Item
1. Description of Registrant’s Securities to be
Registered.
On
December 2, 2008, the Board of Directors of LSB Industries, Inc. (the “Company”)
renewed and amended its existing preferred share rights plan (the “Terminating
Plan”), which expires as of January 5, 2009, through the execution and delivery
of a new preferred share rights plan in the form of a new Renewed Rights
Agreement, dated December 2, 2008, between the Company and UMB Bank, n.a., as
rights agent (“Renewed Rights Agreement”). Pursuant to the Renewed
Rights Agreement, the Company’s Board of Directors declared a dividend
distribution of one right (individually, the “Right” and collectively, the
“Rights”) for each outstanding share of the Company’s Common Stock, par value
$.10 per share (the “Common Stock”), to stockholders of record on January 5,
2009 (the “Record Date”). The Renewed Rights Agreement also
contemplates the issuance of one Right for each share of Common Stock which is
issued by the Company between the Record Date and the Distribution Date (or
earlier redemption or termination of the Rights).
The terms
of the Renewed Rights Agreement are substantially similar to the terms of the
Terminating Plan, with certain exceptions. The complete description
of the terms of the Rights is set forth in the Renewed Rights
Agreement. Capitalized terms used and not defined herein will have
the respective meaning described to such terms in the Renewed Rights
Agreement.
The
Rights are not exercisable until the Distribution Date. The Rights
and the Renewed Rights Agreement will expire on January 4, 2019 (the “Final
Expiration Date”), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed by the Company, in each case, as described
below.
Rights
Dividend
Pursuant
to the terms of the Renewed Rights Agreement, the Board of Directors of the
Company declared a dividend distribution of one Right for each outstanding share
of Common Stock of the Company to stockholders of record on January 5, 2009 (the
“Record Date”). The Renewed Rights Agreement also contemplates the
issuance of one Right for each share of Common Stock which is issued by the
Company between the Record Date and the Distribution Date (or earlier redemption
or termination of the Rights).
Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series 4 Junior Participating Preferred Stock, no
par value (the “Preferred Shares”), of the Company at a purchase price of $47.75
(the “Purchase Price”), subject to adjustment.
Rights
Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of the Preferred Shares of the Company at a purchase
price of $47.75 per one-one hundredth of a Preferred Share (the “Purchase
Price”), subject to adjustment. The description of the Rights are set
forth in the Renewed Rights Agreement.
Distribution
Date, Acquiring Persons and Excluded Persons
Until the
earlier of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons of such person (an “Acquiring Person”) have
acquired beneficial ownership of 15% or more of the Company’s outstanding Common
Stock (except pursuant to a Permitted Offer, as defined below, or by Excluded
Persons, as defined below) or (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors prior to such time as any
person becomes an Acquiring Person) following the commencement of, or
announcement of an intention (which intention remains in effect for five
business days after the announcement) to make a tender or exchange offer, the
consummation of which would result in a person or group of affiliated or
associated persons of such person becoming an Acquiring Person of 15% or more of
the Company’s Common Stock, except pursuant to a Permitted Offer or by an
Excluded Person (the earlier of such dates being called the “Distribution
Date”), the Rights are not exercisable and are not transferable apart from the
Company’s Common Stock. Under the Renewed Rights Plan a person is
also deemed to beneficially own shares of the Company’s Common Stock that are
the subject of a derivative transaction entered into, or a derivative security
acquired by, such person, which gives such person the economic equivalent of
ownership. As soon as practicable after the Rights become
exercisable, separate Rights certificates would be issued and the Rights would
become transferable apart from the Company’s Common Stock. The Rights
held by the person or group who triggers the Rights shall be null and void and
are not exercisable.
The
Rights will not become exercisable or non-redeemable based on the Common Stock
held or beneficially owned by any of the following persons or entities
(“Excluded Persons”):
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any
subsidiary of the Company;
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any
employee benefit plan of the Company or its
subsidiaries;
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any
entity holding Common Stock for or pursuant to any employee benefit plan
of the Company or its subsidiaries;
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any
member of the “Golsen Group”, which are (i) Jack E. Golsen, (ii) his wife
and children, (iii) the spouse and children of Jack E. Golsen’s children,
(iv) the estate, executor administrator, guardian or custodian of person’s
described in (i), (ii) and (iii) above, (v) any corporation, partnership,
limited liability company, other entity or trust of which at least 80% of
the voting stock, membership or equity interest (or, as to trusts,
presumptive interest in principle and income) is beneficially owned by
persons described in (i), (ii), (iii) and (iv) above, and (vi) certain
other affiliates or associates of the persons described in (i), (ii),
(iii) and (iv) above;
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any
person whom the Board of Directors determines acquired 15% or more of the
Common Stock inadvertently (including, without limitation, (a) any person
who was unaware that he, she or it was the beneficial owner of a
percentage of the Common Stock that would otherwise cause such person to
trigger the Rights or (b) such person
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was
unaware of the extent of its beneficial ownership of Common Stock but had
no actual knowledge of the consequences of such and had no intention on
influencing control of the Company) and such person divests, within 10
business days from the date of the board’s determination a sufficient
number of shares (or derivative common shares) so as to no longer
beneficially own 15% of the Common Stock;
or
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any
person who acquires beneficial ownership of 15% or more of the Common
Stock solely as the result of purchases by the Company of Common Stock,
unless such person shall, after such share repurchase by the Company,
become the beneficial owner of an additional 1% or more of the then
outstanding shares of Common Stock of the
Company.
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The
Renewed Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights):
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the
Rights will be transferred with and only with the Common Stock of the
Company;
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new
Common Stock certificates issued after the Record Date, upon transfer or
new issuance of Common Stock by the Company will contain a notation
incorporating the Renewed Rights Agreement by reference;
and
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the
surrender for transfer of any certificates for Common Stock, even without
such notation (or a copy of this Summary of Rights) being attached
thereto, will also constitute the transfer of Rights associated with the
Common Stock represented by such
certificate.
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As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights (“Right Certificates”) will be mailed to the holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights. The
Rights are not exercisable until the Distribution Date.
The
Rights and the Renewed Rights Agreement will expire on January 4, 2019 (the
“Final Expiration Date”), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed by the Company, in each case, as described
below.
Distribution
and Rights
In the
event that any person becomes an Acquiring Person (except pursuant to a tender
or exchange offer which is for all outstanding shares of Common Stock at a price
and on terms which a majority of those members of the Board of Directors who are
not officers of the Company and who are not Acquiring Persons or affiliates,
associates, nominees or representatives of an Acquiring Person determines to be
adequate and in the best interests of the Company, its stockholders and other
relevant constituencies, other than the Acquiring Person, its affiliates and
associates (a “Permitted Offer”)), each holder of a Right (except Rights which
have been voided as set forth herein) will thereafter have the Right (the
“Flip-In Rights”) to receive upon exercise the number of shares of Common Stock
or of one-one hundredths of a share of Preferred Shares (or, in certain
circumstances, other securities of the Company) having a value
(on the
date such person became an Acquiring Person) equal to two times the Purchase
Price of the Right.
If an
acquiring company were to merge or otherwise combine with the Company, or the
Company were to sell 50% or more of its assets or earning power, each Right then
outstanding would “flip-over” and thereby would become a right to buy that
number of shares of Common Stock of the acquiring company which at the time of
such transaction would have a market value of two times the exercise price of
the Right. The acquirer who triggered the Rights is excluded from the
ability to “flip-over”. A merger or other combination would not
entitle the Rights to “flip-over” if such transaction is consummated with a
person or group who acquired Common Stock pursuant to a Permitted Offer (as
defined below), the price per share of Common Stock paid to all holders of
Common Stock is not less than the price per share of Common Stock pursuant to
the Permitted Offer, and the form of consideration offered in such transaction
is the same as the form of consideration paid pursuant to the Permitted
Offer. “Permitted Offer” is a tender or exchange offer for all shares
of Common Stock at a price and on terms that a majority of the Board of
Directors, who are not officers or the person or group who could trigger the
exercisability of the Rights, deem adequate and in the best interest of the
Company and its stockholders.
Adjustments
The
Purchase Price payable, and the number of Preferred Shares, Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution:
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in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred
Shares;
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upon
the grant to holders of the Preferred Shares of certain rights or warrants
to subscribed for or purchase Preferred Shares at a price, or securities
convertible into Preferred Shares with a conversion price, less than the
then current market price of the Preferred Shares;
or
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upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in Preferred Shares)
or of subscription rights or warrants (other than those referred to
above).
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The
number of outstanding Rights and the number of one one-hundredths of a Preferred
Share issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in Common Stock or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution
Date.
With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of
one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
Rights
held by Acquiring Persons or Affiliate or Associate of Such Acquiring Person or
Transferee of Acquiring Person
Any
Rights that are beneficially owned by (i) any Acquiring Person (or any affiliate
or associate of such Acquiring Person), (ii) a transferee of an Acquiring Person
(or any affiliate or associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) under certain conditions, a
transferee of any Acquiring Person (or any affiliate or associate thereof) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, shall be null and void and no holder of such Rights shall thereafter have
rights to exercise such Rights.
Exchange
Features
At any
time after a person becomes an Acquiring Person and prior to the acquisition by
such Person (or affiliate or associate of an Acquiring Person) of 50% or more of
the outstanding Common Stock, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such Acquiring Person which have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one-one hundredth of a Preferred Share (or of a share of a class or series of
the Company’s preferred stock having equivalent Rights, preferences and
privileges), per Right (subject to adjustment). Upon the Board of
Directors of the Company ordering the exchange, the right to exercise the Right
shall terminate and the only right thereafter shall be to receive the shares in
accordance with the exchange.
Redemption
At any
time prior to the earlier of the Distribution Date or Final Expiration Date, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the “Redemption Price”), adjusted to
reflect any stock split, stock dividend or similar transaction, and payable, at
the option of the Company, either in cash, shares of Common Stock, or any other
form of consideration deemed appropriate by the Board of the
Company. The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holder of Rights will be to receive the Redemption Price.
Amendment
The terms
of the Renewed Rights Agreement and the Rights may be amended by the Company
without the consent of the holders of the Rights, in order to cure any
ambiguity, to correct or supplement any provision contained therein which may be
defective or inconsistent with any other provisions contained therein, or to
make any other changes or amendments to the provisions contained therein which
the Company may deem necessary or desirable, except that from and after such
time as any person becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights (other than the Acquiring
Person or any
affiliate
or associate of the Acquiring Person). No amendment to the Renewed
Rights Agreement or the Rights shall be made which changes the redemption price
or the number of Preferred Shares or shares of Common Stock for which a Right is
exercisable or exchangeable.
No
Rights as a Stockholder
Until a
Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
Terms
of Preferred Shares
The new
series of Preferred Shares issuable upon exercise of the Rights would be
non-redeemable. The dividend, liquidation, voting, and non-redemption
feature of the Preferred Shares are designed so that the value of the one
one-hundredth interest in a share of Preferred Shares purchasable with each
Right will approximate the value of one share of the Company’s Common
Stock. Each whole share of new Preferred Shares would be entitled to
receive a quarterly preferential dividend of $1 per share but would be entitled
to receive, in the aggregate, a dividend of 100 times the dividend declared on
the Common Stock. In the event of liquidation, the holders of the new
Preferred Shares would be entitled to receive a preferential liquidation payment
of $100 per share but would be entitled to receive, in the aggregate, a
liquidation payment equal to 100 times the payment made per share of Common
Stock. In addition to certain voting rights provided in the
Certificate of Incorporation, or by law, each whole share of new Preferred
Shares would have 100 votes, voting together as a single class with the
Company’s Common Stock and other capital stock of the Company having general
voting rights. Finally, in the event of any merger, consolidation or
other transaction in which shares of the Company’s Common Stock are exchanged
for or changed into other stock or securities, cash and/or other property, each
share of new Preferred Shares would be entitled to receive 100 times the amount
received per share of the Company’s Common Stock. The foregoing
Rights are protected against dilution in the event additional shares of Common
Stock or new Preferred Shares are issued by the Company.
Anti-Takeover
Effect
The
Renewed Rights Agreement and the Rights have certain anti-takeover
effects. Such will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by the Company’s
Board of Directors. The Rights should not interfere with any merger
or other business combination approved by the Board of Directors since (a) such
transaction may satisfy the Permitted Offer exception to the definition of
Acquiring Person or (b) the Rights may be redeemed by the Company at $.01 per
Right prior to the time that a Person or group has acquired beneficial ownership
of 15% or more of the shares of the Company’s Common Stock.
The
foregoing description of the Renewed Rights Agreement and the Rights contained
herein do not purport to be complete and such are qualified in their entirety by
reference to the Renewed Rights Agreement.
Item
2. Exhibits.
Exhibit
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1.
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Renewed
Rights Agreement, dated December 2, 2009, between LSB Industries, Inc. and
UMB Bank, n.a. has been filed as Exhibit 4.1 to Form 8-K filed on December
5, 2008 by the Company with the Securities and Exchange Commission, and is
incorporated herein by reference.
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2.
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Form
of Certificate of Designations relating to the Series 4 Junior
Participating Class C Preferred Stock has been filed as Exhibit 4.2 to
Form 8-K filed on December 5, 2008 by the Company with the Securities and
Exchange Commission, and is incorporated herein by
reference.
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Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated:
January 2, 2009
LSB INDUSTRIES,
INC.
By: /s/ Tony M. Shelby
Tony M.
Shelby,
Chief Financial
Officer