LSB INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made this ______ day of ______________,
199__, between LSB INDUSTRIES, INC., a Delaware corporation,
hereinafter called the "Company", and ** 10% SHAREHOLDER **, hereinafter
called "Optionee";
W I T N E S S E T H:
In consideration of the mutual covenants and conditions
herein set forth and for good and valuable consideration, the
Company and the Optionee agree as follows:
1. Recitations. The Company is presently employing the Optionee
as its employee and considers it desirable and in its best interest
that Optionee be given an inducement to acquire an initial or
additional proprietary interest in the Company as an added
incentive to advance the interest of the Company in the form of
this option to purchase certain shares of the Company's common
stock, par value $.10 per share ("Common Stock"), which option
hereunder is granted subject to and in accordance with the
Company's 1993 Stock Option and Incentive Plan, as amended prior to
this date (the "Plan"). The capitalized terms herein shall have
the same meaning as set forth in the Plan, unless otherwise
indicated.
2. Employment. This Agreement shall not impose upon the Company
any obligation to retain Optionee in its employ or to retain
Optionee at his present salary or position. If Optionee shall leave
the employ of the Company for any reason, the option granted herein
shall immediately terminate, except as otherwise expressly provided
in Section 4 hereof.
3. Grant of Option. The Company hereby grants to Optionee as of
the close of business on this _____ day of ____________________,
199__ (the "Date of Grant"), the right, privilege and option to
purchase an aggregate of _______________ shares of its Common Stock
for a price of $___________ per share (the "Exercise Price"), under
and subject to the terms and conditions of the Plan to which
reference is hereby made and a copy of which is attached to and
made a part hereof, such Exercise Price being one hundred ten
percent (110%) of the Fair Market Value of the Common Stock as
determined pursuant to the Plan. Such option is hereinafter
referred to as the "Option" and the shares of Common Stock
purchasable upon the exercise of the Option are hereinafter
sometimes referred to as the "Option Shares". The Option is
intended by the parties hereto to be an incentive stock option, as
such term is defined under Section 422 of the Internal Revenue Code
of 1986, as amended.
4. Exercise of Stock Options.
4.1 As an Employee. If the Option has not been terminated
pursuant to Section 7 hereof, the Option granted herein
may be exercised by Optionee as hereinafter provided.
Unless waived by the Board of Directors or a committee
thereof that administers the Plan (the Board of
Directors or a committee thereof is referred to herein
as the "Committee"), the Optionee, while in the
employment of the Company, may exercise the option as
follows:
4.1.1 at any time after one (1) year of continuous
employment by the Optionee from the Date of
Grant, the Option may be exercised in whole or
in part as to not more than twenty percent
(20%) of the total number of Option Shares;
4.1.2 at any time after two (2) years of continuous
employment by the Optionee from the Date of
Grant, the Option may be exercised, in whole
or in part, as to an additional twenty percent
(20%) of the total number of Option Shares;
4.1.3 at any time after three (3) years of
continuous employment by the Optionee from the
Date of Grant, the Option may be exercised, in
whole or in part, as to an additional thirty
percent (30%) of the total number of Option
Shares;
4.1.4 at a time after four (4) years of continuous
employment by the Optionee from the Date of
Grant, the Option may be exercised, in whole
or in part, as to all of the Option Shares
remaining subject to the Option.
The right to exercise the Option shall be cumulative.
Employment by a Subsidiary of the Company shall be
considered employment by the Company. The Committee
shall have the sole right to accelerate the time when
Optionee will become entitled to exercise the Option
pursuant to the terms hereof and the Plan.
4.2 As a Former Employee. The Option granted herein may
not be exercised after the Optionee is no longer an
employee of the Company or any Subsidiary; except that
if the Optionee ceases to be an employee on account of
physical or mental disability as defined in Section
22(e)(3) of the Code ("Former Employee"), he may
exercise the option within twelve (12) months after the
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date on which he ceased to be an employee, for the
number of Option Shares for which he could have
exercised at the time he ceased to be an employee. In
no event may the Option be exercised after the
expiration of five (5) years from the Date of Grant.
4.3 In Case of Death. If the Optionee dies prior to the
termination of this Option, the Option may be exercised
within one (1) year after the death of the Optionee by
the personal representative of his estate, or by a
person who acquired the right to exercise the Option by
bequest, inheritance, or by reason of the death of the
Optionee, provided that:
4.3.1 the Optionee died while an employee of the
Company or a Subsidiary; or
4.3.2 the Optionee ceased to be an employee of the
Company or a Subsidiary on account of physical
or mental disability and died within three (3)
months after the date on which he ceased to be
such employee.
The Option may be exercised only as to the number of
shares for which the Optionee could have exercised at
the time the Optionee died. In no event may the Option
be exercised after the expiration of five (5) years
from the Date of Grant.
4.4 Continuous Employment. The Committee shall decide, in
its sole and absolute discretion, to what extent leaves
of absence for government or military service, illness,
temporary disability or other reasons, shall not
interrupt continuous employment, which decision shall
be binding for the purpose of this Agreement.
4.5 Acceleration upon Change in Control. The Option shall
become immediately exercisable in full, notwithstanding
the four (4) year vesting schedule provided in Section
4.1, upon a change in control of the Company. A
"change in control" shall be defined as set forth in
the Plan.
5. Notice of Exercise and Payment of Exercise Price. Subject to
the terms of this Agreement, the Option shall be exercised by
giving written notice of such exercise to the Company identifying
the Option being exercised and specifying the number of Option
Shares then being purchased. Such notice shall be accompanied by
payment in full of the Exercise Price, which shall be in cash or in
whole shares of Common Stock which are already owned by the
Optionee, or partly in cash and partly in such Common Stock. Cash
payments shall be made by wire transfer, certified check, bank
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check or personal check, in each case payable to the order of the
Company; provided, however, that the Company shall not be required
to deliver certificates for shares of Common Stock with respect to
which the Option is exercised until the Company has confirmed the
receipt of good and valuable funds in payment of the purchase price
thereof. Payments in the form of Common Stock (which shall be
valued at the Fair Market Value of a share of Common Stock on the
date of exercise) shall be made by delivery of stock certificates
in negotiable form (in form and content satisfactory to the
Company) which are effective to transfer good and valid title
thereto to the Company, free of any liens or encumbrances.
6. Issuance of Shares. As soon as practicable after its receipt
of such notice and payment, the Company shall cause one or more
certificates for the shares so purchased to be delivered to the
Optionee or his or her estate, as the case may be; provided,
however, the obligation of the Company to deliver such certificates
shall be subject to the Company's compliance with any applicable
federal and state securities laws as provided in Section 10 hereof.
7. Termination of Option. This Agreement and the Option granted
herein, to the extent not theretofore exercised, shall terminate
and become null and void immediately upon the earlier of the
following to occur:
7.1 Option No Longer Exercisable. At such time as the
Option is no longer exercisable pursuant to the terms
of Section 4 hereof;
7.2 Surrender of Options. Upon the Optionee's surrender to
the Company for cancellation of this Agreement and the
Option granted herein; and,
7.3 Expiration of Term. Upon the fifth (5th) anniversary
of the Date of Grant.
8. Restrictions. The Option will not be transferrable otherwise
than by will or the laws of descent and distribution, and the
Option may be exercised, during the lifetime of the Optionee, only
by Optionee. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned,
transferred (except as provided above), pledged, or hypothecated in
any way, will not be assignable by operation of law and will not be
subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other
disposition of the Option contrary to the provisions hereof, and
the levy of any execution, attachment or similar process upon the
Option, will be null and void and without effect.
9. Adjustments. Pursuant to the terms of the Plan, in the event
of a merger, consolidation, reorganization, recapitalization, stock
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dividend, stock split, reverse stock split, or other change in the
corporate structure or capitalization affecting the Corporation's
common stock, a fair and equitable adjustment will be made in the
number, kind, option price, etc., of shares subject to the Option
to the extent that the proportionate interest of the holder of the
Option will be maintained as before the occurrence of such event.
10. Compliance with Law and Approval of Regulatory Bodies. No
shares of Common Stock will be issued or, in the case of treasury
shares, transferred, upon exercise of the Option, except in
compliance with all applicable federal and state laws and
regulations and in compliance with rules of stock exchanges on
which the Company's shares may be listed. Any share certificate
issued to evidence shares as to which the Option is exercised shall
bear such restrictive legends and statements as the Committee shall
deem advisable to assure compliance with federal and state laws and
regulations. No shares of Common Stock will be issued or, in the
case of treasury shares, transferred, upon exercise of the Option
until the Company has obtained such consent or approval from
regulatory bodies, federal or state, having jurisdiction over such
matters as the Committee may deem advisable.
11. Investment Representations. Optionee, or his personal
representative, may be required by the Committee to give a written
representation that the shares subject to the Option will be
acquired, or are being acquired, as the case may be, for investment
and not with a view to a public distribution of them; provided,
however, that the Committee in its sole discretion, may release the
Optionee, or his personal representative, from such investment
representations either prior to or subsequent to the exercise of
the Option.
12. Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any shares covered by this Agreement or
the Option until the date of issuance of a stock certificate to him
for such shares. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date such
stock certificate is issued.
13. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties
hereto.
14. Incorporation by Reference; Interpretation. The Option is
granted pursuant to the terms of the Plan, the terms of which are
incorporated herein by reference, and the Option and this Agreement
shall be interpreted in accordance with the Plan. The Committee
shall construe and interpret the terms and provisions of the Plan
and this Agreement and shall at its discretion make general and
special rules and regulations for administering the Plan, which
construction, interpretation, rules and regulations shall be
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binding and conclusive upon all persons granted an option pursuant
to the Plan and this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed effective as of the Date of Grant.
LSB INDUSTRIES, INC.
ATTEST:
____________________________ By:___________________________
Secretary Name:______________________
Title:_____________________
(SEAL)
"Optionee"
______________________________
(Signature)
______________________________
(Please Print Name)
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