSB of LSB's Shares or
any interest therein for a period of ten (10) years from the date
of the Closing and such right shall terminate on the date which is
ten (10) years from the date of the Closing with respect to rights
which have not accrued by that date. The rights provided to
Shareholders under this Section 13 are personal only to the
Shareholders and may not be assigned or transferred to any allowed
purchaser of the Non-Subject Shares.
14. Miscellaneous.
14.1 Full Agreement - No Oral Modification. This Agreement embodies
all representations, warranties and agreements of the parties and
supersedes all negotiations and agreements prior to the execution
of this Agreement. This Agreement, and any provision under this
Agreement, may not be altered, modified or waived except by an
instrument in writing signed by the parties.
14.2 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective
successors and assigns; provided, however, that no assignment of
this Agreement shall be made to any party other than any of LSB's
subsidiaries or affiliates without the written consent of the
other party, which consent shall not be unreasonably withheld.
14.3 Governing Law. This Agreement (except Section 6.8 above) shall be
governed by and construed in accordance with the laws of the State
of Oklahoma applicable to contracts made and performed entirely
therein.
14.4 Counterparts. This Agreement may be executed in any number of
counterparts, which taken together shall constitute one and the
same instrument, and each of which shall be considered an original
for all purposes.
14.5 Section Headings. The section headings contained in this
Agreement are for convenience and reference only and shall not in
any way affect the meaning or interpretation of this Agreement.
14.6 Severability. All Agreements and covenants contained herein are
severable, and in the event any of them should be held to be
invalid by a court of competent jurisdiction, this Agreement shall
be interpreted and enforced as if such invalid Agreements or
covenants were not contained herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
By:_____________________________________
_______________________, President
LSB HOLDINGS, INC.
By:___________________________________
________________________, President
___________________________________
_____________________, individually
___________________________________
_____________________, individually
___________________________________
_____________________, individually
Attachments:
Exhibit "A" - Statement of Net Revenue Expected from ____________ and
_____ Projects