LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made this ______ day of ______________,
199__, between LSB INDUSTRIES, INC., a Delaware corporation,
hereinafter called the "Company", and __________________________,
hereinafter called "Optionee";
W I T N E S S E T H:
In consideration of the mutual covenants and conditions
herein set forth and for good and valuable consideration, the
Company and the Optionee agree as follows:
1. Recitations. The Company is presently employing the
Optionee as its employee and considers it desirable and in
its best interest that Optionee be given an inducement to
acquire an initial or additional proprietary interest in the
Company as an added incentive to advance the interest of the
Company in the form of this option to purchase certain
shares of the Company's common stock, par value $.10 per
share ("Common Stock"), which option hereunder is granted
subject to and in accordance with the Company's 1993 Stock
Option and Incentive Plan, as amended prior to this date
(the "Plan"). The capitalized terms herein shall have the
same meaning as set forth in the Plan, unless otherwise
indicated.
2. Employment. This Agreement shall not impose upon the
Company any obligation to retain Optionee in its employ or
to retain Optionee at his present salary or position. If
Optionee shall leave the employ of the Company for any
reason, the option granted herein shall immediately
terminate, except as otherwise expressly provided in Section
4 hereof.
3. Grant of Option. The Company hereby grants to Optionee
as of the close of business on this _____ day of
____________________, 199__ (the "Date of Grant"), the
right, privilege and option to purchase an aggregate of
_______________ shares of its Common Stock for a price of
$___________ per share (the "Exercise Price"), under and
subject to the terms and conditions of the Plan to which
reference is hereby made and a copy of which is attached to
and made a part hereof, such Exercise Price being one
hundred percent (100%) of the Fair Market Value of the
Common Stock as determined pursuant to the Plan. Such
option is hereinafter referred to as the "Option" and the
shares of Common Stock purchasable upon the exercise of the
Option are hereinafter sometimes referred to as the "Option
Shares". The Option is intended by the parties hereto to be
an incentive stock option, as such term is defined under
Section 422 of the Internal Revenue Code of 1986, as
amended.
4. Exercise of Stock Options.
4.1 As an Employee. If the Option has not been
terminated pursuant to Section 7 hereof, the
Option granted herein may be exercised by Optionee
as hereinafter provided. Unless waived by the
Board of Directors or a committee thereof that
administers the Plan (the Board of Directors or a
committee thereof is referred to herein as the
"Committee"), the Optionee, while in the
employment of the Company, may exercise the option
as follows:
4.1.1 at any time after one (1) year of continuous
employment by the Optionee from the Date of
Grant, the Option may be exercised in whole
or in part as to not more than twenty percent
(20%) of the total number of Option Shares;
4.1.2 at any time after two (2) years of continuous
employment by the Optionee from the Date of
Grant, the Option may be exercised, in whole
or in part, as to an additional twenty
percent (20%) of the total number of Option
Shares;
4.1.3 at any time after three (3) years of
continuous employment by the Optionee from
the Date of Grant, the Option may be exer-
cised, in whole or in part, as to an
additional thirty percent (30%) of the total
number of Option Shares;
4.1.4 at a time after four (4) years of continuous
employment by the Optionee from the Date of
Grant, the Option may be exercised, in whole
or in part, as to all of the Option Shares
remaining subject to the Option.
The right to exercise the Option shall be cumulative.
Employment by a Subsidiary of the Company shall be
considered employment by the Company. The Committee
shall have the sole right to accelerate the time when
Optionee will become entitled to exercise the Option
pursuant to the terms hereof and the Plan.
4.2 As a Former Employee. The Option granted herein
may not be exercised after the Optionee is no
longer an employee of the Company or any
Subsidiary; except that if the Optionee ceases to
be an employee on account of physical or mental
disability as defined in Section 22(e)(3) of the
Code ("Former Employee"), he may exercise the
option within twelve (12) months after the date on
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which he ceased to be an employee, for the number
of Option Shares for which he could have exercised
at the time he ceased to be an employee. In no
event may the Option be exercised after the
expiration of ten (10) years from the Date of
Grant.
4.3 In Case of Death. If the Optionee dies prior to
the termination of this Option, the Option may be
exercised within one (1) year after the death of
the Optionee by the personal representative of his
estate, or by a person who acquired the right to
exercise the Option by bequest, inheritance, or by
reason of the death of the Optionee, provided
that:
4.3.1 the Optionee died while an employee of the
Company or a Subsidiary; or
4.3.2 the Optionee ceased to be an employee of the
Company or a Subsidiary on account of
physical or mental disability and died within
three (3) months after the date on which he
ceased to be such employee.
The Option may be exercised only as to the number of
shares for which the Optionee could have exercised at
the time the Optionee died. In no event may the Option
be exercised after the expiration of ten (10) years
from the Date of Grant.
4.4 Continuous Employment. The Committee shall
decide, in its sole and absolute discretion, to
what extent leaves of absence for government or
military service, illness, temporary disability or
other reasons, shall not interrupt continuous
employment, which decision shall be binding for
the purpose of this Agreement.
4.5 Acceleration upon Change in Control. The Option
shall become immediately exercisable in full,
notwithstanding the four (4) year vesting schedule
provided in Section 4.1, upon a change in control
of the Company. A "change in control" shall be
defined as set forth in the Plan.
5. Notice of Exercise and Payment of Exercise Price.
Subject to the terms of this Agreement, the Option shall be
exercised by giving written notice of such exercise to the
Company identifying the Option being exercised and speci-
fying the number of Option Shares then being purchased.
Such notice shall be accompanied by payment in full of the
Exercise Price, which shall be in cash or in whole shares of
Common Stock which are already owned by the Optionee, or
partly in cash and partly in such Common Stock. Cash
payments shall be made by wire transfer, certified check,
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bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company
shall not be required to deliver certificates for shares of
Common Stock with respect to which the Option is exercised
until the Company has confirmed the receipt of good and
valuable funds in payment of the purchase price thereof.
Payments in the form of Common Stock (which shall be valued
at the Fair Market Value of a share of Common Stock on the
date of exercise) shall be made by delivery of stock
certificates in negotiable form (in form and content
satisfactory to the Company) which are effective to transfer
good and valid title thereto to the Company, free of any
liens or encumbrances.
6. Issuance of Shares. As soon as practicable after its
receipt of such notice and payment, the Company shall cause
one or more certificates for the shares so purchased to be
delivered to the Optionee or his or her estate, as the case
may be; provided, however, the obligation of the Company to
deliver such certificates shall be subject to the Company's
compliance with any applicable federal and state securities
laws as provided in Section 10 hereof.
7. Termination of Option. This Agreement and the Option
granted herein, to the extent not theretofore exercised,
shall terminate and become null and void immediately upon
the earlier of the following to occur:
7.1 Option No Longer Exercisable. At such time as the
Option is no longer exercisable pursuant to the
terms of Section 4 hereof;
7.2 Surrender of Options. Upon the Optionee's
surrender to the Company for cancellation of this
Agreement and the Option granted herein; and,
7.3 Expiration of Term. Upon the tenth (10th)
anniversary of the Date of Grant.
8. Restrictions. The Option will not be transferrable
otherwise than by will or the laws of descent and
distribution, and the Option may be exercised, during the
lifetime of the Optionee, only by Optionee. More
particularly (but without limiting the generality of the
foregoing), the Option may not be assigned, transferred
(except as provided above), pledged, or hypothecated in any
way, will not be assignable by operation of law and will not
be subject to execution, attachment, or similar process.
Any attempted assignment, transfer, pledge, hypothecation,
or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment
or similar process upon the Option, will be null and void
and without effect.
9. Adjustments. Pursuant to the terms of the Plan, in the
event of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock
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split, or other change in the corporate structure or
capitalization affecting the Corporation's common stock, a
fair and equitable adjustment will be made in the number,
kind, option price, etc., of shares subject to the Option to
the extent that the proportionate interest of the holder of
the Option will be maintained as before the occurrence of
such event.
10. Compliance with Law and Approval of Regulatory Bodies.
No shares of Common Stock will be issued or, in the case of
treasury shares, transferred, upon exercise of the Option,
except in compliance with all applicable federal and state
laws and regulations and in compliance with rules of stock
exchanges on which the Company's shares may be listed. Any
share certificate issued to evidence shares as to which the
Option is exercised shall bear such restrictive legends and
statements as the Committee shall deem advisable to assure
compliance with federal and state laws and regulations. No
shares of Common Stock will be issued or, in the case of
treasury shares, transferred, upon exercise of the Option
until the Company has obtained such consent or approval from
regulatory bodies, federal or state, having jurisdiction
over such matters as the Committee may deem advisable.
11. Investment Representations. Optionee, or his personal
representative, may be required by the Committee to give a
written representation that the shares subject to the Option
will be acquired, or are being acquired, as the case may be,
for investment and not with a view to a public distribution
of them; provided, however, that the Committee in its sole
discretion, may release the Optionee, or his personal
representative, from such investment representations either
prior to or subsequent to the exercise of the Option.
12. Rights as a Shareholder. Optionee shall have no
rights as a shareholder with respect to any shares covered
by this Agreement or the Option until the date of issuance
of a stock certificate to him for such shares. No
adjustment shall be made for dividends or other rights for
which the record date is prior to the date such stock
certificate is issued.
13. Binding Effect. This Agreement shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
14. Incorporation by Reference; Interpretation. The Option
is granted pursuant to the terms of the Plan, the terms of
which are incorporated herein by reference, and the Option
and this Agreement shall be interpreted in accordance with
the Plan. The Committee shall construe and interpret the
terms and provisions of the Plan and this Agreement and
shall at its discretion make general and special rules and
regulations for administering the Plan, which construction,
interpretation, rules and regulations shall be binding and
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conclusive upon all persons granted an option pursuant to
the Plan and this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed effective as of the Date of Grant.
LSB INDUSTRIES, INC.
ATTEST:
_________________________ By:___________________________
Secretary Name:______________________
Title:_____________________
(SEAL)
"Optionee"
______________________________
(Signature)
______________________________
(Please Print Name)
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