Item
1.01
Entry
into a Material Definitive Agreement.
On
October 12, 2006, the Company entered into an Exchange Agreement with Harold
Seidel (“Seidel”), which provides for (a) the issuance to Seidel of 7.4 shares
of the Company’s common stock in exchange for each share of the Company’s $3.25
Convertible Exchangeable Class C Preferred Stock, Series 2 (the “Series 2
Preferred”) beneficially owned by Seidel and (b) the waiver by Seidel of all of
Seidel’s rights to all accrued and unpaid dividends on the Series 2 Preferred.
Pursuant to the terms of the Exchange Agreement, the Company will issue
to
Seidel 74,000 shares of common stock in exchange for the 10,000 shares
of Series
2 Preferred owned by Seidel.
As
of
September 30, 2006, the accrued and unpaid dividend on the Series 2 Preferred
was $23.2625 per share. Accordingly, Seidel waived an aggregate of approximately
$232,625.00 in accrued and unpaid dividends on the shares of Series 2 Preferred
to be surrendered to the Company in accordance with the Exchange Agreement.
The
Exchange Agreement is subject to the Company listing the shares of common
stock
to be issued in connection with the Exchange Agreements on the
AMEX.
The
Exchange Agreement was solicited by and negotiated with Seidel. Neither
the
Company nor Seidel has paid or given, or agreed to pay or give, directly
or
indirectly, any commission or other remuneration for soliciting each exchange.
The exchange will be conducted under the exemption from registration provided
by
Section 3(a)(9) the Securities Act of 1933, as amended (the “Act”). The Series 2
Preferred is registered with the Securities and Exchange Commission under
the
Form S-2 Registration Statement No. 33-61640, effective May 19, 1993, and,
as
such, the Company believes that the shares of common stock issued pursuant
to
Section 3(a)(9) of the Act in exchange for the Series 2 Preferred will
be freely
tradable by the recipient of the shares and will not be considered restricted
securities under Rule 144 of the Act.
Upon
completion of the foregoing exchange, (a) 506,222 shares of Series 2 Preferred
(excluding 18,300 shares of Series 2 Preferred held by LSB in treasury)
will
remain issued and outstanding and (b) there will a total of approximately
$11.8
million in accrued and unpaid dividends relating to such issued and outstanding
Series 2 Preferred.
On
October 13, 2006, the Company issued a press release announcing the Exchange
Agreement described above, along with four other substantially similar
Exchange
Agreements, dated October 6 and 11, 2006, with other holders of the Company's
Series 2 Preferred. A copy of the press release is attached as Exhibit
99.1 to
this report. The earlier Exchange Agreements provide for the issuance by
the
Company of an aggregate of 646,967 shares of Series 2 Preferred, resulting
in
the waiver of approximately $2,033,794 of accrued and unpaid dividends
on such
Series 2 Preferred. The earlier Exchange Agreements are reported in the
Company's Form 8-K, filed October 12, 2006. None of the accrued and unpaid
dividends waived pursuant to the various Exchange Agreements or remaining
on the
outstanding shares of Series 2 Preferred have been declared.
This
report is not an offer or a solicitation of an offer to sell or exchange
any
security.
Section 3
- Securities and Trading Markets
Item 3.02:
Unregistered
Sales of Equity Securities
Pursuant
to the Exchange Agreement discussed in Item 1.01 of this report, which
disclosure is hereby incorporated by reference in this Item 3.02, the Company
will issue a total of 74,000 shares of its common stock, par value $.10
per
share, in an unregistered exchange of 10,000 shares of its Series 2 Preferred.
The exchange will be conducted under the exemption from registration provided
by
Sections 3(a)(9) the Act. The exchange is subject to listing of the shares
of
common stock with the AMEX.
On
October 13, 2006, the Company issued a press release reporting the foregoing
exchange and previous similar exchanges by the Company, a copy of which
is
attached as Exhibit 99.1 to this report.
This
report is not an offer or a solicitation of an offer to sell or exchange
any
security.
Section
9 - Financial Statements and Exhibits
Item
9.01: Financial
Statements and Exhibits.
Exhibit
Number Description
99.1 Press
Release, dated October 13, 2006.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has
duly
caused this report to be signed on its behalf by the undersigned hereunto
duly
authorized.
Dated:
October
16, 2006
LSB
INDUSTRIES,
INC.
By: /s/
Tony M. Shelby
Tony
M. Shelby,
Senior
Vice President
and
Chief
Financial
Officer