Document:

Exhibit 10.1

    

      SECOND
        AMENDMENT TO AN SUPPLY AGREEMENT

       

      This
        Second Amendment to AN Supply Agreement (“Second Amendment”), is entered into by
        and between Orica USA, Inc. (“Orica”) and El Dorado Chemical Company (“EDC”),
        with retroactive effect to January 1, 2006 (“Effective Date”) in reference to
        the following:

      

      	A.  	
              Orica
                and EDC entered into that certain AN Supply Agreement dated November
                1,
                2001 (the “Original Agreement”), as amended by that certain letter
                amendment dated December 13, 2002 relating to ammonia supply, as
                amended
                by a letter amendment dated January 23, 2004, and as further amended
                by a
                letter amendment dated June 27, 2006 (collectively, the “First
                Amendment”). The Original Agreement and First Amendment are collectively
                hereinafter referred to as the “Agreement”. Capitalized terms that are not
                otherwise defined herein shall have the meaning given such terms
                in the
                Agreement. 

            

      

      	B.  	
              The
                parties desire to extend the term of the Agreement to December 31,
                2010,
                with available two-year notice of termination after December 31,
                2008.

            

      

      	C.  	
              The
                parties desire to set, commencing April 1, 2006 through December
                31, 2006,
                a minimum rate of AN purchases by Orica from the EDC Plant of 15,000
                Tons
                per Month, with Orica to use commercially reasonable efforts to purchase
                in Year 2006 the Minimum Quantity of 200,000 Tons of
                AN.

            

      

      	D.  	
              The
                parties desire to set, commencing January 1, 2007, the Minimum Quantity
                of
                AN purchases by Orica from the EDC Plant at 210,000 Tons per Year,
                at the
                rate of no less than 16,000 Tons per
                Month.

            

      

      	E.  	
              The
                parties desire to set, commencing January 1, 2007, the *** at ***
                and to
                eliminate the Additional Fee.

            

      

      	F.  	
              The
                parties desire to remove from the Agreement all references to and
                obligations in connection with “Slurry Explosives Corporation”, “SEC” and
                “SEC Tons”.

            

      

      	G.  	
              The
                parties desire to confirm their agreement that, notwithstanding any
                provision of the Agreement, EDC shall be entitled to sell from the
                EDC
                Plant up to 15,000 Tons of AN Solution per Year and up to 10,000
                Tons of
                AGAN per Year for explosives uses.

            

       

      NOW,
        THEREFORE, for good and valuable consideration, the receipt and sufficiency
        of
        which is hereby acknowledged, the parties agree as follows:

      

      1. Preamble.
        The
        preamble is hereby incorporated herein by reference; provided that in case
        of
        any inconsistency between any part of the preamble and any part of the body
        of
        this Agreement the body of this Agreement shall prevail.

      

      2.  Term.
        The
        reference to “December 31, 2006” in Section 2.1 of the Agreement is hereby
        deleted, and “December 31, 2010” is inserted in its place.

       

      
        
          ***INDICATES
            CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS
            PUBLIC
            FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
            BY THE
            SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
            FILED
            SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
            FOR
            PURPOSES OF SUCH REQUEST. 

          
          

        

        
          
            

          

        

         

      

      

      3.  Minimum
        Quantity and Monthly Purchases for 2006.
        Commencing April 1, 2006 through December 31, 2006, Orica shall purchase
        AN from
        the EDC Plant at the rate of no less than 15,000 Tons per Month, but in no
        event
        at a rate in excess of the manufacturing capability of AN at the EDC Plant.
        For
        Year 2006 only, Orica will use commercially reasonable efforts to purchase
        200,000 Tons of AN from the EDC Plant. Liquidated Damages for Year 2006 shall
        be
        based on 180,000 Tons of AN. Liquidated Damages for a shortfall of annual
        purchases shall be determined on accordance with Schedule D.

      

      4.  Minimum
        Quantity and Monthly Purchases Commencing 2007.
        Commencing January 1, 2007 and thereafter throughout the Term, the Minimum
        Quantity shall equal 210,000 Tons of AN per Year. Commencing January 1, 2007,
        Orica will purchase AN from the EDC Plant at the rate of no less than 16,000
        Tons per Month, but in no event in excess of the manufacturing capability
        of AN
        at the EDC Plant. Liquidated Damages for a shortfall of annual purchases
        shall
        be determined on accordance with Schedule D.

      

      5.  Schedule
        D Replaced.
        For
        clarification, Schedule D to the Agreement is deleted, and the amended Schedule
        D attached to this Second Amendment is inserted in its place. Schedule D
        provides additional detail with respect to Liquidated Damages payments and
        calculations.

      

      6.  ***.
        Commencing January 1, 2007 and thereafter throughout the Term, the definition
        of
        *** in Schedule C to the Agreement shall be deemed amended by deleting the
        reference to “***,” and inserting in its place the amount of “***.”

      

      7.  Additional
        Fee.
        Commencing January 1, 2007 and thereafter throughout the Term, all references
        and obligations with respect to the “Additional Fee” and Additional Fee
        Calculation in Schedule C to the Agreement shall be deemed deleted.

      

      8.  SEC
        References.
        Commencing on the Effective Date, all references to and obligations with
        respect
        to “Slurry Explosives Corporation”, “SEC”, and “SEC Tons” are hereby deleted so
        that neither Slurry Explosives Corporation nor SEC has any continuing effect
        on
        or in the Agreement.

      

      9.  Carve
        Out for AN Solution and AGAN.
        Commencing on the Effective Date, notwithstanding anything to the contrary
        in
        the Agreement, EDC may sell or otherwise convey from the EDC Plant up to
        15,000
        Tons of AN Solution per Year and up to 10,000 Tons of AGAN per Year into
        the
        industrial market for explosives uses.

      

      10.  No
        Other Changes.
        Except
        as provided in this Second Amendment, all other terms of the Agreement shall
        remain in full force and effect.

       

      
        IN
          WITNESS WHEREOF, the parties have executed this Second Amendment effective
          as of
          the date first written above.

      

      
        
          ***INDICATES
            CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS
            PUBLIC
            FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
            BY THE
            SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
            FILED
            SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
            FOR
            PURPOSES OF SUCH REQUEST. 

          
          

        

        
          
            

          

        

      

      

                                  ORICA
          USA, INC.

        

        By:_______________________________________

        Name:____________________________________

        Title:_____________________________________

        Date
          of
          Signature:___________________________

        

        EL
          DORADO
          CHEMICAL COMPANY

         

        By:_______________________________________

        Name:____________________________________

        Title:_____________________________________

        Date
          of
          Signature:___________________________

      

       

      
        
           

          ***INDICATES
            CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS
            PUBLIC
            FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
            BY THE
            SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
            FILED
            SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
            FOR
            PURPOSES OF SUCH REQUEST. 

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “D”

      

      LIQUIDATED
        DAMAGES CALCULATION

      

      Payment
        by Orica

      

      In
        the
        event Orica purchases less than 180,000 Tons in the Year 2006 or less than
        210,000 Tons in any Year thereafter (“Minimum Quantity”), from the EDC Plant and
        subject to the remainder of this Schedule “D”, the following calculation shall
        be made:

      

      The
        Actual Manufacturing Fee per Ton for the relevant Year is determined by dividing
        ***.

      

      If
        Orica
        has taken delivery of less than 180,000 Tons in the Year 2006 or less than
        210,000 Tons in any Year thereafter and the Actual Manufacturing Fee exceeds
        the
        Provisional Manufacturing Fee, EDC shall invoice Orica a dollar amount equal
        to
        the difference between the Total Actual Costs and the Total Amount Paid by
        Orica
        in respect of those shipments. Orica shall pay such invoice as hereinafter
        provided.

      

      The
        result of the foregoing calculation, on a per Ton basis, is hereinafter referred
        to as “Liquidated Damages”. 

      

      The
        following two (2) examples are based on hypothetical figures and are not
        intended to portray actual results that might be achieved from varying
        production levels.

      

      Example
        1: Orica has not purchased 210,000 Tons (or, adjusted to 180,000 Tons for
        2006)

      
        	 	
                Dollars

              	
                Tons

              	
                Dollars
                  per Ton

              
	
                ***

              	
                $***

              	
                210,000

              	
                $***

              
	
                ***

              	
                $***1

              	
                210,000

              	
                $***

              
	
                ***

              	 	
                20,000

              	 
	
                ***

              	
                $***

              	
                190,000

              	
                $***

              
	
                ***

              	
                $***

              	
                190,000

              	
                ***

              
	
                Manufacturing
                  Fee Total

              	
                $***1

              	
                190,000

              	
                $***

              
	
                Fees
                  already paid

              	
                $***

              	
                190,000

              	
                $***

              
	
                Net
                  owed EDC

              	
                $***

              	 	
                $***

              

      

      

      
        
          D-1

          

          ***INDICATES
            CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS
            PUBLIC
            FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
            BY THE
            SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
            FILED
            SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
            FOR
            PURPOSES OF SUCH REQUEST. 

        

        
          
          

          
            

          

        

         

      

      In
        addition to the foregoing, Orica shall remain obligated to pay *** in accordance
        with Schedule “C” hereto.

      

      The
        Minimum Quantity shall be reduced pro-rata in the event of:

      

      	(a) 	
              non-delivery
                of Ammonia to the EDC Site during such periods as EDC is supplying
                Ammonia
                pursuant to Section 3.1 of the Agreement if (x) such failure is due
                to an
                act or omission of EDC or the breach of EDC of the supply contract
                with
                its Ammonia supplier or (y) EDC is able to recover insurance proceeds
                to
                cover is Claim associated with the non-delivery of such Ammonia and
                then
                only to the extent of such net recovery after payment of applicable
                deductibles; or

            

      

      
        	 	
                (b)

              	
                Labor
                  Difficulties at Orica’s or its Affiliates’ (including, without limitation,
                  Nelson Brothers, LLC) or distributors’ customers coal mining operations
                  normally supplied from the EDC Plant or with railroads used to
                  transport
                  AN to those customers, provided that Orica shall provide to EDC
                  written
                  notice of any such Labor Difficulties within five (5) days of Orica’s
                  knowledge of such Labor Difficulties, and that Orica uses its best
                  efforts, but not requiring the expenditure of funds, to mitigate
                  the
                  impact of such Labor Difficulties on EDC. Any reduction of Minimum
                  Quantities shall cease upon the cessation of applicable Labor
                  Difficulties; or

              

      

      

      
        	 	
                (c)

              	
                The
                  Reduction of Orica’s Obligations to EDC, in the circumstances described in
                  the following provisions of this Schedule
“D”.

              

      

      

      For
        greater certainty and notwithstanding any other provision of this Agreement,
        in
        no case shall Orica be required to pay Liquidated Damages as a result of
        EDC’s
        failure to supply AN no matter the cause of such failure unless same is due
        to
        the actions or omissions of Orica. 

      

      Reduction
        of Orica’s Obligations to EDC:

       

      
        If
          EDC
          fails to supply 180,000 Tons in Year 2006 or 210,000 Tons in any Year
          thereafter, which AN
          has
          been
          ordered pursuant to the terms of this Agreement, and such EDC failure to
          supply
          is not due to any act or omission of Orica, then, subject to the next following
          paragraph (below Example 2), the calculation of the Manufacturing Fee pursuant
          to Schedule “C” hereto and the calculation of Liquidated Damages pursuant to
          this Schedule “D” will be made as if a minimum of 180,000 Tons in Year 2006 or
          210,000 Tons for any Year thereafter were delivered to Orica to the extent
          such
          shortfall is due to EDC’s failure to deliver. However, Orica shall not have any
          obligation to EDC in respect of the costs incurred by EDC associated with
          the
          Tons not manufactured and not delivered to Orica which Orica is entitled
          to
          deduct from the Minimum Quantity as provided for above. A demand by Orica
          for AN
          production in excess of the EDC Plant’s practical capacity, considering
          seasonality and weather, shall not cause a reduction of Liquidated
          Damages.

      

      
        
          D-2

          

          ***INDICATES
            CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS
            PUBLIC
            FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
            BY THE
            SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
            FILED
            SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
            FOR
            PURPOSES OF SUCH REQUEST. 

        

        
          
          

          
            

          

        

         

      

      

      Example
        2: Orica’s demand is 210,000. Orica has purchased 200,000 Tons
        because

      EDC
        fails to produce 10,000 Tons:

      

      
        	 	
                DOLLARS

              	
                TONS

              	
                DOLLARS
                  PER TON

              
	
                ***
                  

              	
                $***

              	
                210,000

              	
                $***

              
	
                ***

              	
                $***

              	 	 
	
                ***

              	
                $***

              	
                200,000

              	
                $***

              
	
                ***

              	
                $***

              	 	 
	
                ***

              	
                $***

              	
                200,000

              	
                $***

              
	
                ***

              	 	 	
                ***

              
	
                Manufacturing
                  Fee

              	 	 	
                $***

              

      

      

      Result
        for this hypothetical calculation: No Liquidated Damages Payable by
        Orica.

      

      Other
        Provisions

      

      Orica
        will provide EDC with a forecast Monthly off-take of its 180,000 Tons for
        Year
        2006 or 210,000 Tons for any Year thereafter (or such additional amount per
        Month as Orica may advise). In the event Orica has taken delivery of less
        than
        the cumulative amount reflected in its forecast (such Tons not taken being
        referred to as “Shortfall”), and EDC declares Force Majeure under this
        Agreement, upon cessation of the event of Force Majeure, EDC may request
        Orica
        to take additional quantities of AN in subsequent Months, according to an
        agreed
        schedule, to “make-up” Tons not manufactured during the period of Force Majeure.
        Orica will use its best efforts, without expenditure of funds, to take
        additional “make-up” Tons of AN in subsequent Months, up to a maximum of the
        Shortfall. In the event there has been no Shortfall at the date EDC declares
        Force Majeure, Orica shall have no obligation to take “make-up” Tons and Orica
        shall be entitled to reduce its Minimum Quantity obligation in accordance
        with
        the preceding paragraph (above Example 2).

      

      B. ***.

      

      If,
        for
        any reason, Orica forecasts that it will not take delivery on a monthly basis
        of
        its Annual Estimate, Orica shall promptly so advise EDC.

       

      The
        parties shall then consult as to the best method to operate the assets at
        the
        EDC Site to deliver AN in accordance with Orica’s new forecast and at reduced
        costs. *** These reductions will initially be achieved by, to the extent
        feasible, re-deploying the people, assets and products manufactured at the
        EDC
        Site for other purposes. *** include those which relate to the voluntary
        use by
        EDC in another one of its operations at the EDC Site, or the sale of EDC
        of,
        inputs the costs of which have been charged to Orica pursuant to Schedule
“C” to
        this Agreement or this Schedule “D”, provided that no reduction of Liquidated
        Damages will be made hereunder until and after 83,806 Tons of DSN acid is
        manufactured by EDC in a Year. If a cost reduction opportunity necessitates
        an
        expenditure of funds in order to achieve the savings and both parties agree
        to
        make the expenditure, those funds will be expended by Orica and EDC in
        proportion to the benefit each will receive

       

      
        
          
            
              D-3

               

              ***INDICATES
                CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
                THIS PUBLIC
                FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
                BY THE
                SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
                FILED
                SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
                FOR
                PURPOSES OF SUCH REQUEST.

            

          

          
            
            

            
              

            

          

           

        

      

       

      C. Payment:

      

      Any
        payments which Orica may make pursuant to the provisions of this Schedule
“D”
shall constitute Orica’s sole obligation to compensate EDC for Orica’s failure
        to take delivery of the Minimum Quantity of AN. EDC shall prepare a calculation
        of any Liquidated Damages for each Year (“Annual LD Report”), which will be
        delivered by EDC to Orica by February 28 of each Year and shall be subject
        to
        Orica’s Verification Right which Orica may exercise in a similar manner to its
        right in respect of the Manufacturing Fee. Any amounts owed by Orica to EDC
        as
        shown by the Annual LD Report shall be paid to EDC within thirty (30) days
        of
        Orica’s receipt of the Annual LD Report, subject to Orica’s Verification Right.
        In the event that Orica wishes to exercise its Verification Right, Orica
        shall
        pay all undisputed amounts owing to EDC within such 30-day period which payment
        shall not waive Orica’s right to dispute the remainder.

       

      
        
          
            D-4

             

            ***INDICATES
              CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS
              PUBLIC
              FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT
              BY THE
              SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN
              FILED
              SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
              FOR
              PURPOSES OF SUCH REQUEST.Exhibit 10.2

    EXCHANGE
      AGREEMENT
by
      and
      among
LSB
      INDUSTRIES, INC.
(the
      “Company”)

and

    PAUL
      DENBY REVOCABLE TRUST, U/A/D 10/12/93
THE
      PAUL
      J. DENBY IRA
DENBY
      ENTERPRISES, INC.

TRACY
      DENBY

(the
      “Holders”)

and

PAUL
      J. DENBY

     

    
      October
        __, 2006

    
      
        
           

        

      

      
        
        

        
          

        

      

       

    

    EXCHANGE
      AGREEMENT

     

    This
      EXCHANGE AGREEMENT (the “Agreement”)
      is
      dated this October __, 2006, by and among LSB INDUSTRIES, INC., a Delaware
      corporation (the “Company”),
      and
      PAUL J. DENBY, TRUSTEE OF THE PAUL DENBY REVOCABLE TRUST, U.A.D. 10/12/93 (the
      “Trust”),
      THE
      PAUL J. DENBY IRA (the “IRA”),
      DENBY
      ENTERPRISES, INC. (“DEI”),
      and
      TRACY DENBY, an individual (“T.
      Denby”)
      (each
      of Trust, IRA, DEI and T. Denby are individually a “Holder”
and
      collectively, the “Holders”),
      and
      PAUL J. DENBY, an individual (“Denby”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      there are currently 623,550 shares of the Company’s $3.25 Convertible
      Exchangeable Class C Preferred Stock, Series 2 (the “Series
      2 Preferred”)
      issued
      and outstanding as of the date of this Agreement;

     

    WHEREAS,
      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
      (the “Registration
      Statement”);

     

    WHEREAS,
      the preferences and relative, participating, optional and other rights of the
      Series 2 Preferred are governed by the Company’s Certificate of Designations
      filed with the Secretary of State of the State of Delaware on May 21,
      1993;

     

    WHEREAS,
      Denby and T. Denby, husband and wife, beneficially own an aggregate of 41,000
      shares of Series 2 Preferred and such shares are owned of record by the Holders
      in the amounts set forth below:

    
      
        	
                
Record
                  Owner

              	
                Shares
                  of
Series
                  2 Preferred

              	 
	
                Paul
                  Denby Revocable Trust, U.A.D. 10/12/93

              	
                25,000

              	 
	
                Paul
                  J. Denby IRA

              	
                11,000

              	 
	
                Denby
                  Enterprises, Inc.

              	
                4,000

              	 
	
                Tracy
                  Denby

              	
                   1,000

              	 
	
                Total

              	
                41,000

              	 

      

    

     

    WHEREAS,
      as of the date of this Agreement, the amount of accrued and unpaid dividends
      on
      each share of Series 2 Preferred is $23.2625, and the aggregate amount of
      accrued and unpaid dividends on the Series 2 Preferred held by the Holders
      is
      $953,762.50;

     

    WHEREAS,
      the Holders desire to exchange the Series 2 Preferred for shares of the
      Company’s common stock, par value $.10 per share, at an exchange rate of 7.4
      shares of common stock for each share of Series 2 Preferred, and the Company
      desires to issue shares of its common stock in exchange for the Series 2
      Preferred held by the Holders, all on the terms and conditions set forth in
      this
      Agreement;

     

    WHEREAS,
      each of the Holders shall waive and relinquish any and all rights that the
      Holders may have in and to the accrued and unpaid dividends on the Series 2
      Preferred beneficially owned or held by the Holders; and

     

    WHEREAS,
      the reliance upon the representations made by the Holders in this Agreement,
      the
      transactions contemplated by this Agreement are such that the offer and exchange
      of securities by the Company under this Agreement will be exempt from
      registration under applicable United States securities laws because this is
      an
      exchange offer pursuant to Section 3(a)(9) of the Securities Act of 1933, as
      amended (the “Securities
      Act”)
      and it
      is a private placement intended to be a non-public offering pursuant to Section
      4(2) of the Securities Act and/or Regulation D promulgated under the Securities
      Act.

     

    NOW,
      THEREFORE, in consideration of the terms and conditions contained herein, the
      Company and the Holders hereby agree as follows:

     

    1.  Exchange.
      Subject
      to and upon the terms and conditions set forth in this Agreement, each Holder
      agrees to surrender to the Company (the “Exchange”)
      all of
      the outstanding shares of Series 2 Preferred beneficially owned by the Holders
      for 7.4 shares of the Company’s newly issued common stock per each share of
      Series 2 Preferred beneficially owned by the Holders. The aggregate number
      of
      shares of common stock to be issued in exchange for all of the Series 2
      Preferred shares beneficially owned by the Holders is 303,400 (the “Exchange
      Shares”). 

     

    
      	1.1  	
              Delivery.
                Each Holder will promptly deliver, or cause to be delivered, to the
                Company the certificate or certificates representing the shares of
                Series
                2 Preferred beneficially owned or held by the Holder. Each such
                certificate shall be duly endorsed in blank by the Holder or the
                Holder’s
                nominee, as applicable, with the signature endorsed by Medallion
                guaranty.
                Promptly after receipt of the duly endorsed certificate or certificates,
                the Company will deliver or cause to be delivered to the Holder at
                the
                address set forth on the signature page of this Agreement (or at
                such
                other address provided to the Company in writing), a certificate
                or
                certificates representing the Exchange Shares issued in the name
                of the
                Holder, in such denominations as Holder requests in
                writing.

            

    

     

    
      	1.2  	
              Waiver.
                In consideration of the Exchange, each Holder hereby waives, releases,
                acquits and forever discharges the Company, and all of its respective
                subsidiaries, affiliates, agents, employees, officers, and directors,
                as
                well as their respective heirs, successors, legal and personal
                representatives, and assigns of any and all of them, from and against
                any
                and all claims, liabilities, losses, damages, cause or causes of
                action of
                any kind or character whatsoever, whether liquidated, unliquidated
                or
                disputed, asserted or assertable, known or unknown, in contract or
                in
                tort, at law or in equity, which the Holder might now or hereafter
                having
                arising out of or in connection with or relating to the Series 2
                Preferred, including all rights to any and all amounts of accrued
                and
                unpaid dividends on or in connection with the Series 2
                Preferred.

            

    

     

    
      	1.3  	
              SEC
                Reports.
                The Company is a reporting company under the Exchange Act of 1934,
                as
                amended (the “Exchange
                Act”)
                and has filed with the United States Securities and Exchange Commission
                (the “SEC”)
                all reports required to be filed by the Company under Section 13
                or 15(d)
                of the Exchange Act (the “SEC
                Reports”).
                Each Holder has had the opportunity to review, and has reviewed,
                all such
                reports and information which the Holder deemed material to an investment
                decision regarding the Exchange and the investment in the Exchange
                Shares.

            

    

     

    
      	1.4  	
              Section
                3(a)(9) and Rule 144.
                Assuming the accuracy of the representations and warranties of each
                Holder
                set forth in section 3 of this Agreement, the Company acknowledges
                and
                agrees that, either:

            

    

     

    
      	1.4.1  	
              Section
                3(a)(9).
                The Exchange qualifies as an exchange under Section 3(a)(9) of the
                Securities Act, and, in accordance with Section 3(a)(9) and the applicable
                interpretative letters of the staff of the SEC, the Exchange Shares
                issued
                to the Holder (or the Nominee) will assume the same character of
                the
                Series 2 Preferred surrendered to the Company. As such, the Exchange
                Shares will be unrestricted and may be issued without restrictive
                legend;
                or

            

    

     

    
      	1.4.2  	
              Rule
                144.
                For purposes of Rule 144 of the Securities Act, the holding period
                of the
                Series 2 Preferred and the Exchange Shares may be tacked back to
                the date
                the Holder acquired and paid for in full the Series 2 Preferred.
                In
                reliance on the Holder’s representations and warranties set forth in
                Section 3 of this Agreement, the Company will cause certificates
                evidencing the Exchange Shares to be issued without any restrictive
                legends.

            

    

     

    2.  Representations
      and Warranties of the Company.
      The
      Company represents and warrants to the Holders that:

     

    
      	2.1  	
              Organization
                and Qualification.
                The Company is duly organized, validly existing and in good standing
                under
                the laws of the State of Delaware.

            

    

     

    
      	2.2  	
              Authorization;
                Enforcement; Validity.
                The Company has the requisite power and authority to enter into and
                perform the transactions contemplated by this
                Agreement.

            

    

     

    
      	2.3  	
              Issuance
                of Exchange Shares.
                The issuance of the Exchange Shares is duly authorized and, upon
                issuance
                in accordance with the terms hereof, the Exchange Shares shall be
                validly
                issued, fully paid and nonassessable shares of the common stock of
                the
                Company. Assuming the accuracy of each of the representations and
                warranties of each of the Holder contained in Section 3 of this Agreement,
                the issuance by the Company of the Exchange Shares in accordance
                with the
                terms of this Agreement is exempt from registration under the Securities
                Act.

            

    

     

    
      	2.4  	
              No
                Conflicts.
                The execution, delivery and performance of this Agreement by the
                Company
                and the consummation by the Company of the transactions contemplated
                hereby (including, without limitation, the issuance of the Exchange
                Shares) will not result in a violation of the certificate of incorporation
                or bylaws of the Company.

            

    

     

    
      	2.5  	
              Acknowledgment
                Regarding the Exchange.
                The Company acknowledges and agrees that each Holder is acting solely
                in
                the capacity of an arm’s length purchaser with respect to this Agreement
                and the transactions contemplated hereby. The Company further acknowledges
                that each Holder is not acting as a financial advisor or fiduciary
                of the
                Company (or in any similar capacity) with respect to this Agreement
                and
                the transactions contemplated hereby, and any advice given by the
                Holder
                or any of its representatives or agents in connection with this Agreement
                is merely incidental to the
                Exchange.

            

    

     

    
      	2.6  	
              No
                Commission.
                Each Holder has not paid or given, and has not agreed to pay or give,
                directly or indirectly, any commission or other remuneration for
                soliciting the Exchange. Each Holder agrees and acknowledges that
                the
                Exchange Shares are being issued exclusively for the exchange of
                the
                Series 2 Preferred.

            

    

     

    
      	2.7  	
              No
                General Solicitation.
                Each Holder initially solicited the Company in connection with the
                Exchange. Neither the Company, nor any of its affiliates, nor any
                person
                acting on its or their behalf, has engaged in any form of general
                solicitation or general advertising (within the meaning of Regulation
                D)
                in connection with the Exchange.

            

    

     

    3.  Representations
      and Warranties of the Holders.
      Each
      Holder represents and warrants to the Company that:

     

    
      	3.1  	
              No
                Public Sale or Distribution.
                Each Holder is acquiring the Exchange Shares in the ordinary course
                of
                business for its own account and not with a view towards, or for
                resale in
                connection with, the public sale or distribution thereof; provided,
                however,
                that by making the representations herein, the Holder does not agree
                to
                hold any of the Exchange Shares for any minimum or other specific
                term and
                reserves the right to dispose of the Exchange Shares at any time
                in
                accordance with or pursuant to a registration statement or an exemption
                from the registration requirements of the Securities Act and applicable
                state securities laws. Each Holder does not presently have any agreement
                or understanding, directly or indirectly, with any person to distribute,
                or transfer any interest or grant participation rights in, any of
                the
                Series 2 Preferred or the Exchange
                Shares.

            

    

     

    
      	3.2  	
              Accredited
                Investor and Affiliate Status.
                Each Holder is an “accredited investor” as that term is defined in Rule
                501 of Regulation D under the 1933 Act. Each Holder is not, and has
                not
                been, for a period of at least three months prior to the date of
                this
                Agreement (a) an officer or director of the Company, (b) an “affiliate” of
                the Company (as defined in Rule 144) (an “Affiliate”)
                or (c) a “beneficial owner” of more than 10% of the common stock (as
                defined for purposes of Rule 13d-3 of the Exchange
                Act).

            

    

     

    
      	3.3  	
              Reliance
                on Exemptions.
                Each Holder understands that the Exchange is being made in reliance
                on
                specific exemptions from the registration requirements of United
                States
                federal and state securities laws and that the Company is relying
                in part
                upon the truth and accuracy of, and each Holder’s compliance with, the
                representations, warranties, agreements, acknowledgments and
                understandings of the Holder set forth herein in order to determine
                the
                availability of such exemptions and the eligibility of each Holder
                to
                complete the Exchange and to acquire the Exchange
                Shares.

            

    

     

    
      	3.4  	
              Information.
                Each Holder has been furnished with all materials relating to the
                business, finances and operations of the Company and materials relating
                to
                the Exchange which have been requested by the Holder. Each Holder
                has been
                afforded the opportunity to ask questions of the Company. Neither
                such
                inquiries nor any other due diligence investigations conducted by
                the
                Holder or its representatives shall modify, amend or affect the Holder’s
                right to rely on the Company’s representations and warranties contained
                herein. Each Holder acknowledges that all of the documents filed
                by the
                Company with the SEC under Sections 13(a), 14(a) or 15(d) of the
                Exchange
                Act are available to the Holders, and each Holder has not relied
                on any
                statement of the Company not contained in such documents in connection
                with the Holder’s decision to enter into this Agreement and the
                Exchange.

            

    

     

    
      	3.5  	
              Risk.
                Each Holder understands that its investment in the Exchange Shares
                involves a high degree of risk. Each Holder is able to bear the risk
                of an
                investment in the Exchange Shares including, without limitation,
                the risk
                of total loss of its investment. Each Holder has sought such accounting,
                legal and tax advice as it has considered necessary to make an informed
                investment decision with respect to the Exchange. There is no assurance
                that the Exchange Shares will continue to be quoted, traded or listed
                for
                trading or quotation on the American Stock Exchange or on any other
                organized market or quotation
                system.

            

    

     

    
      	3.6  	
              No
                Governmental Review.
                Each Holder understands that no United States federal or state agency
                or
                any other government or governmental agency has passed on or made
                any
                recommendation or endorsement in connection with the Exchange or
                the
                fairness or suitability of the investment in the Exchange Shares
                nor have
                such authorities passed upon or endorsed the merits of the offering
                of the
                Exchange Shares.

            

    

     

    
      	3.7  	
              Organization;
                Authorization.
                Each Holder has the requisite organizational power and authority
                to enter
                into and perform its obligations under this
                Agreement.

            

    

     

    
      	3.8  	
              Validity;
                Enforcement.
                This Agreement has been duly and validly authorized, executed and
                delivered on behalf of each Holder and shall constitute the legal,
                valid
                and binding obligations of the Holder enforceable against each Holder
                in
                accordance with its terms.

            

    

     

    
      	3.9  	
              Ownership
                of Series 2 Preferred.
                Denby and/or T. Denby is the beneficial owner of the Series 2 Preferred
                held by the Holders. The Holder paid for the Series 2 Preferred in
                full,
                and has continuously held the Series 2 Preferred, more than two years
                prior to the date of this Agreement. The Holders, individually or
                through
                a nominee, owns the Series 2 Preferred outright and free and clear
                of any
                options, contracts, agreements, liens, security interests, or other
                encumbrances.

            

    

     

    
      	3.10  	
              Prior
                Investment Experience.
                Each Holder acknowledges that it has prior investment experience,
                including investment in non-listed and non-registered securities,
                or has
                employed the services of an investment advisor, attorney or accountant
                to
                read all of the documents furnished or made available by the Company
                to it
                and to evaluate the merits and risks of such an investment on its
                behalf,
                and that it recognizes the highly speculative nature of this
                investment.

            

    

     

    
      	3.11  	
              Tax
                Consequences.
                Each Holder acknowledges that the Company has made no representation
                regarding the potential or actual tax consequences for the Holder
                which
                will result from entering into the Agreement and from consummation
                of the
                Exchange. Each Holder acknowledges that it bears complete responsibility
                for obtaining adequate tax advice regarding the Agreement and the
                Exchange.

            

    

     

    
      	3.12  	
              No
                Registration, Review or Approval.
                Each Holder acknowledges, understands and agrees that the Exchange
                Shares
                are being offered and exchanged hereunder pursuant to (a) an exchange
                offer exemption under Section 3(a)(9) of the Securities Act and (b)
                (i) a
                private placement exemption to the registration provisions of the
                Securities Act pursuant to Section 4(2) of such Securities Act and/or
                Regulation D promulgated under the Securities Act) and (ii) a similar
                exemption to the registration provisions of applicable state securities
                laws.

            

    

     

    4.  Conditions
      Precedent to Obligations of the Company.
      The
      obligation of the Company to consummate the transactions contemplated by this
      Agreement is subject to the satisfaction of each of the following conditions,
      provided
      that
      these conditions are for the Company’s sole benefit and may be waived by the
      Company at any time in its sole discretion by providing each Holder with prior
      written notice thereof:

     

    
      	4.1  	
              Delivery.
                Each Holder shall have delivered to the Company all of the Series
                2
                Preferred beneficially owned by Denby or T. Denby and held by a Holder
                or
                a nominee.

            

    

     

    
      	4.2  	
              No
                Prohibition.
                No order of any court, arbitrator, or governmental or regulatory
                authority
                shall be in effect which purports to enjoin or restrain any of the
                transactions contemplated by this
                Agreement.

            

    

     

    
      	4.3  	
              Listing.
                If required, the Exchange Shares (a) shall be designated for quotation or
                listed on the American Stock Exchange and (b) shall not have been
                suspended, as of the date of this Agreement, by the SEC or the American
                Stock Exchange from trading on the American Stock
                Exchange.

            

    

     

    5.  Conditions
      Precedent to Obligations of the Holders.
      The
      obligation of the Holders to consummate the transactions contemplated by this
      Agreement is subject to the satisfaction of the condition that no order of
      any
      court, arbitrator, or governmental or regulatory authority shall be in effect
      which purports to enjoin or restrain any of the transactions contemplated by
      this Agreement. Such condition is for each Holder’s sole benefit and may be
      waived by the Holder at any time in its sole discretion by providing the Company
      with prior written notice thereof.

     

    6.  Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of
      Delaware , without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of Delaware or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of Delaware. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
      AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
      TRANSACTION CONTEMPLATED HEREBY.

     

    
      	6.1  	
              Counterparts.
                This Agreement may be executed in two or more identical counterparts,
                all
                of which shall be considered one and the same agreement and shall
                become
                effective when counterparts have been signed by each party and delivered
                to the other party; provided
                that a facsimile signature shall be considered due execution and
                shall be
                binding upon the signatory thereto with the same force and effect
                as if
                the signature were an original, not a facsimile
                signature.

            

    

     

    
      	6.2  	
              Headings.
                The headings of this Agreement are for convenience of reference and
                shall
                not form part of, or affect the interpretation of, this
                Agreement.

            

    

     

    
      	6.3  	
              Severability.
                If any provision of this Agreement shall be invalid or unenforceable
                in
                any jurisdiction, such invalidity or unenforceability shall not affect
                the
                validity or enforceability of the remainder of this Agreement in
                that
                jurisdiction or the validity or enforceability of any provision of
                this
                Agreement in any other
                jurisdiction.

            

    

     

    
      	6.4  	
              Entire
                Agreement; Amendments.
                This Agreement supersedes all other prior oral or written agreements
                between the Holders, the Company, their affiliates and persons acting
                on
                their behalf with respect to the matters discussed herein, and this
                Agreement and the instruments referenced herein contain the entire
                understanding of the parties with respect to the matters covered
                herein
                and therein and, except as specifically set forth herein or therein,
                neither the Company nor any Holders makes any representation, warranty,
                covenant or undertaking with respect to such matters. No provision
                of this
                Agreement may be amended other than by an instrument in writing signed
                by
                the Company and the Holders against whom the amendment may be enforced.
                No
                provision hereof may be waived other than by an instrument in writing
                signed by the party against whom enforcement is
                sought.

            

    

     

    
      	6.5  	
              Notices.
                Any notices, consents, waivers or other communications required or
                permitted to be given under the terms of this Agreement must be in
                writing
                and will be deemed to have been delivered: (a) upon receipt, when
                delivered personally; (b) upon receipt, when sent by facsimile (provided
                confirmation of transmission is mechanically or electronically generated
                and kept on file by the sending party); or (c) one calendar day (excluding
                Saturdays, Sundays, and national banking holidays) after deposit
                with an
                overnight courier service, in each case properly addressed to the
                party to
                receive the same. The addresses and facsimile numbers for such
                communications shall be:

            

    

     

    If
      to the
      Company:

     

    LSB
      Industries, Inc.

    16
      South
      Pennsylvania

    P.
      O. Box
      754

    Oklahoma
      City, OK 73101

    Telephone:
      (405) 235-4546

    Facsimile:
      (405) 236-1209

    Attention:
      Heidi Brown, Esq.

     

    If
      to the
      Holders, to Paul J. Denby at the address set forth on the books and records
      of
      the Company, or to such other address and/or facsimile number and/or to the
      attention of such other person as the recipient party has specified by written
      notice given to each other party five (5) days prior to the effectiveness of
      such change.

     

    
      	6.6  	
              Successors
                and Assigns.
                This Agreement shall be binding upon and inure to the benefit of
                the
                parties and their respective successors and assigns, including any
                purchasers of the Exchange Shares. Each Holder may assign some or
                all of
                its rights hereunder without the consent of the Company, in which
                event
                such assignee shall be deemed to be the Holder hereunder with respect
                to
                such assigned rights.

            

    

     

    
      	6.7  	
              No
                Third Party Beneficiaries.
                This Agreement is intended for the benefit of the parties hereto
                and their
                respective permitted successors and assigns, and is not for the benefit
                of, nor may any provision hereof be enforced by, any other
                person.

            

    

     

    
      	6.8  	
              Representations
                are Survival.
                The representations and warranties of the Company and each Holder
                contained in sections 2 and 3, respectively, will survive the closing
                of
                the transactions contemplated by this Agreement. Each Holder shall
                be
                responsible only for its own representations, warranties, agreements
                and
                covenants hereunder.

            

    

     

    
      	6.9  	
              Further
                Assurances.
                Each party shall do and perform, or cause to be done and performed,
                all
                such further acts and things, and shall execute and deliver all such
                other
                agreements, certificates, instruments and documents, as any other
                party
                may reasonably request in order to carry out the intent and accomplish
                the
                purposes of this Agreement and the consummation of the transactions
                contemplated hereby.

            

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      and delivered by their duly authorized officers as of the date first above
      written.

     

    LSB
      INDUSTRIES, INC., a Delaware corporation

    By:
      ________________________________ 

    Jack
      E.
      Golsen, Chief Executive Officer

    

    (the
      “Company”)

    

    PAUL
      DENBY REVOCABLE TRUST, U.A.D. 10/12/93

     

    By:
      ______________________________

    Paul
      J.
      Denby, Trustee

    

    (the
      “Trust”)

    

    THE
      PAUL
      J. DENBY IRA

     

    By:
      _______________________________ 

    Name:
      _____________________________ 

    Title:
      _____________________________ 

    

    (the
      “IRA”)

    

    DENBY
      ENTERPRISES, INC.

    

    By:
      _______________________________ 

    Paul
      J.
      Denby, President

    

    (“DEI”)

    ________________________

    TRACY
      DENBY, an individual

    

    (“T.
      Denby”)

    

    (collectively,
      the “Holders”).

    ________________________

    PAUL
      J.
      DENBY, an individual

    

    (“Denby”)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]