Document:

Exhibit
10.31

 

PURCHASE

 

AGREEMENT

 

Dated
as of [___]

 

by
and between

 

FACEBANK
GROUP, INC.

 

and

 

[PURCHASER]

 

    	 

     

    

 

TABLE
OF CONTENTS

 

	 	Page

	ARTICLE I Purchase and Sale of Common Stock	
	 	 	 
	 	Section
    1.1	Purchase
    and Sale of Common Stock	1
	 	Section
    1.2	Purchase
Price and Closing	1
	 	Section
    1.3	Delivery	1
	 	Section
    1.4	Reservation
of Warrant Shares	2
	 	 	 	 
	ARTICLE II Representations and Warranties	2
	 	 	 
	 	Section
    2.1	Representations
    and Warranties of the Company	2
	 	Section
    2.2	Representations
and Warranties of the Purchaser	4
	 	 	 	 
	ARTICLE III Covenants	5
	 	 	 
	 	Section
    3.1	Public
    Disclosure	5
	 	Section
    3.2	Further
Assurances	5
	 	Section
    3.3	Additional
Listing Application	6
	 	 	 	 
	ARTICLE IV Conditions	6
	 	 	 
	 	Section
    4.1	Condition
    Precedent to the Obligations of each Party to Close and Purchase or Sell the Shares	6
	 	Section
    4.2	Condition
    Precedent to the Obligation of the Purchaser to Close and to Purchase the Shares	6
	 	Section
    4.3	Conditions
    Precedent to the Obligation of the Company to Close and to Sell the Shares	6
	 	 	 	 
	ARTICLE V Legend	6
	 	 	 
	 	Section
    5.1	Legend	6
	 	 	 	 
	ARTICLE VI Termination	7
	 	 	 
	 	Section
    6.1	Termination	7
	 	Section
    6.2	Effect
of Termination	7
	 	 	 	 
	ARTICLE VII Miscellaneous	7
	 	 	 
	 	Section
    7.1	Governing
    Law; Jurisdiction	7
	 	Section
    7.2	Entire
Agreement; Amendment	7
	 	Section
    7.3	Notices	8
	 	Section
    7.4 	Delays
or Omissions	8
	 	Section
    7.5	Titles;
Subtitles	9
	 	Section
    7.6	Successors
and Assigns	9
	 	Section
    7.7	No
Third Party Beneficiaries	9
	 	Section
    7.8	Survival	9
	 	Section
    7.9	Counterparts	9
	 	Section
    7.10	Severability	9
	 	Section
    7.11	SPECIFIC
PERFORMANCE	9
	 	Section
    7.12	Consents	9
	 	Section
    7.13	Construction
of Agreement	9

 

    	i

     

    

 

PURCHASE
AGREEMENT

 

This
PURCHASE AGREEMENT (this “Agreement”) is entered into as of [___], 2020, by and between Facebank Group, Inc.,
a Florida corporation (the “Company”), and [___] (the “Purchaser”).

 

WHEREAS,
the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, [•] shares
of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and the Company desires
to issue to the Purchaser a warrant to purchase [•] shares of Common Stock (the “Warrant”) (the “Transaction”).

 

WHEREAS,
the Common Stock and the Warrant are being offered and, as applicable, sold and issued to the Purchaser, on the terms and subject
to the conditions set forth herein, without registration under the Securities Act (as defined below), in reliance on an exemption
from the registration requirements under the Securities Act.

 

NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

 

ARTICLE
I

 

Purchase
and Sale of Common Stock

 

Section
1.1 Purchase and Sale of Common Stock. Upon the following terms and conditions, the Company shall (a) issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, [•] shares of Common Stock (the “Shares”),
at a price per Share equal to $7.00, and for an aggregate purchase price of $[•] (the “Share Purchase Price”);
and (b) issue to the Purchaser the Warrant to purchase [•] shares of Common Stock (the “Warrant Shares”)
with an exercise price of $7.00 per share. The Company and the Purchaser are executing and delivering this Agreement in accordance
with and in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and the rules and regulations promulgated thereunder, including Regulation
D (“Regulation D”), and/or upon such other exemption from the registration requirements of the Securities Act
as may be available with respect to any or all of the investments to be made hereunder.

 

Section
1.2 Purchase Price and Closing. The Company agrees to issue and sell to the Purchaser and, in consideration of and
in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchaser agrees
to purchase the Shares. The closing of the purchase and sale of the Shares (the “Closing”) shall take place
at the offices of the Company located at 1115 Broadway, 12th Floor, New York, NY 10010, as soon as practicable following the satisfaction
or waiver of the conditions set forth in Article IV, or at such other time and place or on such date as the Purchaser and the
Company may agree upon (such date is hereinafter referred to as the “Closing Date”). At the Closing, the entire
Share Purchase Price shall be paid by the Purchaser in cash, by wire transfer of immediately available funds, to an account designated
in writing by the Company against the issuance by the Company of the Shares and the Warrant.

 

Section
1.3 Delivery. At the Closing or as promptly thereafter as is practicable (but in no event more than five (5) Business
Days after the Closing Date or two (2) Business Days after the Closing Date in the case of the Warrant), the Company shall deliver
to the Purchaser (a) written confirmation (including via email) from the Company’s transfer agent that it has issued a book
entry position in the Shares, and (b) a warrant in substantially the form attached hereto as Exhibit A to acquire [•]
shares of Common Stock. For purposes hereof, the term “Business Day” shall mean a day other than Saturday,
Sunday or a federal holiday in which the OTCQB Venture Market is closed for trading.

 

    	 

     

    

 

Section
1.4 Reservation of Warrant Shares. The Company has authorized and has reserved and covenants to continue to reserve
a number of its authorized but unissued shares of Common Stock equal to the number of shares of Common Stock necessary to permit
the exercise of the Warrant, so long as the Warrant is outstanding. Any shares of Common Stock issuable upon exercise of the Warrant
(and such shares when issued) are herein referred to as the “Warrant Shares”. The Shares, the Warrant and the
Warrant Shares are sometimes collectively, individually, or in some combination thereof, referred to herein as the “Securities”.

 

ARTICLE
II

 

Representations
and Warranties

 

Section
2.1 Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser as
follows:

 

(a)
Organization; Standing and Power. The Company and each of its Subsidiaries (i) is a corporation or other organization duly
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, (ii)
has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted
and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions
where the failure to so qualify or to be in good standing, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Change to the Company. For purposes of this Agreement, “Subsidiary,” when used with
respect to any party, shall mean any corporation or other organization, whether incorporated or unincorporated, at least a majority
of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.
For purposes of this Agreement, the term “Material Adverse Change” when used in connection with an entity,
means any change, event, violation, inaccuracy, circumstance or effect (any such item, an “Effect”), individually
or when taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Material
Adverse Change, that (i) is or is reasonably likely to be materially adverse to the business, assets (including intangible assets),
capitalization, financial condition or results of operations of such entity taken as a whole with its subsidiaries or (ii) will
or is reasonably likely to materially impede the ability of such entity to timely consummate the transactions contemplated by
the Transaction Documents in accordance with the terms thereof and applicable legal requirements.

 

(b)
Issuance and Delivery of Shares. The issuance and delivery of the Shares has been duly authorized and, when issued and
paid for in accordance with the terms of this Agreement, (a) shall be free and clear of any and all liens, security interests,
options, claims, encumbrances or restrictions (collectively, “Liens”), except for such restrictions on transfer
or ownership as set forth in this Agreement or otherwise imposed by applicable federal or state securities laws or by the Purchaser,
(b) shall have been duly authorized and validly issued, (c) shall be fully paid and nonassessable and (d) shall have been issued
in compliance with all applicable federal and state securities laws. The issuance and delivery of the Shares are not subject to
any preemptive or similar rights. The Warrant Shares have been duly authorized by the Company and reserved and, when issued upon
exercise of the Warrant in accordance with the terms of the Warrant, (a) shall be free and clear of any and all Liens, except
for such restrictions on transfer or ownership as set forth in this Agreement or otherwise imposed by applicable federal or state
securities laws or by the Purchaser, (b) shall have been duly authorized and validly issued, (c) shall be fully paid and nonassessable
and (d) shall have been issued in compliance with all applicable federal and state securities laws.

 

    	-2-

     

    

 

(c)
Charter Documents. The Company is not in violation of any of the provisions of the Company Charter Documents, and each
Significant Subsidiary of the Company is not in violation of its respective Subsidiary Charter Documents. For purposes of this
Agreement, the term: (i) “Company Charter Documents” shall mean (A) a true and correct copy of the Certificate
of Incorporation and Bylaws of the Company, each as amended to date; (ii) “Significant Subsidiary” shall have
the meaning provided by Rule 1-02 of Regulation S-X of the Commission; (iii) “Subsidiary Charter Documents”
shall mean the certificate of incorporation and bylaws, or like organizational documents of a Subsidiary; and (iv) “Commission”
shall mean the Securities and Exchange Commission.

 

(d)
Subsidiaries. All the outstanding shares of capital stock of, or other equity or voting interests in, each Significant
Subsidiary have been validly issued and are fully paid and nonassessable and are owned by the Company, a wholly-owned Subsidiary
of the Company, or the Company and another wholly-owned Subsidiary of the Company, free and clear of all Liens, including any
restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests, except for restrictions
imposed by (i) applicable securities laws; (ii) that certain Loan and Security Agreement dated March 17, 2020, by and between
fuboTV Inc. and the Company; (iii) that certain Note Purchase Agreement dated March 17, 2020, by and among FB Loan Series I, LLC,
fuboTV Inc., the Company, Evolution AI Corporation, and Pulse Evolution Corporation; (iv) that certain Credit Agreement dated
March 11, 2020, by and between the Company and HLEE Finance S.a.r.l.; and (v) that certain Credit and Guaranty Agreement dated
as of April 6, 2018, by and among fuboTV Inc., certain subsidiaries of fuboTV Inc., as guarantors, and AMC Networks Ventures LLC;
except as would not reasonably be expected to have a Material Adverse Change to the Company or a Material Adverse Change to such
Subsidiary. Other than the Subsidiaries of the Company, neither the Company nor any of its Subsidiaries owns any capital stock
of, or other equity or voting interests of any nature in, or any interest convertible, exchangeable or exercisable for, capital
stock of, or other equity or voting interests of any nature in, any other person. For purposes of this Agreement, the term “Lien”
shall mean pledges, claims, liens, charges, encumbrances, options and security interests of any kind or nature whatsoever.

 

(e)
Capital Stock. The authorized capital stock of the Company consists of: (i) 400,000,000 shares of Common Stock and (ii)
50,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”). At the close of
business on [___]: (i) [___] shares of Common Stock were issued and outstanding and (ii) [___] shares of Preferred Stock were
issued and outstanding. No shares of Common Stock are owned or held by any Subsidiary of the Company. Each share of capital stock
of the Company which may be issued as contemplated or permitted by the Transaction Documents will be, when issued, duly authorized
and validly issued, fully paid and nonassessable and not subject to any preemptive rights, free and clear of all Liens. 

 

(f)
Authority. The Company has all requisite corporate power and authority to enter into this Agreement, the Warrant and the
other agreements and documents contemplated hereby and thereby which are executed by the Company or to which the Company is a
party (all of the foregoing agreements and documents, including this Agreement, are collectively referred to herein as the “Transaction
Documents”). The execution and delivery of the Transaction Documents and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate or other
proceeding on the part of the Company is necessary to authorize the execution and delivery of the Transaction Documents or to
consummate the transactions contemplated thereby, subject only to such registrations, declarations and filings as may be required
under applicable federal, foreign and state securities (or related) laws and the rules and regulations of the OTCQB Venture Market
(the “Necessary Consents”). The Transaction Documents have been, or will be upon the Closing, duly executed
and delivered by the Company (other than the Warrant, which will be delivered within two (2) Business Days of the Closing) and,
assuming due execution and delivery by the other parties hereto, constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such enforceability may be subject to the laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies. 

 

    	-3-

     

    

 

(g)
Non-Contravention. The execution and delivery of the Transaction Documents by the Company does not, and performance of
the Transaction Documents by the Company and the consummation of the transactions contemplated thereby will not: (i) conflict
with or violate the Company Charter Documents or any Subsidiary Charter Documents of any Subsidiary of the Company or (ii) result
in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under,
or materially impair the Company’s rights or alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties
or assets of the Company or any of its Subsidiaries pursuant to, any material Contract of the Company.

 

(h)
Necessary Consents. No consent, approval, order or authorization of, or registration, declaration or filing with any Governmental
Entity or any other person is required to be obtained or made by the Company in connection with the execution and delivery of
the Transaction Documents or the consummation of the transactions contemplated thereby, except for (i) certain of the Necessary
Consents and (ii) such other consents, authorizations, filings, approvals and registrations which if not obtained or made would
not be material to the Company or materially adversely affect the ability of the parties hereto to consummate the transactions
contemplated hereby. “Governmental Entity” shall mean any supranational, national, state, municipal, local
or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other governmental authority
or instrumentality, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority.

 

Section
2.2 Representations and Warranties of the Purchaser. The Purchaser hereby makes the following representations and
warranties to the Company:

 

(a)
Organization and Standing of the Purchaser. If the Purchaser is an entity, the Purchaser is a corporation, limited liability
company or partnership duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization.

 

(b)
Authorization and Power. The Purchaser has the requisite power and authority to enter into and perform the Transaction
Documents and to purchase the Shares being sold to it hereunder. The execution, delivery and performance of the Transaction Documents
by the Purchaser and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary
corporate or other action, and no further consent or authorization of the Purchaser or its Board of Directors, stockholders, or
partners, as the case may be, is required. The Transaction Documents constitute, or shall constitute when executed and delivered
by the Company and the Purchaser, valid and binding obligations of the Purchaser enforceable against the Purchaser in accordance
with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of
creditor’s rights and remedies or by other equitable principles of general application.

 

    	-4-

     

    

 

(c)
Acquisition for Investment. The Purchaser is acquiring the Securities solely for its own account and not with a view to
or for sale in connection with the distribution thereof. The Purchaser does not have a present intention to sell any of the Securities,
nor a present arrangement (whether or not legally binding) or intention to effect any distribution of any of the Securities to
or through any person or entity. The Purchaser acknowledges that it (i) has such knowledge and experience in financial and business
matters such that the Purchaser is capable of evaluating the merits and risks of its investment in the Company, (ii) is able to
bear the financial risks associated with an investment in the Securities, and (iii) has been given full access to such records
of the Company and the Subsidiaries and to the officers of the Company as it has deemed necessary or appropriate to conduct its
due diligence investigation.

 

(d)
Restricted Securities. The Purchaser understands that the Securities have not been, and will not be, registered under the
Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed
herein. The Purchaser understands that the Securities are “restricted securities” under applicable U.S. federal and
state securities laws and that, pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they are registered
with the Commission and qualified by state authorities, or an exemption from such registration and qualification requirements
is available. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may
be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the
Securities, and on requirements which are outside of the Purchaser’s control. The Purchaser understands that no United States
federal or state agency or any government or governmental agency has passed upon or made any recommendation or endorsement of
the Securities.

 

(e)
No General Solicitation. The Purchaser acknowledges that the Securities were not offered to the Purchaser by means of any
form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including
(i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast
over television or radio, or (ii) any seminar or meeting to which the Purchaser was invited by any of the foregoing means of communications.

 

(f)
Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act.

 

ARTICLE
III

 

Covenants

 

Section
3.1 Public Disclosure. The parties shall consult with each other, and to the extent practicable, agree, before issuing
any press release or Form 8-K or otherwise making any public statement with respect to the transactions contemplated by the Transaction
Documents other than as may be required by the Commission or the OTCQB Venture Market, as advised by counsel to the Company.

 

Section
3.2 Further Assurances. From and after the date of this Agreement, upon the request of the Purchaser or the Company,
the Company and the Purchaser shall execute and deliver such instruments, documents and other writings as may be reasonably necessary
or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. The Company agrees to
use its commercially reasonable efforts to take or cause to be taken all action and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the
Transaction Documents, subject to the terms and conditions hereof and thereof, including all actions and things necessary to cause
all conditions set forth in Article IV to be satisfied.

 

    	-5-

     

    

 

Section
3.3 Additional Listing Application. To the extent required by the rules of the OTCQB Venture Market, the Company
will file a notification form for the listing of additional shares in connection with the transactions contemplated hereby.

 

ARTICLE
IV

 

Conditions

 

Section
4.1 Condition Precedent to the Obligations of each Party to Close and Purchase or Sell the Shares. The respective
obligations of each party to this Agreement to proceed with the Closing shall be subject to the satisfaction at or prior to the
Closing Date of the following condition:

 

(a)
No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
or promulgated by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.

 

Section
4.2 Condition Precedent to the Obligation of the Purchaser to Close and to Purchase the Shares. The obligation of
the Purchaser to purchase the Shares from the Company at the Closing shall be subject to the satisfaction at or prior to the Closing
Date of the following condition, which may be waived, in writing, exclusively by the Purchaser:

 

(a)
Delivery of Transaction Documents. The other Transaction Documents to which the Company is a party (other than the Warrant,
which will be delivered within two (2) Business Days of the Closing Date) shall have been duly executed and delivered by the Company
to the Purchaser.

 

Section
4.3 Conditions Precedent to the Obligation of the Company to Close and to Sell the Shares

.
The obligation of the Company to sell the Shares to the Purchaser shall be subject to the satisfaction at or prior to the Closing
Date of the following condition, which may be waived, in writing, exclusively by the Company:

 

(a)
Delivery of Transaction Documents. The other Transaction Documents to which the Purchaser is party shall have been duly
executed and delivered by the Purchaser to the Company.

 

ARTICLE
V

 

Legend

 

Section
5.1 Legend.

 

(a)
The Purchaser agrees to the imprinting of a legend on any of the Securities substantially in the following form until such legend
may be removed as provided in subsection (b) below:

 

    	-6-

     

    

 

“THE
SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IF APPLICABLE,
STATE SECURITIES LAWS. THESE SHARES OF COMMON STOCK MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO FACEBANK GROUP, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(b)
Securities shall not contain any legend (including the legend set forth in Section 5.1(a) hereof): (i) while a registration statement
covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Securities pursuant
to Rule 144, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to promptly issue a legal opinion
to the Company’s transfer agent if required by the Company’s transfer agent to effect the removal of the legend hereunder.

 

ARTICLE
VI

 

Termination

 

Section
6.1 Termination. This Agreement may be terminated at any time prior to the Closing Date by the mutual written consent
of the Company and the Purchaser; provided, however, that the right to terminate pursuant to this Section 6.1 shall not be available
to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Closing to occur on
or before such date, and such action or failure to act constitutes a breach of this Agreement.

 

Section
6.2 Effect of Termination. In the event of a termination by the Company or the Purchaser, written notice
thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated
without further action by any party. If this Agreement is terminated as provided in Section 6.1 herein, this Agreement shall
become void and of no further force or effect, except for this Section 6.2 and Article VII herein, which shall survive the
termination of this Agreement. Nothing in this Section 6.2 shall be deemed to release the Company or the Purchaser from any
liability for any breach of this Agreement, or to impair the rights of the Company or the Purchaser to compel specific
performance by the other of its obligations under this Agreement. 

 

ARTICLE
VII

 

Miscellaneous

 

Section
7.1 Governing Law; Jurisdiction. This Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York without giving effect to the principles of conflicts of laws. Any legal action or other
legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement may be brought or otherwise
commenced in any state or federal court located in the State of New York. Each party hereto agrees to the entry of an order to
enforce any resolution, settlement, order or award made pursuant to this Section 7.1 by the state and federal courts located in
the State of New York and in connection therewith hereby waives, and agrees not to assert by way of motion, as a defense, or otherwise,
any claim that such resolution, settlement, order or award is inconsistent with or violative of the laws or public policy of the
laws of the State of New York or any other jurisdiction.

 

    	-7-

     

    

 

Section
7.2 Entire Agreement; Amendment. This Agreement and the other Transaction Documents constitute the full and entire
understanding and agreement between the parties with regard to the subjects hereof and thereof. Any previous agreements among
the parties relative to the specific subject matter hereof are superseded by this Agreement. Neither this Agreement nor any provision
hereof may be amended, changed, waived, discharged or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, change, waiver, discharge or termination is sought.

 

Section
7.3 Notices. All notices and other communications required or permitted hereunder shall be effective upon receipt
and shall be in writing and may be delivered in person, by telecopy, electronic mail, express delivery service or U.S. mail, in
which event it may be mailed by first-class, certified or registered, postage prepaid, addressed, to the party to be notified,
at the respective addresses set forth below, or at such other address which may hereinafter be designated in writing:

 

	 	(a)	If
    to the Purchaser, to:
	 	 	 
	 	 	[PURCHASER]
	 	 	[INSERT
    ADDRESS LINE 1]
	 	 	[INSERT
    ADDRESS LINE 2]
	 	 	Attention:
    [•]
	 	 	Email:
    [•]
	 	 	 
	 	 	 
	 	(b)	If
    to the Company, to:
	 	 	 
	 	 	FaceBank
    Group, Inc.
	 	 	1115
    Broadway, 12th Floor
	 	 	New
    York, NY 10010
	 	 	Attention:
    Chief Executive Officer
	 	 	Email:
    dgandler@fubo.tv
	 	 	 
	 	 	with
    a copy (which shall not constitute notice) to:
	 	 	 
	 	 	Wilson
    Sonsini Goodrich & Rosati Professional Corporation
	 	 	650
    Page Mill Road
	 	 	Palo
    Alto, California 94304-1050
	 	 	Attention:
    Robert G. Day
	 	 	Email:
    rday@wsgr.com
	 	 	 
	 	 	and
    with a copy (which shall not constitute notice) to:
	 	 	 
	 	 	Wilson
    Sonsini Goodrich & Rosati Professional Corporation
	 	 	1301
    Avenue of the Americas, 40th Floor
	 	 	New
    York, NY 10019-6022
	 	 	Attention:
    Megan J. Baier
	 	 	Email:
    mbaier@wsgr.com

 

Section
7.4 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing
to any party upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy,
nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or
character of any breach or default under this Agreement, or any waiver of any provisions or conditions of this Agreement must
be in writing and shall be effective only to the extent specifically set forth in writing, and that all remedies, either under
this Agreement, by law or otherwise, shall be cumulative and not alternative.

 

    	-8-

     

    

 

Section
7.5 Titles; Subtitles. The titles of the Articles and Sections of this Agreement are for convenience of reference
only and in no way define, limit, extend, or describe the scope of this Agreement or the intent of any of its provisions.

 

Section
7.6 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors and assigns of the parties hereto.

 

Section
7.7 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.

 

Section
7.8 Survival. The representations and warranties of the Company and the Purchaser contained herein shall not survive
the Closing.

 

Section
7.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.

 

Section
7.10 Severability. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section
7.11 SPECIFIC PERFORMANCE. THE PARTIES HERETO AGREE THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF
THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH ITS SPECIFIC INTENT OR WERE OTHERWISE BREACHED. IT IS ACCORDINGLY
AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS, WITHOUT BOND, TO PREVENT OR CURE BREACHES OF THE PROVISIONS
OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH
THEY MAY BE ENTITLED BY LAW OR EQUITY, AND ANY PARTY SUED FOR BREACH OF THIS AGREEMENT EXPRESSLY WAIVES ANY DEFENSE THAT A REMEDY
IN DAMAGES WOULD BE ADEQUATE.

 

Section
7.12 Consents

.
Any permission, consent, or approval of any kind or character under this Agreement shall be in writing and shall be effective
only to the extent specifically set forth in such writing.

 

Section
7.13 Construction of Agreement

.
No provision of this Agreement shall be construed against either party as the drafter thereof.

 

[Remainder
of page intentionally left blank. Signature pages to follow]

 

    	-9-

     

    

 

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

 

	 	FACEBANK
    GROUP, INC.
	 	 
	 	By:	 
	 	Name:	David
    Gandler
	 	Title:	Chief
    Executive Officer

 

	 	[PURCHASER]
	 	 
	 	By:	                 
	 	Name:	 
	 	Title:	 

 

    	-10-

     

    

 

EXHIBIT
A

 

FORM
OF WARRANT

 

W-[__]

 

THIS
WARRANT AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED
OR AN EXEMPTION THEREFROM IS AVAILABLE.

 

WARRANT
TO PURCHASE COMMON STOCK

OF
FACEBANK GROUP, INC.

 

Date
of Issuance: [●], 2020

 

In
consideration for the payment by ___________________________ to Facebank Group, Inc., a Florida corporation (the “Company”),
of $[●] in cash, by certified check, or by wire transfer (the “Purchase Price”), the Company agrees to the provisions
set forth herein. The Company certifies that ___________________________ and its permitted assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company, up to [●] fully-paid and nonassessable
shares of Common Stock (the “Warrant Shares”) at a purchase price per share equal to the Warrant Price (defined below).
The number of shares of Common Stock purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as provided herein. The initial Warrant Price (the “Warrant Price”) per share of Common Stock shall
equal $7.00.

 

For
the purpose of this Warrant, the term “Common Stock” shall mean (i) the Common Stock, par value $0.0001 per share,
of the Company as of the Date of Issuance, or (ii) any other class or classes of stock resulting from successive changes or reclassifications
of such class of stock, and the term “Business Day” shall mean any day other than a Saturday or Sunday or a day on
which commercial banks in New York, New York are required or authorized to be closed.

 

Section
1. Term of Warrant, Exercise of Warrant. (a) Subject to the terms of this Warrant, the Holder shall have the right, at
its option, which may be exercised in whole or in part, at any time, and from time to time, commencing at the time immediately
following the time the Purchase Price has been paid and until the earlier of (x) 5:00 p.m. Eastern Time on the eighteen-month
anniversary of the Date of Issuance and (y) the closing of a Change of Control (as defined below) (the “Warrant Expiration
Date”) to purchase from the Company the Warrant Shares. “Change of Control” shall mean the sale, conveyance
or disposal of all or substantially all of the Company’s property or business or the Company’s merger with or into
or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company) or any other transaction or
series of related transactions in which the stockholders of the Company immediately prior to the transaction or transactions own
less than a majority of the voting power of the surviving corporation following the transaction or transactions.

 

    	-11-

     

    

 

(b)
The purchase rights evidenced by this Warrant shall be exercised by the Holder surrendering this Warrant, with the form of subscription
at the end hereof duly executed by the Holder, to the Company at its office in New York, New York (or, in the event the Company’s
principal office is no longer in New York, New York, its then principal office in the United States (the “Principal Office”)),
accompanied by payment, of an amount (the “Exercise Payment”) equal to the Warrant Price multiplied by the number
of Warrant Shares being purchased pursuant to such exercise, payable as follows: (i) by payment to the Company in cash, by certified
check, or by wire transfer of the Exercise Payment, (ii) by surrender to the Company for cancellation of securities of the Company
having a Market Price (as hereinafter defined) on the date of exercise equal to the Exercise Payment; or (iii) by a combination
of the methods described in clauses (i) and (ii) above. In lieu of exercising the Warrant as set forth in the foregoing sentence,
the Holder may elect to perform a net exercise and receive a payment equal to the difference between (i) the Market Price on the
date of exercise multiplied by the number of Warrant Shares as to which the payment is then being elected and (ii) the aggregate
Warrant Price with respect to such Warrant Shares, payable by the Company to the Holder only in shares of Common Stock valued
at the Market Price on the date of exercise. For purposes hereof, the term “Market Price” shall mean, with respect
to any day, the average closing price of a share of Common Stock or other security for the five consecutive trading days preceding
such day on the principal national securities exchange on which the shares of Common Stock or securities are listed or admitted
to trading or, if not listed or admitted to trading on any national securities exchange, the average of the reported high and
low prices during such five trading day period on the OTCQB Venture Market, if the shares of Common Stock or securities are not
publicly traded, the Market Price for such day shall be the fair market value thereof determined in good faith by the Board of
Directors of the Company.

 

(c)
Upon any exercise of this Warrant, the Company shall issue and cause to be delivered with all reasonable dispatch, but in any
event within five Business Days, to or upon the written order of the Holder and, subject to Section 3, in such name or names as
the Holder may designate (provided that such names other than the Holder may include only affiliates of the Holder), written confirmation
(including via email) from the Company’s transfer agent that it has issued a book entry position for the number of full
Warrant Shares issuable upon such exercise together with such other property, including cash (if necessary pursuant to Section
5.3 hereof), which may be deliverable upon such exercise. If fewer than all of the Warrant Shares represented by this Warrant
are purchased, a new Warrant of the same tenor as this Warrant, evidencing the Warrant Shares not purchased will be issued and
delivered by the Company at the Company’s expense, to the Holder together with the issue of the written confirmation from
the Company’s transfer agent that it has issued a book entry position representing the Warrant Shares then being purchased.
The Warrant certificate, when surrendered upon exercise of the Warrant, shall be canceled by the Company.

 

(d)
The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision
hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company
or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver written confirmation from the Company’s transfer agent that it has issued a book entry position representing shares
of Common Stock upon exercise of this Warrant or to credit such shares to the Holder’s DTC account (as the case may be)
as required pursuant to the terms hereof.

 

    	-12-

     

    

 

Section
2. Warrant Register, Registration of Transfers.

 

Section
2.1. Warrant Register. The Company shall keep at its Principal Office, a register (the “Warrant Register”)
in which the Company shall record the name and address of the Holder from time to time and all transfers and exchanges of this
Warrant. The Company shall give the Holder prior written notice of any change of the address at which such register is kept.

 

Section
2.2. Registration of Transfers, Exchanges or Assignment of the Warrant. The Holder shall be entitled to assign its interest
in this Warrant in whole or in part to any affiliate of Holder upon surrender thereof accompanied by a written instrument or instruments
of transfer in the form of assignment at the end hereof duly executed by the Holder. Except as set forth in the preceding sentence,
this Warrant may not be assigned by the Holder. This Warrant may also be exchanged or combined with warrants of like tenor at
the option of the Holder for another Warrant or Warrants of like tenor and representing in the aggregate the right to purchase
a like number of Warrant Shares upon presentation thereof to the Company at its Principal Office together with a written notice
signed by the Holder specifying the denominations in which the new Warrant is or the new Warrants are to be issued.

 

Upon
surrender for transfer or exchange of this Warrant to the Company at its Principal Office for transfer or exchange, in accordance
with this Section 2, the Company shall, without charge (subject to Section 3), execute and deliver a new Warrant or Warrants of
like tenor and of a like aggregate amount of Warrant Shares in the name of the assignee named in such instrument of assignment
and, if the Holder’s entire interest is not being assigned, in the name of the Holder with respect to that portion not transferred,
and this Warrant shall promptly be canceled.

 

Notwithstanding
the foregoing, the Holder acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities
Act of 1933, as amended (the “Act”), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise
dispose of this Warrant and Warrant Shares in the absence of (i) registration or qualification of this Warrant and such Warrant
Shares under any applicable U.S. federal or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to
the Company, that such registration and qualification are not required.

 

Section
3. Payment of Taxes. The Company shall pay all documentary stamp taxes, if any, attributable to the initial issuance of
any Warrant Shares upon the exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax
or taxes which may be payable in respect of any transfer involved in the issue or delivery of any Warrant or book entry position
for Warrant Shares in a name other than that of the Holder as such name is then shown on the books of the Company.

 

Section
4. Certain Covenants.

 

Section
4.1. Reservation of Warrant Shares. There have been reserved and the Company shall at all times keep reserved, out of its
authorized but unissued Common Stock, free from any preemptive rights, rights of first refusal or other restrictions (other than
pursuant to the Act and applicable state securities laws) a number of shares of Common Stock sufficient to provide for the exercise
of the rights of purchase represented by this Warrant.

 

Section
4.2. No Impairment. The Company shall not by any action including, without limitation, amending its Certificate of Incorporation,
any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but shall at all times in good
faith assist in the carrying out of all such terms and in the taking of all such action, as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company shall take
all such action as may be necessary or appropriate in order that the Company may validly issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant at the then Warrant Price therefor.

 

    	-13-

     

    

 

Section
4.3. Notice of Certain Corporate Action. In case the Company shall propose (a) to offer to the holders of its Common Stock
rights to subscribe for or to purchase any shares of Common Stock or shares of stock of any class or any other securities, rights
or options, or (b) to effect any reclassification of its Common Stock (other than a reclassification involving only the subdivision,
or combination, of outstanding shares of Common Stock), or (c) to effect any capital reorganization, or (d) to effect any Change
of Control, or (e) to effect the liquidation, dissolution or winding up of the Company or (f) to offer to the holders of its Common
Stock the right to have their shares of Common Stock repurchased or redeemed or otherwise acquired by the Company, or (g) to take
any other action which would require the adjustment of the Warrant Price and/or the number of Warrant Shares issuable upon exercise
of this Warrant, then in each such case (but without limiting the provisions of Section 5), the Company shall give to the Holder,
a notice of such proposed action, which shall specify the date on which a record is to be taken for purposes of such dividend,
distribution or offer of rights, or the date on which such reclassification, reorganization, Change of Control, liquidation, dissolution,
or winding up is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be
fixed and shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock. Such notice shall be so given at least ten (10) Business Days prior to the record date for determining
holders of the Common Stock for purposes of participating in or voting on such action, or at least ten (10) Business Days prior
to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever
shall be the earlier. Such notice shall specify, in the case of any subscription or repurchase rights, the date on which the holders
of Common Stock shall be entitled thereto, or the date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon any reorganization, reclassification, Change of Control or other
action, as the case may be. Such notice shall also state whether the action in question or the record date is subject to the effectiveness
of a registration statement under the Act or to a favorable vote of security holders, if either is required, and the adjustment
in Warrant Price and/or number of Warrant Shares issuable upon exercise of this Warrant as a result of such reorganization, reclassification,
Change of Control or other action, to the extent then determinable. No such notice shall be given if the Company reasonably determines
that the giving of such notice would require disclosure of material information which the Company has a bona fide purpose for
preserving as confidential or the disclosure of which would not be in the best interests of the Company.

 

Section
4.4. Purchase Entirely for Own Account. The Holder acknowledges that this Warrant is given to the Holder in reliance upon
the Holder’s representation to the Company, which by its acceptance of this Warrant the Holder hereby confirms, that the
Warrant and the Warrant Shares (collectively, the “Securities”) being acquired by the Holder are being acquired for
investment for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Holder has no present intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Warrant, the Holder further represents that the Holder does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with
respect to any of the Securities. The Holder represents that it has full power and authority to enter into this Warrant. The Holder
has not been formed for the specific purpose of acquiring any of the Securities.

 

Section
4.5. Disclosure of Information. The Holder has had an opportunity to discuss the Company’s business, management,
financial affairs and the terms and conditions of the offering of the Securities with the Company’s management and has had
an opportunity to review the Company’s facilities, and has had an opportunity to read all of the Company’s filings
with the Securities and Exchange Commission.

 

    	-14-

     

    

 

Section
4.6. Restricted Securities. The Holder understands that the Securities have not been, and will not be, registered under
the Act, by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things,
the bona fide nature of the investment intent and the accuracy of the Holder’s representations as expressed herein. The
Holder understands that the Securities are “restricted securities” under applicable U.S. federal and state securities
laws and that, pursuant to these laws, the Holder must hold the Securities indefinitely unless they are registered with the Securities
and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements
is available. The Holder further acknowledges that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Holder’s control, and which the Company is under no
obligation and may not be able to satisfy.

 

Section
4.7. Accredited Investor. The Holder is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Act.

 

Section
5. Adjustment of Warrant Price.

 

Section
5.1. Subdivision or Combination of Stock. In case the Company shall at any time (i) issue a dividend payable in Common
Stock or any rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares, then (x) in the case of a dividend or subdivision, the Warrant Price in effect immediately prior to
such dividend or subdivision shall be proportionately decreased and the number of shares of Common Stock purchasable upon the
exercise of the Warrant immediately prior to such adjustment shall be proportionately increased, and (y) in the case of a
combination, the Warrant Price in effect immediately prior to such combination shall be proportionately increased and the
number of shares of Common Stock purchasable upon the exercise of the Warrant immediately prior to such adjustment shall be
proportionately decreased.

 

Section
5.2. Reorganization, Reclassification, Consolidation, Merger or Sale. If any capital reorganization or reclassification
of the capital stock of the Company or any consolidation or merger of the Company with another corporation, other than a Change
of Control, shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation,
exercise, merger or sale, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to receive
upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore
receivable upon the exercise of this Warrant, that number of shares of stock, securities or assets (including cash) as may be
issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of
Warrant Shares for which this Warrant could have been exercised immediately prior to such reorganization, reclassification, consolidation,
merger or sale, and in any such case appropriate provision shall be made with respect to the rights and interests of such Holder
to the end that the provisions hereof shall thereafter be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets (including cash) thereafter deliverable upon the exercise of this Warrant. The Company will not effect any
such consolidation, merger or sale, unless prior to the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such assets shall assume, by written instrument executed
and mailed or delivered to the Holder at the last address of such Holder appearing on the books of the Company, the obligation
to deliver to such Holder such shares of stock, securities or assets (including cash) as, in accordance with the foregoing provisions,
the Holder may be entitled to receive.

 

    	-15-

     

    

 

Section
5.3. Fractional Shares. The Company shall not issue fractions of shares of Common Stock upon exercise of this Warrant or
scrip in lieu thereof. If any fraction of a share of Common Stock would, except for the provisions of this Section 5.3, be issuable
upon exercise of this Warrant, the Company shall in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth (1/100) of a share, to be computed on the basis of
the Market Price for a share of Common Stock as of the date of exercise.

 

Section
5.4. Notice of Adjustment. Upon any adjustment of the Warrant Price, and from time to time upon the request of the Holder,
the Company shall furnish to the Holder the Warrant Price resulting from such adjustment or otherwise in effect and the number
of Warrant Shares then available for purchase under this Warrant, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.

 

Section
5.5. Certain Events. If any event occurs as to which, in the good faith judgment of the Board of Directors of the Company
the other provisions of this Section 5 are not strictly applicable or if strictly applicable would not fairly protect the exercise
rights of the Holder in accordance with the essential intent and principles of such provisions, then the Board of Directors of
the Company in the good faith, reasonable exercise of its business judgment shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles so as to protect such exercise rights as aforesaid.

 

Section
6. No Rights as a Stockholder; Notice to Holder. Nothing contained in this Warrant shall be construed as conferring upon
the Holder the right to vote or to consent or to receive notice as a stockholder in respect of any meeting of stockholders for
the election of directors of the Company or any other matter, or any rights whatsoever as a stockholder of the Company.

 

Section
7. Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with, in
the case of a Holder which is not a qualified institutional buyer within the meaning of Rule 144A under the Act, surety) in an
amount reasonably satisfactory to it, or (in the case of mutilation) upon surrender and cancellation thereof, the Company will
issue, in lieu thereof, a new Warrant of like tenor.

 

Section
8. Notices. All notices and other written communications provided for hereunder shall be given in writing and delivered
in person or sent by overnight delivery service (with charges prepaid), and (i) if to the Holder addressed to it at the address
specified for such Holder in the Warrant Register or at such other address as the Holder shall have specified to the Company in
writing in accordance with this Section 8, and (ii) if to the Company, addressed to it at 1115 Broadway, 12th Floor, New York,
NY 10010 or at such other address as the Company shall have specified to the Holder in writing in accordance with this Section
8. Notice given in accordance with this Section 8 shall be effective upon the earlier of the date of delivery or the second Business
Day at the place of delivery after dispatch.

 

Section
9. Applicable Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York
without giving effect to principles of conflict of laws.

 

Section
10. Warrant Share Legend. The Warrant Shares, until such Warrant Shares have been distributed pursuant to a registration
statement effective under the Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under
the Act (or any similar rule then in force) shall bear one or all of the following legends:

 

    	-16-

     

    

 

“THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

Any
legend required by the Blue Sky laws of any state to the extent such laws are applicable to the Warrant Shares.

 

Section
11. Captions. The captions of the Sections and subsections of this Warrant have been inserted for convenience only and
shall have no substantive effect.

 

Section
12. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the
Company and the Holder.

 

    	-17-

     

    

 

IN
WITNESS WHEREOF, the undersigned have executed this Warrant as of the [●] day of [●], 2020.

 

	 	FACEBANK
    GROUP, INC.
	 	 
	 	By:	 
	 	Name:	David
    Gandler
	 	Title:	Chief
    Executive Officer

 

	 	[NAME
    OF WARRANT HOLDER]
	 	 
	 	By:	            
	 	Name:	 
	 	Title:	 

 

    	-18-

     

    

 

[To
be signed only upon exercise of Warrant]

 

TO
Facebank Group, Inc.:

 

The
undersigned, the holder of the within Warrant (the “Holder”), hereby irrevocably elects to exercise the purchase right
represented by such Warrant for, and to purchase thereunder, ______ shares of Common Stock of Facebank Group, Inc. and herewith
[makes payment of $______ therefor in full payment of the Exercise Payment][tenders securities having a Market Price of $_____
in full payment of the Exercise Payment] or [elects to receive a payment equal to the difference between (i) the Market Price
(as defined in the Warrant) multiplied by ________ (the number of Warrant Shares as to which the payment is being elected) and
(ii) ___________, which is the exercise price with respect to such Warrant Shares, in full payment of the Exercise Payment, payable
by the Company to the Holder only in shares of Common Stock valued at the Market Price in accordance with the terms of the Warrant],
and requests that the book entry position for such shares be issued in the name of ______.

 

	Dated:	 	 
	 	 	 
		 	 
	 	 	 
	 	 	 
	 	 	(Signature
        must conform in all respects to name of

        Holder
        as specified on the face of the Warrant)

	 	 	 
	 	 	 
	 	 	Address

 

    	 

     

    

 

[To
be signed only upon transfer of Warrant]

 

FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________ the right represented by the within Warrant
to purchase _____ shares of the Common Stock of Facebank Group, Inc. to which the within Warrant relates, and appoints _______
attorney to transfer said right on the books of Facebank Group, Inc. with full power of substitution in the premises.

 

	Dated:	 	 
	 	 	 
	 	 	 
	(Signature
    must conform in all respects to 	 	 
	name
    of Holder as specified on the face of the Warrant)	 	 
	 	 	 
	 	 	
	 	 	 
	 	 	Address
	 	 	 
	In
    the presence of:lxu-ex41_7.htm

Exhibit 4.1

 

SECTION 382 RIGHTS AGREEMENT

Dated as of July 6, 2020

 

between

LSB INDUSTRIES, INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.,

 

as Rights Agent

 

 

 

 

 

 

Table of Contents

 

Page

 

	
Section 
	
1.Definitions1

	
Section 
	
2.Appointment of Rights Agent7

	
Section 
	
3.Issue of Right Certificates8

	
Section 
	
4.Form of Right Certificates9

	
Section 
	
5.Countersignature and Registration10

	
Section 
	
6.Transfer, Split-up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates10

	
Section 
	
7.Exercise of Rights; Purchase Price; Expiration Date of Rights11

	
Section 
	
8.Cancellation and Destruction of Right Certificates13

	
Section 
	
9.Status and Availability of Preferred Shares13

	
Section 
	
10.Preferred Shares Record Date14

	
Section 
	
11.Adjustment of Purchase Price, Number of Shares or Number of Rights14

	
Section 
	
12.Certificate of Adjustment20

	
Section 
	
13.Consolidation, Merger, Sale or Transfer of Assets or Earning Power20

	
Section 
	
14.Fractional Rights and Fractional Shares21

	
Section 
	
15.Rights of Action22

	
Section 
	
16.Agreement of Right Holders22

	
Section 
	
17.Right Certificate Holder Not Deemed a Stockholder23

	
Section 
	
18.Concerning the Rights Agent23

	
Section 
	
19.Merger or Consolidation or Change of Name of Rights Agent24

	
Section 
	
20.Rights and Duties of Rights Agent25

	
Section 
	
21.Change of Rights Agent27

	
Section 
	
22.Issuance of New Right Certificates28

	
Section 
	
23.Redemption29

	
Section 
	
24.Exchange29

	
Section 
	
25.Notice of Certain Events31

	
Section 
	
26.Notices32

	
Section 
	
27.Supplements and Amendments32

	
Section 
	
28.Successors33

	
Section 
	
29.Benefits of this Agreement33

-i-

Table of Contents

(continued)

Page

 

	
Section 
	
30.Severability33

	
Section 
	
31.Governing Law33

	
Section 
	
32.Counterparts33

	
Section 
	
33.Descriptive Headings and Construction33

	
Section 
	
34.Administration34

	
Section 
	
35.Force Majeure34

	
Section 
	
36.Process to Seek Exemption34

 

 

 

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SECTION 382 RIGHTS AGREEMENT

This Section 382 Rights Agreement (this “Agreement”), dated as of July 6, 2020, is between LSB Industries, Inc. a Delaware corporation (the “Company”), and Computershare Trust Company, N.A., a federally chartered trust company, as rights agent (the “Rights Agent”).

The Company and certain of its Subsidiaries (as defined below) have generated certain Tax Attributes (as defined below) for United States federal income tax purposes and the Company therefore desires to avoid an “ownership change” within the meaning of Section 382 of the Code (as defined below), including for purposes of Section 383 of the Code, and to preserve the Company’s ability to utilize such Tax Attributes. 

The Board of Directors of the Company (the “Board of Directors”) has authorized and declared a dividend of one preferred share purchase right (a “Right”) for each share of common stock, par value $0.10 per share, of the Company outstanding on the Close of Business on July 16, 2020 (the “Record Date”) and has authorized the issuance of one Right with respect to each additional Common Share (as defined below) issued by the Company between the Record Date and the earliest of (i) the Distribution Date, (ii) the Redemption Date, and (iii) the Final Expiration Date, and additional Common Shares that shall become outstanding after the Distribution Date as provided in Section 22 of this Agreement, each Right initially representing the right to purchase one one-thousandth of a Preferred Share, subject to adjustment, upon the terms and subject to the conditions hereof.

Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties agree as follows:

Definitions

. For purposes of this Agreement, the following terms have the meanings indicated:

1.1“Acquiring Person” means any Person (other than an Exempt Person) who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 4.9% or more of the Common Shares then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any entity holding Common Shares for or pursuant to the terms of any such employee benefit plan or (v) any Person who or which, together with all Affiliates and Associates of such Person, at the time of the first public announcement of this Agreement, is a Beneficial Owner of 4.9% or more of the Common Shares then outstanding (a “Grandfathered Stockholder”); provided, that if a Grandfathered Stockholder becomes, after such time, the Beneficial Owner (other than pursuant to the vesting or exercise of any equity awards issued to a member of the Board of Directors or pursuant to additional grants of any such equity awards to a member of the Board of Directors) of any additional Common Shares (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of Common Shares then outstanding Beneficially Owned by such Grandfathered Stockholder) then such Grandfathered Stockholder shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional Common Shares, such Person is not the Beneficial Owner of 4.9% or more of the Common Shares then outstanding; provided, 

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further, that upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 4.9%, such Grandfathered Stockholder shall no longer be deemed to be a Grandfathered Stockholder and this clause (v) shall have no further force or effect with respect to such Person. For the avoidance of doubt, in the event that after the time of the first public announcement of this Agreement, any agreement, arrangement or understanding pursuant to which any Grandfathered Stockholder is deemed to be the Beneficial Owner of Common Shares expires, is settled in whole or in part, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different Common Shares that confers Beneficial Ownership of Common Shares shall be considered the acquisition of Beneficial Ownership of additional Common Shares by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of this Agreement unless, upon such acquisition of Beneficial Ownership of additional Common Shares, such person is not the Beneficial Owner of 4.9% or more of the Common Shares then outstanding.

Notwithstanding the foregoing, no Person shall become an Acquiring Person as the result of an acquisition or redemption of Common Shares by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares Beneficially Owned by such Person to 4.9% (or such other percentage as would otherwise result in such Person becoming an Acquiring Person) or more of the Common Shares then outstanding; provided, that if a Person would, but for the provisions of this paragraph, become an Acquiring Person by reason of an acquisition or redemption of Common Shares by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Common Shares at any time such that the Person is or thereby becomes the Beneficial Owner of 4.9% (or such other percentage as would otherwise result in such Person becoming an Acquiring Person) or more of the Common Shares then outstanding (other than Common Shares acquired solely as a result of corporate action of the Company not caused, directly or indirectly, by such Person), then such Person shall be deemed to be an Acquiring Person.

Notwithstanding the foregoing, if the Board of Directors, with the concurrence of a majority of the members of the Board of Directors who are not, and are not representatives, nominees, Affiliates or Associates of, such Person or an Acquiring Person, determines in good faith that a Person that would otherwise be an Acquiring Person has become such inadvertently (including because (i) such Person was unaware that it beneficially owned a percentage of Common Shares that would otherwise cause such Person to be an Acquiring Person or (ii) such Person was aware of the extent of its Beneficial Ownership of Common Shares but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without any intention of changing, obtaining or influencing control of the Company, and such Person divests as promptly as practicable a sufficient number of Common Shares so that such Person would no longer be an Acquiring Person, then such Person shall not be deemed to have become an Acquiring Person.  Notwithstanding the foregoing, if a bona fide swaps dealer who would otherwise be an Acquiring Person has become so as a result of its actions in the ordinary course of its business that the Board of Directors determines, in its sole discretion, were taken without the intent or effect of evading or assisting any other Person to evade the purposes and intent of this Agreement, or otherwise seeking to control or influence the management or policies 

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of the Company, then, and unless and until the Board of Directors shall otherwise determine, such Person shall not be deemed to be an Acquiring Person. 

Notwithstanding the foregoing, no Person shall become an Acquiring Person solely as a result of an Exempt Transaction.

Notwithstanding the foregoing, no regulated investment company under Section 851 of the Code shall be deemed to be an Acquiring Person, unless the Board of Directors determines, in its reasonable discretion, that such regulated investment company is deemed to Beneficially Own more than 4.9% or more of the Common Shares then outstanding under the applicable standards of Treasury Regulation 1.382-3(a). In determining whether any regulated investment company is an Acquiring Person, the filing of a statement under Section 13 of the Exchange Act with respect to such regulated investment company shall not be deemed to establish that such regulated investment company has acquired Beneficial Ownership of 4.9% or more of the Common Shares then outstanding; provided, that the Board of Directors shall be entitled to rely upon any such filing unless such regulated investment company provides information and diligence that permits the Board of Directors to conclude, in its reasonable discretion, that such regulated investment company has not acquired Beneficial Ownership of 4.9% or more of the Common Shares then outstanding pursuant to the standards of Treasury Regulation 1.382-3.

	

	
Notwithstanding the definition of Acquiring Person under this Agreement, the Board of Directors may also determine that any Person is an Acquiring Person under this Agreement if such Person becomes the Beneficial Owner of 4.9% (by value) or more of the Common Shares then outstanding (as the term “stock” is defined in Treasury Regulations Sections 1.382-2(a)(3) and 1.382-2T(f)(18)).

 

1.2 “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b‐2 promulgated under the Exchange Act, as in effect on the date of this Agreement.

1.3A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “Beneficially Own,” or have “Beneficial Ownership” of, any securities:

1.3.1which such Person actually owns (directly or indirectly) or would be deemed to actually or constructively own pursuant to Section 382 of the Code and the Treasury Regulations promulgated thereunder (including any coordinated acquisition of securities by any Persons who have a formal or informal understanding with respect to such acquisition (to the extent that ownership of such securities would be attributed to such Persons under Section 382 of the Code and the Treasury Regulations promulgated thereunder));

1.3.2which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly, within the meaning of Rules 13d-3 or 13d-5 promulgated under the Exchange Act, as in effect on the date of this Agreement;

1.3.3which such Person or any of such Person’s Affiliates or Associates has (i) the right or ability to vote, cause to be voted or control or direct the voting of pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, that a Person 

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shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security if the agreement, arrangement or understanding to vote such security (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (B) is not also then reportable on a statement on Schedule 13D under the Exchange Act (or any comparable or successor report) or (ii) the right or the obligation to become the Beneficial Owner (whether such right is exercisable or such obligation is required to be performed immediately or only after the passage of time, the occurrence of conditions, the satisfaction of regulatory requirements or otherwise) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), written or otherwise, or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise, through conversion of a security, pursuant to the power to revoke a trust, discretionary account or similar arrangement, pursuant to the power to terminate a repurchase or similar so-called “stock-borrowing” agreement or arrangement, or pursuant to the automatic termination of a trust, discretionary account or similar arrangement; provided, that a Person shall not be deemed to be the Beneficial Owner of, or to Beneficially Own, (x) securities tendered pursuant to a tender or exchange offer made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act until such tendered securities are accepted for purchase or exchange or (y) any shares of the Company’s Preferred Stock or Class C Preferred Stock (other than the Preferred Shares); 

1.3.4which are Beneficially Owned (within the meaning of the preceding subsections of this Section 1.3), directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding, whether or not in writing, for the purpose of acquiring, holding, voting or disposing of any securities of the Company or cooperating in obtaining, changing, or influencing control of the Company; or

1.3.5which are the subject of, or the reference securities for, or that underlie, any Derivative Position of such Person or any of such Person’s Affiliates or Associates, with the number of Common Shares deemed Beneficially Owned in respect of a Derivative Position being the notional or other number of Common Shares in respect of such Derivative Position (without regard to any short or similar position) that is specified in (i) one or more filings with the Securities and Exchange Commission by such Person or any of such Person’s Affiliates or Associates or (ii) the documentation evidencing such Derivative Position as the basis upon which the value or settlement amount of such Derivative Position, or the opportunity of the holder of such Derivative Position to profit or share in any profit, is to be calculated in whole or in part (whichever of (i) or (ii) is greater), or if no such number of Common Shares is specified in such filings or documentation (or such documentation is not available to the Board of Directors), as determined by the Board of Directors in its reasonable discretion.

Notwithstanding anything in this definition of Beneficial Owner to the contrary, the phrase “then outstanding,” when used with reference to a Person’s Beneficial Ownership of securities of the Company, means the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to Beneficially Own hereunder.

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1.4 “Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in the state of New York are authorized or obligated by law or executive order to close.

1.5 “Close of Business” on any given date means 5:00 p.m., New York time, on such date; provided, that if such date is not a Business Day, it means 5:00 p.m., New York time, on the next succeeding Business Day.

1.6“Code” means the Internal Revenue Code of 1986, as amended. 

1.7“Common Shares” means the shares of common stock, par value $0.10 per share, of the Company. “Common Shares,” when used with reference to any Person other than the Company, means the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person.

1.8“Common Stock Equivalents” has the meaning set forth in Section 11.1.3(ii)(C).

1.9“Current Per Share Market Price” has the meaning set forth in Section 11.4.1.

1.10“Current Value” has the meaning set forth in Section 11.1.3(i)(A).

1.11“Derivative” has the meaning set forth in Section 1.12.

1.12“Derivative Position” shall mean any option, warrant, convertible security, stock appreciation right, or other security, contract right or derivative position or similar right (including any “swap” transaction with respect to any security, other than a broad based market basket or index) (any of the foregoing, a “Derivative”), whether or not presently exercisable, that (i) has an exercise or conversion privilege or a settlement payment or mechanism at a price related to the value of the Common Shares or a value determined in whole or in part with reference to, or derived in whole or in part from, the value of the Common Shares and that increases in value as the market price or value of the Common Shares increases or that provides an opportunity, directly or indirectly, to profit or share in any profit derived from any increase in the value of the Common Shares and (ii) is capable of being settled, in whole or in part, through delivery of cash or Common Shares (whether on a required or optional basis, and whether such settlement may occur immediately or only after the passage of time, the occurrence of conditions, the satisfaction of regulatory requirements or otherwise), in each case regardless of whether (A) it conveys any voting rights in such Common Shares to any Person or (B) any Person (including the holder of such Derivative Position) may have entered into other transactions that hedge its economic effect.

1.13“Distribution Date” has the meaning set forth in Section 3.1.

1.14“Earning Power” has the meaning set forth in Section 13.3.

1.15“Equivalent Preferred Shares” has the meaning set forth in Section 11.2.

1.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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1.17“Exchange Property” has the meaning set forth in Section 24.6.

1.18“Exchange Ratio” has the meaning set forth in Section 24.1.

1.19“Exchange Recipients” has the meaning set forth in Section 24.6.

1.20“Exempt Person” means any Person that the Board of Directors determines is exempt from this Agreement, which determination shall be made in the sole and absolute discretion of the Board of Directors; provided, that no Person shall qualify as an Exempt Person unless such determination is made prior to such time as any Person becomes an Acquiring Person; provided, further, that any Person will cease to be an Exempt Person if the Board of Directors makes a contrary determination with respect to such Person regardless of the reason therefor. 

1.21“Exempt Transaction” means any transaction that the Board of Directors determines is exempt from this Agreement, which determination shall be made in the sole and absolute discretion of the Board of Directors; provided, no transaction shall qualify as an Exempt Transaction unless such determination is made prior to such time as any Person becomes an Acquiring Person. 

1.22“Exemption Request” has the meaning set forth in Section 36.

1.23“Final Expiration Date” means the earliest to occur of (i) the Close of Business on the day following the certification of the voting results of the Company’s 2021 annual meeting of stockholders, if at such stockholder meeting a proposal to approve this Agreement has not been passed by the affirmative vote of the majority of the votes cast at the 2021 annual meeting of stockholders or any other meeting of stockholders of the Company duly held prior to such meeting, (ii) the date on which the Board of Directors determines in its sole discretion that (x) this Agreement is no longer necessary for the preservation of material valuable Tax Attributes or (y) the Tax Attributes have been fully utilized and may no longer be carried forward and (iii) the Close of Business on July 6, 2023.

1.24“Grandfathered Stockholder” has the meaning set forth in Section 1.1.

1.25“NYSE” means the New York Stock Exchange.

1.26“Person” means any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity.

1.27“Preferred Shares” means shares of Series G Class C Preferred Stock, no par value, of the Company having such rights and preferences as are set forth in the form of Certificate of Designations set forth as Exhibit A hereto, as the same may be amended from time to time. 

1.28“Purchase Price” has the meaning set forth in Section 7.2.

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1.29“Redemption Date” has the meaning set forth in Section 23.2.

1.30“Redemption Price” has the meaning set forth in Section 23.1.

1.31“Requesting Person” has the meaning set forth in Section 36.

1.32“Right Certificate” means a certificate evidencing a Right substantially in the form of Exhibit B hereto.

1.33“Spread” has the meaning set forth in Section 11.1.3(i).

1.34“Stock Acquisition Date” means the earliest of the date of (i) the public announcement by the Company or an Acquiring Person that an Acquiring Person has become such (which, for purposes of this definition, shall include a statement on Schedule 13D filed pursuant to the Exchange Act) and (ii) the public disclosure of facts by the Company or an Acquiring Person that reveals the existence of an Acquiring Person or indicating that an Acquiring Person has become an Acquiring Person.

1.35“Subsidiary” of any Person means any Person of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.

1.36“Summary of Rights” means the Summary of Rights to Purchase Preferred Shares substantially in the form of Exhibit C hereto.

1.37“Tax Attributes” means any net operating loss carryovers, capital loss carryovers, general business credit carryovers, Section 163(j) deferred interest carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any loss or deduction (whether actual or prospective) attributable to a “net unrealized built-in loss” within the meaning of Section 382 of the Code and the Treasury Regulations promulgated thereunder, of the Company or any of its Subsidiaries.

1.38“Trading Day” means a day on which the principal national securities exchange on which a security is listed or admitted to trading is open for the transaction of business or, if a security is not listed or admitted to trading on any national securities exchange, a Business Day.

1.39“Treasury Regulations” means final, temporary and proposed regulation of the Department of Treasury under the Code and any successor regulation, including any amendments thereto.

1.40“Trust” has the meaning set forth in Section 24.6.

Appointment of Rights Agent

. The Company hereby appoints the Rights Agent to act as rights agent for the Company in accordance with the express terms and conditions hereof (and no implied terms or conditions), and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-rights agents as it may deem necessary or desirable, upon ten days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co-

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rights agent. In the event that the Company appoints one or more co-rights agents, the respective duties of the Rights Agent and any co-rights agent shall be as the Company shall reasonably determine, provided that such duties and determination are consistent with the terms and provisions of this Agreement and that contemporaneously with such appointment, if any, the Company shall notify the Rights Agent in writing thereof.

Issue of Right Certificates

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3.1Until the earlier of (i) the Close of Business on the tenth day after the Stock Acquisition Date (or, in the event that the Board of Directors determines on or before such tenth day to effect an exchange in accordance with Section 24 and determines that a later date is advisable, such later date) and (ii) the Close of Business on the tenth Business Day (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) after the date of the commencement by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any entity holding Common Shares for or pursuant to the terms of any such benefit plan or any Exempt Person) of a tender or exchange offer the consummation of which would result in any Person becoming an Acquiring Person (such date being herein referred to as the “Distribution Date”) (provided, that if such tender or exchange offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender or exchange offer), (A) the Rights will be evidenced by the certificates (or other evidence of book-entry or other uncertificated ownership) for Common Shares registered in the names of the holders thereof (which shall also be deemed to be Right Certificates) and not by separate Right Certificates (provided, that each certificate (or other evidence of book-entry or other uncertificated ownership) representing Common Shares outstanding as of the Close of Business on the Record Date evidencing the Rights shall be deemed to incorporate by reference the terms of this Agreement, as amended from time to time), and (B) the right to receive Right Certificates will be transferable only in connection with the transfer of Common Shares. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested, at the expense of the Company and upon receipt of all relevant information, send) by first-class, postage-prepaid mail, to each record holder of Common Shares as of the Distribution Date (other than any Acquiring Person or any Associate or Affiliate of any Acquiring Person), at the address of such holder shown on the records of the Company, a Right Certificate, substantially in the form of Exhibit B hereto, evidencing one Right for each Common Share so held, subject to adjustment as provided herein; provided, that the Rights may instead be recorded in book-entry or other uncertificated form, in which case such book-entries or other evidence of ownership shall be deemed to be Right Certificates for all purposes of this Agreement; provided, further, that all procedures relating to actions to be taken or information to be provided with respect to such Rights recorded in book-entry or other uncertificated forms, and all requirements with respect to the form of any Right Certificate set forth in this Agreement, may be modified as necessary or appropriate to reflect book-entry or other uncertificated ownership. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates.

3.2As soon as practicable after the Record Date, the Company will make available a copy of the Summary of Rights to any holder of Rights who may request it prior to the Final 

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Expiration Date. The Company shall provide the Rights Agent with written notice of the occurrence of the Final Expiration Date and the Rights Agent shall not be deemed to have knowledge of the occurrence of the Final Expiration Date, unless and until it shall have received such written notice. 

3.3Certificates for Common Shares which become outstanding (including reacquired Common Shares referred to in the last sentence of this Section 3.3) after the Record Date but prior to the earliest of (i) the Distribution Date, (ii) the Redemption Date, and (iii) the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them a legend in substantially the following form:

This certificate also evidences and entitles the holder hereof to certain Rights (as defined in the Rights Agreement) as set forth in a Section 382 Rights Agreement between LSB Industries, Inc. and Computershare Trust Company, N.A., as Rights Agent (or any successor rights agent), dated as of July 6, 2020, as it may from time to time be amended or supplemented pursuant to its terms (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of LSB Industries, Inc. and the office or offices of Computershare Trust Company, N.A. designated for such purpose. The Rights are not exercisable prior to the occurrence of certain events specified in the Rights Agreement. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced separately and will no longer be evidenced by this certificate. LSB Industries, Inc. will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain circumstances, Rights that are or were acquired or Beneficially Owned by an Acquiring Person (or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement)), including such Rights held by a subsequent holder, may become null and void.

Notwithstanding this Section 3.3, the omission of a legend shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Rights. If the Company purchases or acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common Shares which are no longer outstanding. Rights shall be issued in respect of all Common Shares issued or disposed of (including upon issuance or reissuance of Common Shares out of authorized but unissued shares) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date, and the Final Expiration Date, or in certain circumstances provided in Section 22 hereof, after the Distribution Date.

Form of Right Certificates

. Right Certificates (and the forms of election to purchase Preferred Shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement (but which do not affect the rights, duties, liabilities or responsibilities of the Rights Agent), or as may be required to comply with 

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any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the other provisions of this Agreement, the Right Certificates shall entitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share as shall be set forth therein at the Purchase Price, but the amount and type of securities purchasable upon exercise and the Purchase Price shall be subject to adjustment as provided herein.

Countersignature and Registration

. Right Certificates shall be duly executed on behalf of the Company by its Chairman of the Board of Directors, its Chief Executive Officer, its President or any of its Vice Presidents, either manually or by facsimile signature, and shall be attested by the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, either manually or by facsimile signature or by other customary means of electronic transmission. Upon written request by the Company, the Right Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature or by other customary means of electronic transmission, by an authorized signatory of the Rights Agent, but it shall not be necessary for the same signatory to countersign all of the Right Certificates hereunder. No Right Certificate shall be valid for any purpose unless so countersigned, either manually or by facsimile or by other customary means of electronic transmission. If any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates nevertheless may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the Person that signed such Right Certificates had not ceased to be such officer of the Company. Any Right Certificate may be signed on behalf of the Company by any Person that, at the actual date of the execution of such Right Certificate, is a proper officer of the Company to sign such Right Certificate, even if at the date of the execution of this Agreement such Person was not such an officer.

Following the Distribution Date, and receipt by the Rights Agent of written notice to that effect and all other relevant information referred to in this Agreement, the Rights Agent will keep or cause to be kept, at its office or offices designated for such purpose, books for registration of the transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates, and the date of each of the Right Certificates.

	
Transfer, Split-up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates
	

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6.1Subject to the provisions of Section 14, at any time after the Distribution Date, and prior to the earlier of the Redemption Date and the Final Expiration Date, any Right Certificate (other than a Right Certificate representing Rights that have become null and void pursuant to Section 11.1.2 or that have been exchanged pursuant to Section 24) may be transferred, split up, combined or exchanged for another Right Certificate, entitling the registered holder to purchase a like number of Preferred Shares as the Right Certificate surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, 

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split up, combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender (together with any required form of assignment and certificate duly executed and properly completed) the Right Certificate to be transferred, split up, combined or exchanged at the office or offices of the Rights Agent designated for such purpose, accompanied by a signature guarantee and such other documentation as the Rights Agent may reasonably request. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have properly completed and duly executed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) of the Rights represented by such Right Certificate or the Affiliates or Associates thereof, or of any other Person with which such Beneficial Owner or any of such Beneficial Owner’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of any securities of the Company, as the Company or the Rights Agent shall reasonably request. Thereupon, the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company or the Rights Agent may require payment from the holders of the Right Certificates of a sum sufficient for any tax or governmental charge that may be imposed in connection with any transfer, split-up, combination or exchange of Right Certificates. The Rights Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of taxes and/or charges unless and until it is satisfied that all such payments have been made.

6.2Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate (other than any Right Certificate representing Rights that have become null and void pursuant to Section 11.1.2, that have been redeemed pursuant to Section 23 or that have been exchanged pursuant to Section 24), the identity of the Beneficial Owner (or former Beneficial Owner) of the Rights represented by such Right Certificate or the Affiliates or Associates thereof, or of any other Person with which such Beneficial Owner or any of such Beneficial Owner’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of any securities of the Company, as the Company or the Rights Agent shall request (including a signature guarantee and such other documentation as the Rights Agent may reasonably request) and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and, at the Company’s or the Rights Agent’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and, in case of mutilation, upon surrender to the Rights Agent and cancellation of the Right Certificate, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

Exercise of Rights; Purchase Price; Expiration Date of Rights

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7.1The registered holder of any Right Certificate (other than a holder whose Rights have become void pursuant to Section 11.1.2, have been redeemed pursuant to Section 23 or have been exchanged pursuant to Section 24) may exercise the Rights evidenced thereby in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, 

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with the appropriate form of election to purchase on the reverse side thereof properly completed and duly executed, to the Rights Agent at the offices of the Rights Agent designated for such purpose, accompanied by a signature guarantee and such other documentation as the Rights Agent may reasonably request, together with payment of the Purchase Price multiplied by the number of one one-thousandths of a Preferred Share for which a Right that is exercised is then exercisable and an amount equal to any applicable transfer tax or charges required to be paid pursuant to Section 9, prior to the earliest of (i) the Final Expiration Date, (ii) the time at which the Rights are redeemed pursuant to Section 23, and (iii) the time at which the Rights are exchanged pursuant to Section 24.

7.2The purchase price to be paid upon the exercise of each Right to purchase one one-thousandth of a Preferred Share represented by a Right shall initially be $10.00 (the “Purchase Price”) and shall be payable in lawful money of the United States of America in accordance with Section 7.3. Each Right shall initially entitle the holder to acquire one one-thousandth of a Preferred Share upon exercise of the Right. The Purchase Price and the number of Preferred Shares or other securities for which a Right is exercisable shall be subject to adjustment from time to time as provided in Sections 11 and 13.

7.3Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and certificate properly completed and duly executed, accompanied by payment of the Purchase Price for the number of Rights exercised and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 by cash, certified check, cashier’s check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly: (i)(A) requisition from any transfer agent of the Preferred Shares (or from the Company if there shall be no such transfer agent, or make available, if the Rights Agent is the transfer agent) certificates for the number of Preferred Shares to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) requisition from any depositary agent for the Preferred Shares depositary receipts representing such number of Preferred Shares as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent with the depositary agent), and the Company hereby directs any such depositary agent to comply with such request; (ii) when necessary to comply with this Agreement, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional Preferred Shares in accordance with Section 14 or Section 24; (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated in writing by such holder; and (iv) when necessary to comply with this Agreement, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue other securities of the Company, pay cash and/or distribute other property pursuant to this Agreement, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when necessary to comply with this Agreement, and until so received, the Rights Agent shall have no duties or obligations with respect to such securities, cash and/or other assets.

7.4If the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights 

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remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Right Certificate or to such holder’s duly authorized assigns, subject to the provisions of Section 14.

7.5Notwithstanding anything in this Agreement or the Right Certificate to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of Rights or other securities of the Company upon the occurrence of any purported transfer or exercise as set forth in this Section 7 unless such registered holder shall have (i) properly completed and duly executed the certificate contained in the appropriate form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof, as the Company and the Rights Agent shall reasonably request.

Cancellation and Destruction of Right Certificates

. All Right Certificates surrendered for the purpose of exercise, transfer, split-up, combination or exchange shall, if surrendered to the Company or to any of its agents (other than the Rights Agent), be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. At the expense of the Company, the Rights Agent shall deliver all canceled Right Certificates which have been canceled by the Rights Agent to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

Status and Availability of Preferred Shares

.

9.1The Company covenants and agrees that it will cause to be reserved and kept available, out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with Section 7. 

9.2The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares delivered upon exercise of Rights shall, at the time of delivery of the certificates (or entry in the book-entry account system of the Company) for such Preferred Shares (subject to payment of the Purchase Price and compliance with all other applicable provisions of this Agreement), be duly and validly authorized and issued and fully paid and non-assessable shares.

9.3The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates or depositary receipts for the Preferred Shares in a name other 

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than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise, and shall not be required to issue or to deliver any certificates or depositary receipts for Preferred Shares upon the exercise of any Rights until any such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s and the Rights Agent’s reasonable satisfaction that no such tax is due.

Preferred Shares Record Date

. Each Person in whose name any certificate (or entry in the book-entry account system of the Company) for Preferred Shares is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares represented thereby on, and such certificate or book-entry shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, that, if the date of such surrender and payment is a date upon which the Preferred Shares transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Shares transfer books of the Company are open.  Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be exercisable, including the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

Adjustment of Purchase Price, Number of Shares or Number of Rights

.

11.1General.

11.1.1In the event that the Company shall at any time after the date of this Agreement (i) declare a dividend on the Preferred Shares payable in Preferred Shares, (ii) subdivide the outstanding Preferred Shares, (iii) combine the outstanding Preferred Shares into a smaller number of Preferred Shares or (iv) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving Person), except as otherwise provided in this Section 11.1, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date, the holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the Preferred Shares issuable upon exercise of one Right.  If an event occurs that would require an adjustment under both this Section 11.1.1 and Section 11.1.2 hereof, the adjustment provided for in this Section 11.1.1 shall be in addition to, and shall be made prior to, the adjustment required pursuant to Section 11.1.2 hereof.

11.1.2Subject to the second paragraph of this Section 11.1.2 and to Section 24, from and after the Stock Acquisition Date, each holder of a Right shall have a right to receive, 

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upon exercise of each Right at a price equal to the then current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of Common Shares as shall equal the result obtained by dividing (A) the product of (x) the current Purchase Price and (y) the number of one one-thousandths of a Preferred Share for which a Right is then exercisable by (B) 50% of the then Current Per Share Market Price of the Company’s Common Shares (determined pursuant to Section 11.4) on the Stock Acquisition Date. 

From and after the Stock Acquisition Date, any Rights that are or were acquired or Beneficially Owned by (i) an Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (ii) a transferee of any Acquiring Person (or of any such Associate or Affiliate) who becomes such a transferee after the Acquiring Person becomes an Acquiring Person or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes such a transferee prior to or concurrently with the Acquiring Person becoming an Acquiring Person and who receives such Rights (A) with actual knowledge that the transferor is or was an Acquiring Person or (B) pursuant to either (x) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom the Acquiring Person (or such Associate or Affiliate) has any continuing agreement, arrangement, understanding or relationship (whether or not in writing) regarding the transferred Rights or (y) a transfer which the Board of Directors has determined is part of a plan, arrangement or understanding (whether or not in writing) which has as a primary purpose or effect of the avoidance of this Section 11.1.2, (each such Person described in (i)-(iii) above, an “Excluded Person”) shall, in each such case, be null and void, and any holder of such Rights (whether or not such holder is an Acquiring Person or an Associate or Affiliate of an Acquiring Person) shall thereafter have no right to exercise such Rights under any provision of this Agreement.  No Right Certificates shall be issued pursuant to Sections 3, 6, 7.4 or 11 or otherwise hereof that represents Rights that are or have become null and void pursuant to the provisions of this paragraph and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become null and void pursuant to the provisions of this paragraph shall, upon receipt of written notice directing it to do so, be canceled by the Rights Agent. 

11.1.3If there are not sufficient authorized but unissued Common Shares to permit the exercise in full of the Rights in accordance with Section 11.1.2 or the exchange of the Rights in accordance with Section 24, or should the Board of Directors so elect, the Company may with respect to such deficiency, (i) determine the excess (the “Spread”) of (A) the value of the Common Shares issuable upon the exercise of a Right as provided in Section 11.1.2 (the “Current Value”) over (B) the Purchase Price, and (ii) with respect to each Right, make adequate provision to substitute for such Common Shares, upon payment of the applicable Purchase Price, any one or more of the following having an aggregate value determined by the Board of Directors to be equal to the Current Value: (A) cash, (B) a reduction in the Purchase Price, (C) Common Shares or other equity securities of the Company (including shares, or units of shares, of preferred stock which the Board of Directors has determined to have the same value as Common Shares (“Common Stock Equivalents”)), (D) debt securities of the Company or (E) other assets, property or instruments. The Company shall provide the Rights Agent with prompt reasonably detailed written notice of any final determination under the previous sentence. 

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If the Board of Directors shall determine in good faith that additional Common Shares should be authorized for issuance upon exercise in full of the Rights, the Company may suspend the exercisability of the Rights in order to seek any authorization of additional shares, decide the appropriate form of distribution to be made and determine the value thereof. If the exercisability of the Rights is suspended pursuant to this Section 11.1.3, the Company shall make a public announcement, and shall promptly deliver to the Rights Agent a statement, stating that the exercisability of the Rights has been temporarily suspended. When the suspension is no longer in effect, the Company shall make another public announcement, and promptly deliver to the Rights Agent a statement, so stating. For purposes of this Section 11.1.3, the value of the Common Shares shall be the Current Per Share Market Price of the Common Shares (as determined pursuant to Section 11.4.1) as of the Stock Acquisition Date, and the value of any Common Stock Equivalent shall be deemed to have the same value as the Common Shares on such date.

11.2If the Company fixes a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Preferred Shares (or shares having the same rights, privileges and preferences as the Preferred Shares (“Equivalent Preferred Shares”)) or securities convertible into Preferred Shares or Equivalent Preferred Shares at a price per Preferred Share or Equivalent Preferred Share (or having a conversion price per share, if a security convertible into Preferred Shares or Equivalent Preferred Shares) less than the then Current Per Share Market Price of the Preferred Shares (as determined pursuant to Section 11.4.2) on such record date, the Purchase Price to be in effect after such record date shall be adjusted by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, (i) the numerator of which shall be (A) the number of Preferred Shares outstanding on such record date plus (B) the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares or Equivalent Preferred Shares to be offered (or the aggregate initial conversion price of the convertible securities to be offered) would purchase at such Current Per Share Market Price and (ii) the denominator of which shall be (A) the number of Preferred Shares outstanding on such record date plus (B) the number of additional Preferred Shares or Equivalent Preferred Shares to be offered for subscription or purchase (or into which the convertible securities to be offered are initially convertible); provided, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. If such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent, which shall be conclusive for all purposes. Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed. If such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed.

11.3If the Company fixes a record date for the making of a distribution to all holders of the Preferred Shares (including any distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving Person) or evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in 

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Preferred Shares) or subscription rights or warrants (excluding those referred to in Section 11.2), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, (i) the numerator of which shall be the then Current Per Share Market Price of the Preferred Shares on such record date, less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and which shall be conclusive for all purposes) of the portion of the assets or evidences of indebtedness to be distributed or of such subscription rights or warrants applicable to one Preferred Share and (ii) the denominator of which shall be the then Current Per Share Market Price of the Preferred Shares; provided, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the Preferred Shares to be issued upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed. If such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed.

11.4Current Per Share Market Price.

11.4.1For the purpose of any computation hereunder, the “Current Per Share Market Price” of any security on any date shall be deemed to be the average of the daily closing prices per share of such security for the 30 consecutive Trading Days immediately prior to such date; provided, that if the Current Per Share Market Price of the security is determined during a period (i) following the announcement by the issuer of such security of (A) a dividend or distribution on such security payable in shares of such security or other securities convertible into such shares, or (B) any subdivision, combination or reclassification of such security, and (ii) prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the Current Per Share Market Price shall be appropriately adjusted to reflect the current market price per share equivalent of such security. The closing price for each day shall be the last sale price or, if no such sale takes place on such day, the average of the closing bid and asked prices, in either case as reported by NYSE, or, if on any such date the security is not quoted by NYSE, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the security selected by the Board of Directors. If on any such date no such market maker is making a market in the security, the fair value of the security on such date as determined in good faith by the Board of Directors shall be used.

11.4.2For the purpose of any computation hereunder, the “Current Per Share Market Price” of the Preferred Shares shall be determined in accordance with the method set forth in Section 11.4.1. If the Preferred Shares are not publicly traded, the “Current Per Share Market Price” of the Preferred Shares shall be conclusively deemed to be the Current Per Share Market Price of the Common Shares as determined pursuant to Section 11.4.1 (appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof) multiplied by one thousand.  If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, “Current Per Share Market Price” means the fair value per share as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

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11.5No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, that any adjustments which by reason of this Section 11.5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one one-thousandth of a Preferred Share or one one-thousandth of any other share or security as the case may be. Notwithstanding the first sentence of this Section 11.5, any adjustment required by this Section 11 shall be made no later than three years from the date of the transaction which requires such adjustment.

11.6If, as a result of an adjustment made pursuant to Section 11.1, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Shares, the number of such other shares so receivable upon exercise of any Right shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Sections 11.1 through 11.3, inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares shall apply on like terms to any such other shares.

11.7All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of Preferred Shares purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

11.8Unless the Company exercises its election as provided in Section 11.9, upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11.2 and 11.3, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandth of a Preferred Share (calculated to the nearest one one-thousandth of a Preferred Share) obtained by (i) multiplying the number of one one-thousandth of a Preferred Share covered by a Right immediately prior to this adjustment by the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

11.9The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights in substitution for any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of Preferred Shares for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one one-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement (with prompt written notice thereof to the Rights Agent) of its election to adjust the number of Rights, indicating the record date for the adjustment and, if known at the time, the amount of the adjustment to be made. The record date may be the date on which the Purchase Price is adjusted or any day thereafter but, if the Right Certificates have been distributed, shall be at least ten days after the date of the public announcement. If Right Certificates have been distributed, upon each adjustment of the number of Rights pursuant to this Section 11.9, the Company shall, as 

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promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14, the additional Rights to which such holders shall be entitled as a result of such adjustment or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates to be so distributed shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.

11.10Irrespective of any adjustment or change in the Purchase Price or the number of Preferred Shares issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of Preferred Shares which were expressed in the initial Right Certificates issued hereunder.

11.11Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value of the Preferred Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable Preferred Shares at such adjusted Purchase Price.

11.12If this Section 11 requires that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may defer, until the occurrence of such event, issuing to the holder of any Right exercised after such record date Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares upon the occurrence of the event requiring adjustment.

11.13Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that any (i) combination or subdivision of the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the Current Per Share Market Price, (iii) issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred Shares, or (v) issuance of any rights, options or warrants referred to in Section 11.2 made by the Company after the date of this Agreement to holders of its Preferred Shares shall not be taxable to such stockholders.

11.14If, at any time after the date of this Agreement and prior to the Distribution Date, the Company (i) declares or pays any dividend on the Common Shares payable in Common Shares or (ii) effects a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise other than by payment of dividends in Common Shares) into a 

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greater or lesser number of Common Shares, then in any such case (A) the number of one one-thousandths of a Preferred Share purchasable after such event upon exercise of each Right shall be determined by multiplying the number of one one-thousandths of a Preferred Share so purchasable immediately prior to such event by a fraction, the numerator of which is the number of Common Shares outstanding immediately before such event and the denominator of which is the number of Common Shares outstanding immediately after such event, and (B) each Common Share outstanding immediately after such event shall have issued with respect to it that number of Rights which each Common Share outstanding immediately prior to such event had issued with respect to it. The adjustments provided for in this Section 11.14 shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is affected.

Certificate of Adjustment

. Whenever an adjustment or any event affecting the Rights or their exercisability (including an event that causes Rights to become null and void) occurs or is made as provided in Sections 11 and 13, the Company shall promptly (i) prepare a certificate setting forth such adjustment and a reasonably detailed statement of the facts, computation, methodology and accounting for such adjustment, (ii) promptly file with the Rights Agent and with each transfer agent for the Common Shares or the Preferred Shares a copy of such certificate, and (iii) if such adjustment occurs following a Distribution Date, mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein contained and shall not be obligated or responsible for calculating any adjustment, nor shall the Rights Agent be deemed to have knowledge of such an adjustment or any such event, unless and until it shall have received such certificate. Notwithstanding the foregoing sentence, but without limiting any of the rights or immunities of the Rights Agent, the failure of the Company to make such certification or give such notice shall not affect the validity of, or the force or effect of, the requirement for such adjustment. Any adjustment to be made pursuant to Section 11 or 13 hereof shall be effective as of the date of the event giving rise to such adjustment. The Rights Agent shall be entitled to rely on any such certificate and on any adjustment or statement therein and shall have no duty or liability with respect thereto, and shall not be deemed to have knowledge of any such adjustment or any such event unless and until it shall have received such certificate.

Consolidation, Merger, Sale or Transfer of Assets or Earning Power

. 

13.1If, at any time after a Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other Person; (ii) any Person consolidates with the Company, or merges with and into the Company, and the Company is the continuing or surviving Person of such merger and, in connection with such merger, all or part of the Common Shares are or will be changed into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property; or (iii) the Company sells or otherwise transfers (or one or more of its Subsidiaries sell or otherwise transfer), in one or more transactions, assets or Earning Power aggregating 50% or more of the assets or Earning Power of the Company and its Subsidiaries (taken as a whole) to any other Person other than the Company or one or more of its wholly owned Subsidiaries, then proper provision shall be made so that (A) each holder of a Right (except as otherwise provided herein) shall have the right to receive, upon the exercise of each Right at a price equal to the then current Purchase Price multiplied by the number of one one-

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thousandths of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of Common Shares of such other Person (including the Company as successor thereto or as the surviving Person) equal to the result obtained by dividing (I) the product of (x) the then current Purchase Price and (y) the number of one one-thousandths of a Preferred Share for which a Right is then exercisable by (II) 50% of the then Current Per Share Market Price of the Common Shares of such other Person (determined pursuant to Section 11.4) on the date of consummation of such consolidation, merger, sale or transfer; (B) the issuer of such Common Shares shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement; (C) the term “Company” shall thereafter be deemed to refer to such issuer; and (D) such issuer shall take steps (including the reservation of a sufficient number of shares of its common stock in accordance with Section 9) in connection with such consummation as may be necessary to ensure that the provisions hereof shall thereafter be applicable in relation to the common stock thereafter deliverable upon the exercise of the Rights.

13.2The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement providing for such issuer’s compliance with this Section 13. The Company shall not enter into any transaction of the kind referred to in this Section 13 if, at the time of such transaction, there are any rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would eliminate or substantially diminish the benefits intended to be afforded by the Rights. The provisions of this Section 13 shall apply to successive mergers or consolidations or sales or other transfers.

13.3For purposes of this Agreement, the “Earning Power” of the Company and its Subsidiaries shall be determined in good faith by the Company’s Board of Directors on the basis of the operating earnings of each business operated by the Company and its Subsidiaries during the three fiscal years preceding the date of such determination (or, in the case of any business not operated by the Company or any Subsidiary during three full fiscal years preceding such date, during the period such business was operated by the Company or any Subsidiary).

Fractional Rights and Fractional Shares

.

14.1The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company may instead pay to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14.1, the current market value of a whole Right shall be the closing price of the Rights (as determined pursuant to the second sentence of Section 11.4.1) for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. 

14.2The Company shall not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-thousandth of a Preferred Share) upon exercise of the Rights, to distribute certificates which evidence fractional Preferred Shares or to 

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register fractional Preferred Shares in the Company’s share register (other than fractions which are integral multiples of one one-thousandth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant to an agreement between the Company and a depositary selected by the Company; provided, that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-thousandth of a Preferred Share, the Company shall pay to each registered holder of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Preferred Share as the fraction of one Preferred Share that such holder would otherwise receive upon the exercise of the aggregate number of rights exercised by such holder. For the purposes of this Section 14.2, the current market value of a Preferred Share shall be the closing price of a Preferred Share (pursuant to Section 11.4.1) for the Trading Day immediately prior to the date of such exercise.

14.3For purposes of this Section 14, the closing price for any day shall be the last quoted price or, if not so quoted, the average of the high bid and low asked prices as reported by NYSE, or if on any such date the Rights or Preferred Shares, as applicable, are not listed on NYSE, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights or Preferred Shares, as applicable, selected by the Board of Directors. If on any such date no such market maker is making a market in the Rights or Preferred Shares, as applicable, the fair value of the Rights or Preferred Shares, as applicable, on such date as determined in good faith by the Board of Directors shall be used.

14.4The holder of a Right by the acceptance of the Right expressly waives any right to receive fractional Rights or fractional shares upon exercise of a Right (except as provided in this Section 14).

14.5Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent under any section of this Agreement, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments.  The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of, any payment for fractional Rights or fractional shares under any section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies.

Rights of Action

. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18, are vested in the respective registered holders of the Right Certificates. Any registered holder of any Right Certificate may, without the consent of the Rights Agent or of the holder of any other Right Certificate, on such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right 

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Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement by the Company and will be entitled to specific performance of the obligations hereunder, and injunctive relief against actual or threatened violations of the obligations hereunder, of the Company.

Agreement of Right Holders

. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

16.1prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares;

16.2after the Distribution Date, the Right Certificates are transferable only on the registry books maintained by the Rights Agent if surrendered at the office or offices of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer with the appropriate form of certification, properly completed and duly executed, accompanied by a signature guarantee and such other documentation as the Rights Agent may reasonably request; 

16.3the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Shares certificate or, in the case of uncertificated Common Shares, by the book-entry that evidences record ownership of such Common Shares) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Shares certificate or book-entry made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and

16.4notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of the inability of the Company or the Rights Agent to perform any of its or their obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree, judgment or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligation.

Right Certificate Holder Not Deemed a Stockholder

. No holder, as such, of any Right Certificate shall be entitled to vote or receive dividends, or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company that may at any time be issuable on the exercise or exchange of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, to give or withhold consent to any corporate action, to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25), or to receive dividends or subscription rights, or 

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otherwise, until the Rights evidenced by such Right Certificate shall have been exercised or exchanged in accordance with the provisions hereof.

Concerning the Rights Agent

. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder in accordance with a fee schedule to be mutually agreed upon, and, from time to time, on demand of the Rights Agent, to reimburse the Rights Agent for all of its reasonable expenses and counsel fees and other disbursements incurred in the preparation, delivery, negotiation, administration, execution and amendment,  of this Agreement and the exercise and performance of its duties hereunder. The Company also covenants and agrees to indemnify the Rights Agent for, and to hold it harmless against, any and all loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including the reasonable fees and expenses of legal counsel) that may be paid, incurred or suffered by it, or which it may become subject, without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross negligence, bad faith, or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction), for any action taken, suffered or omitted to be taken by the Rights Agent in connection with the execution, acceptance and, administration of, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim or liability arising therefrom or in connection therewith, directly or indirectly.  The provisions under this Section 18 and Section 20 below shall survive the expiration of the Rights and the termination of this Agreement and the resignation, replacement or removal of the Rights Agent.  The reasonable costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.

The Rights Agent shall be fully authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its acceptance and administration of this Agreement and the exercise and performance of its duties hereunder, in each case in reliance upon any Right Certificate or certificate for Preferred Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, instruction, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20. The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take action in connection therewith, unless and until it has received such notice in writing. 

Notwithstanding anything in this Agreement to the contrary, in no event will the Rights Agent be liable for special, punitive, indirect, incidental or consequential loss or damage of any kind whatsoever (including lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

Merger or Consolidation or Change of Name of Rights Agent

. Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stock transfer or other stockholder services business of the Rights Agent or any successor Rights 

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Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. The purchase of all or substantially all of the Rights Agent’s assets employed in the performance of transfer agent activities shall be deemed a merger or consolidation for purposes of this Section 19. If, at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned. If, at that time, any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent. In all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

If, at any time, the name of the Rights Agent changes and any of the Right Certificates have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned. If, at that time, any of the Right Certificates have not been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name. In all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

Rights and Duties of Rights Agent

. The Rights Agent undertakes to perform only the duties and obligations expressly set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Rights Agent. The Rights Agent shall perform its duties and obligations hereunder upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

20.1The Rights Agent may consult with legal counsel (who may be legal counsel for the Company or an employee or legal counsel of the Rights Agent), and the advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of as to any action taken or omitted by it in the absence of bad faith and in accordance with such advice or opinion.

20.2Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof is specifically prescribed herein) may be deemed to be conclusively proved and established by a certificate signed by a Person reasonably believed by the Rights Agent to be any one of the Chief Executive Officer, the Chairman of the Board of Directors, the President, a Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent, and such certificate shall be full authorization to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it under the provisions of this Agreement in reliance upon such certificate. The Rights Agent shall have no duty to act without such a certificate as set forth in this Section 20.2.

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20.3The Rights Agent shall be liable to the Company and any other Person hereunder only for its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction).  Notwithstanding anything in this Agreement to the contrary, any liability of the Rights Agent under this Agreement will be limited to the amount of annual fees paid by the Company to the Rights Agent during the 12 months immediately preceding the event for which recovery from the Rights Agent is being sought.

20.4The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except as to its countersignature thereof) or be required to verify the same. All such statements and recitals are and shall be deemed to have been made by the Company only.

20.5The Rights Agent shall not have any liability for or be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the legality or validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any determination by the Board of Directors with respect to the Rights or breach by the Company of any covenant or failure by the Company to satisfy any condition contained in this Agreement or in any Right Certificate; nor shall it be liable or responsible for any modification by or order of any court, tribunal or governmental authority in connection with the foregoing, any change in the exercisability of the Rights or any adjustment required under the provisions of Sections 11 or 13 or for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate furnished pursuant to Section 12 describing such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Preferred Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares will, when so issued, be validly authorized and issued, fully paid, and non-assessable.

20.6The Rights Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including, without limitation, obligations under applicable regulation or law.

20.7The Rights Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Rights with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.

20.8The Company agrees that it will perform, execute, acknowledge and deliver, or cause to be performed, executed, acknowledged and delivered, all such further and other acts, instruments and assurances as may reasonably be required or reasonably requested by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

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20.9The Rights Agent is hereby authorized and directed to accept written instructions with respect to the performance of its duties hereunder and certificates delivered pursuant to any provision hereof from any Person reasonably believed by the Rights Agent to be any one of the Chairman of the Board, the Chief Executive Officer, the President, a Vice President, the Treasurer or the Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties under this Agreement, and such advice or instructions shall provide full authorization and protection to the Rights Agent, and the Rights Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with the written advice or instructions of any such officer or for any delay in acting while waiting for these instructions.  The Rights Agent shall be fully authorized and protected in relying upon the most recent advice or instructions received by any such officer.  Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent with respect to its duties or obligations under this Agreement.  

20.10The Rights Agent and any affiliate, stockholder, director, officer, agent, representative or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company, or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company, or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement, in each case in compliance with applicable laws. Nothing herein shall preclude the Rights Agent and such other Persons from acting in any other capacity for the Company or for any other legal entity.

20.11The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents. The Rights Agent shall not be answerable or accountable for any act, omission, default, neglect, or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting from any such act, omission, default, neglect or misconduct, absent gross negligence or bad faith in the selection and continued employment of such attorneys or agents thereof (which gross negligence or bad faith must be determined by a final, non-appealable judgment of a court of competent jurisdiction).

20.12No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if the Rights Agent believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

20.13The Rights Agent shall not be required to take notice or be deemed to have notice of any fact, event or determination (including any dates or events defined in this Agreement or the designation of any Person as an Acquiring Person, Affiliate or Associate or whether any Requesting Person has been designated as an Exempt Person) under this Agreement unless and until the Rights Agent shall be specifically notified in writing by the Company of such fact, event or determination, and all notices or other instruments required by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received by the Rights Agent as specified in Section 26, and in the absence of such notice so delivered, the Rights Agent may conclusively assume no such event or condition exists.

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20.14The Rights Agent shall have no responsibility to the Company or any holders of the Right Certificates for interest or earnings on any moneys held by the Rights Agent pursuant to this Agreement. 

Change of Rights Agent

. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to the Company and, in the event that the Rights Agent or one of its Affiliates is not also the transfer agent for the Company in accordance with Section 26 hereof, to each transfer agent of the Common Shares and the Preferred Shares, if known to the Rights Agent, by first class mail, postage prepaid. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent in accordance with Section 26 hereof, as the case may be, and to each transfer agent of the Common Shares and the Preferred Shares by registered or certified mail, and, after the Distribution Date, to the holders of the Right Certificates by first-class mail. In the event that the transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties as Rights Agent under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent, then the incumbent Rights Agent or registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (i) a Person (other than a natural person) organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise stock transfer powers, is subject to supervision or examination by federal or state authority, and has, along with its Affiliates, at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million or (ii) an Affiliate of a Person described in clause (i) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed, and the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and shall execute and deliver any further assurance, conveyance, act or deed necessary for the purpose but such predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing, and shall thereafter be discharged from all duties and obligations hereunder. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and the Preferred Shares, and, after the Distribution Date, mail a notice in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

Issuance of New Right Certificates

. Notwithstanding any of the provisions of this Agreement or of the Right Certificates to the contrary, the Company may, at its option, issue new 

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Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the earlier of the Redemption Date and the Final Expiration Date, the Company may, with respect to Common Shares so issued or sold, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, that no such Right Certificates may be issued if, and to the extent that, the Company, in its sole discretion, determines that such issuance would jeopardize or endanger the value or availability to the Company of the Tax Attributes or otherwise create a significant risk of material adverse tax consequences to the Company. 

Redemption

.

23.1The Board of Directors may, at its option, at any time prior to the earlier to occur of (i) the Close of Business on the tenth day following the Stock Acquisition Date (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (ii) the Final Expiration Date, redeem all, but not less than all, of the then outstanding Rights at a redemption price of $0.001 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (the “Redemption Price”). The redemption of the Rights by the Board of Directors may be made effective at such time, on such basis and subject to such conditions as the Board of Directors in its sole discretion may establish.

23.2Immediately upon the time of the effectiveness of the redemption of the Rights or such earlier time as may be determined by the Board of Directors in the action ordering such redemption (although not earlier than the time of such action) (the “Redemption Date”), and without any further action and without any notice, the right to exercise the Rights shall terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice of any such redemption (with prompt written notice to the Rights Agent); provided, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within ten Business Days after action of the Board of Directors ordering the redemption of the Rights, the Company shall mail, or cause the Rights Agent to mail (at the expense of the Company), a notice of redemption to the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares. Any notice mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. If the payment of the Redemption Price is not included with such notice, each such notice shall state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24, other than in connection with the purchase of Common Shares prior to the Distribution Date.

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Exchange

.

24.1The Board of Directors may, at its option, at any time after a Stock Acquisition Date, mandatorily exchange all or part of the then outstanding and exercisable Rights (which excludes Rights that have become void pursuant to Section 11.1.2) for Common Shares at an exchange ratio of one Common Share per one one-thousandth of a Preferred Share represented by a Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (the “Exchange Ratio”). From and after the occurrence of an event specified in Section 13.1, any Right that theretofore has not been exchanged pursuant to this Section 24 shall thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section 24. The exchange of the Rights by the Board of Directors 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.

24.2Immediately upon the action of the Board of Directors ordering the exchange of any Rights pursuant to Section 24.1, and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give reasonably detailed written notice of any such exchange to the Rights Agent, and shall promptly give public notice of any such exchange; provided, that the failure to give, or any defect in, any such notice shall not affect the validity of such exchange. Within ten Business Days after action by the Board of Directors ordering the exchange of any Rights pursuant to Section 24.1, the Company shall mail, or cause the Rights Agent to mail, a notice of any such exchange to the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11.1.2) held by each holder of Rights.

24.3In any exchange pursuant to this Section 24, the Company, at its option, may substitute Preferred Shares or Common Stock Equivalents for Common Shares exchangeable for Rights at the initial rate of one one-thousandth of a Preferred Share (or an appropriate number of Common Stock Equivalents) for each Common Share, as appropriately adjusted.

24.4If there shall not be sufficient Common Shares, Preferred Shares or Common Stock Equivalents authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall use its reasonable efforts to authorize additional Common Shares, Preferred Shares or Common Stock Equivalents for issuance upon exchange of the Rights.

24.5The Company shall not be required to issue fractions of Common Shares or to distribute certificates which evidence fractional Common Shares. In lieu of issuing fractional Common Shares, the Company may instead pay to the registered holders of the Right Certificates with regard to which such fractional Common Shares would otherwise be issuable an 

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amount in cash equal to the same fraction of the current per share market value of a whole Common Share. For the purposes of this Section 24.5, the current per share market value of a whole Common Share shall be the closing price of a Common Share (as determined pursuant to the second sentence of Section 11.4.1) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

24.6Notwithstanding anything in this Section 24 to the contrary, the exchange of the Rights may be made effective at such time, on such basis and subject to such conditions as the Board of Directors in its sole discretion may establish. Without limiting the preceding sentence, the Board of Directors may (i) in lieu of issuing Common Shares or any other securities contemplated by this Section 24 to the Persons entitled thereto in connection with the exchange (such Persons, the “Exchange Recipients,” and such shares and other securities, together with any dividends or distributions made on such shares or other securities, the “Exchange Property”) issue, transfer or deposit the Exchange Property to or into a trust or other entity (the “Trust”) created upon such terms as the Board of Directors may determine to hold all or a portion of the Exchange Property for the benefit of the Exchange Recipients, (ii) permit the Trust to exercise all of the rights that a stockholder of record would possess with respect to any shares deposited in the Trust and (iii) direct that all holders of Rights entitled to receive Exchange Property shall be entitled to receive such Exchange Property only from the Trust and only upon compliance with the relevant terms and provisions of the Trust and subject to such conditions as the Board of Directors in its sole discretion may establish.  Prior to effecting an exchange of Rights, the Company may require (or cause the trustee or other governing body of the Trust to require), as a condition thereof, that any Exchange Recipient provide evidence that it is not an Acquiring Person, including evidence of the identity of the current or former Beneficial Owners thereof and their Affiliates and Associates. If any Person shall fail to comply with any request to provide such evidence, the Company shall be entitled conclusively to deem the Rights held by such Person to be null and void pursuant to Section 11.1.2 and not transferable or exercisable or exchangeable in connection herewith. In the event that the Board of Directors determines, before the Distribution Date, to effect an exchange, the Board of Directors may delay the occurrence of the Distribution Date to such time as the Board of Directors deems advisable.

Notice of Certain Events

.

25.1If the Company shall after the Distribution Date propose (i) to pay any dividend payable in stock of any class to the holders of its Preferred Shares or to make any other distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend); (ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options; (iii) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares); (iv) to effect any consolidation or merger into or with any other Person, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or Earning Power of the Company and its Subsidiaries (taken as a whole) to any other Person; (v) to effect the liquidation, dissolution or winding-up of the Company; or (vi) to declare or pay any dividend on the Common Shares payable in Common Shares, or to effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares), then, in each such case, the 

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Company shall give to each holder of a Right Certificate and the Rights Agent, in accordance with Section 26, a reasonably detailed notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up is to take place and the date of participation therein by the holders of the Common Shares or Preferred Shares or both, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least ten days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least ten days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares or Preferred Shares or both, whichever shall be the earlier.

25.2The Company shall, as soon as practicable after a Stock Acquisition Date, give to the Rights Agent and each holder of a Right Certificate, in accordance with Section 26, a notice that describes the transaction in which a Person became an Acquiring Person and the consequences of the transaction to holders of Rights under Section 11.1.2.

Notices

. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if in writing and when sent by overnight delivery service or first-class mail, postage prepaid, properly addressed (until another address is filed in writing with the Rights Agent) as follows:

LSB Industries, Inc. 

3503 NW 63rd Street, Suite 500

Oklahoma City, OK 
Attention: Michael J. Foster 

 

with a copy (which shall not constitute notice) to:

 

Kirkland & Ellis LLP

601 Lexington Avenue 

New York, NY 10022

Telephone: (212) 446-4800

Attention: Todd Maynes, P.C. and Shaun Mathew, P.C.
       

Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be deemed given upon receipt and shall be sufficiently given or made if in writing when sent by overnight delivery service or registered or certified mail properly addressed (until another address is filed in writing with the Company) as follows:

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention: Client Services

 

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Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if in writing, when sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.

Supplements and Amendments

. The Company may from time to time, and the Rights Agent shall if the Company so directs in writing, supplement or amend this Agreement without the approval of any holders of Right Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any change to or delete any provision hereof or to adopt any other provisions with respect to the Rights which the Company may deem necessary or desirable; provided, that, at any time after the Close of Business on the tenth day following the Stock Acquisition Date (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), this Agreement shall not be amended or supplemented in any manner which would adversely affect the interests of the holders of Rights (other than an Acquiring Person and its Affiliates and Associates). For the avoidance of doubt, the Company shall be entitled to adopt and implement such procedures and arrangements (including with third parties) as it may deem necessary or desirable to facilitate the exercise, exchange, trading, issuance or distribution of the Rights (and Preferred Shares) as contemplated hereby and to ensure that an Excluded Person does not obtain the benefits thereof, and amendments in respect of the foregoing shall not be deemed to adversely affect the interests of the holders of Rights. Any supplement or amendment authorized by this Section 27 will be evidenced by a writing signed by the Company and the Rights Agent, subject to certification by any of the officers of the Company listed in Section 20.2 that any such supplement or amendment complies with this Section 27. Notwithstanding anything in this Agreement to the contrary, the Rights Agent shall not be required to execute any supplement or amendment to this Agreement that it has determined would adversely affect its own rights, duties, obligations or immunities hereunder.  No supplement or amendment to this Agreement shall be effective unless duly executed by the Rights Agent.

 

Successors

. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

Benefits of this Agreement

. Nothing in this Agreement shall be construed to give to any Person or entity other than the Company, the Rights Agent and the registered holders of the Right Certificates any legal or equitable right, remedy or claim under this Agreement. This Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates.

Severability

. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, that if such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately upon written notice to the Company.

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Governing Law

. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts to be made and performed entirely within the State of Delaware; provided, that all provisions regarding the rights, duties, liabilities and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.  

Counterparts

. This Agreement may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.  A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.

Descriptive Headings and Construction

. Descriptive headings of the sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. In this Agreement, (i) the word “including” (in its various forms) means “including, without limitation,” and (ii) the words “hereunder,” “hereof,” “hereto” and words of similar import are references to this Agreement as a whole and not to any particular provision of this Agreement.

Administration

. Other than with respect to rights, duties, obligations and immunities of the Rights Agent, the Board of Directors, or a duly authorized committee of the Board of Directors, shall have the exclusive power and authority to administer and interpret the provisions of this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or the Company or as may be necessary or advisable in the administration of this Agreement. All such actions, calculations, determinations and interpretations which are done or made by the Board of Directors, or a duly authorized committee of the Board of Directors, in good faith shall be final, conclusive and binding on the Company, the Rights Agent, holders of the Rights and all other parties and shall not subject the Board of Directors, or a duly authorized committee of the Board of Directors, to any liability to the holders of the Rights. The Rights Agent is entitled always to assume that the Board of Directors, or a duly authorized committee of the Board of Directors, as applicable, acted in good faith and shall be fully protected and incur no liability in reliance thereon. 

Force Majeure

.  Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including acts of God, terrorist acts, pandemics, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of any utilities, communications, or computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.

Process to Seek Exemption

.  Any Person who desires to effect any acquisition of Common Shares that might, if consummated, result in such Person beneficially owning 4.9% or more of the Common Shares then outstanding (such Person, a “Requesting Person”) may request that the Board of Directors grant an exemption with respect to such acquisition under this Agreement so that such Person would be deemed to be an Exempt Person for purposes of this 

- 34 -

 

Agreement (such request, an “Exemption Request”). An Exemption Request shall be in proper form and shall be delivered by registered mail, return receipt requested, to the Secretary of the Company at the principal executive office of the Company. The Exemption Request shall be deemed made upon receipt by the Secretary of the Company. To be in proper form, an Exemption Request shall set forth (i) the name and address of the Requesting Person, (ii) the number and percentage of Common Shares then Beneficially Owned by the Requesting Person, together with all Affiliates and Associates of the Requesting Person and (iii) a reasonably detailed description of the transaction or transactions by which the Requesting Person would propose to acquire Beneficial Ownership of Common Shares aggregating 4.9% or more of the Common Shares then outstanding and the maximum number and percentage of Common Shares that the Requesting Person proposes to acquire. The Board of Directors shall endeavor to respond to an Exemption Request within 20 Business Days after receipt of such Exemption Request; provided, that the failure of the Board of Directors to make a determination within 20 Business Days after receipt of an Exemption Request shall be deemed to constitute denial by the Board of Directors of the Exemption Request. The Requesting Person shall respond promptly to reasonable and appropriate requests for additional information from the Company or the Board of Directors and its advisors to assist the Board of Directors in making its determination. The Board of Directors shall only grant an exemption in response to an Exemption Request if it receives, at the request of the Board of Directors, a report from the Company’s advisors to the effect that the acquisition of Beneficial Ownership of Common Shares by the Requesting Person does not create a significant risk of material adverse tax consequences to the Company or the Board of Directors otherwise determines in its sole and absolute discretion that the exemption is in the best interests of the Company. Any exemption granted hereunder may be granted in whole or in part, and may be subject to limitations or conditions (including a requirement that the Requesting Person agree that it will not acquire Beneficial Ownership of Common Shares in excess of the maximum number and percentage of shares approved by the Board of Directors), in each case as and to the extent the Board of Directors shall determine necessary or desirable to provide for the protection of the Company’s Tax Attributes. Any Exemption Request may be submitted on a confidential basis and, except to the extent required by applicable law, the Company shall maintain the confidentiality of such Exemption Request and the determination of the Board of Directors with respect thereto, unless the information contained in the Exemption Request or the determination of the Board of Directors with respect thereto otherwise becomes publicly available. The Exemption Request shall be considered and evaluated by the directors who are independent of the Requesting Person and disinterested with respect to the Exemption Request and the action of a majority of such directors shall be deemed to be the determination of the Board of Directors for purposes of such Exemption Request. The Company shall notify the Rights Agent of any exemption granted under this Section 36.

 

 

[Signature Pages Follow]

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The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

			
	
 
	
LSB INDUSTRIES, INC. 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Cheryl Maguire

	
 
	
Name:
	
Cheryl Maguire

	
 
	
Title:
	
Executive Vice President and

   Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Section 382 Rights Agreement]

 

 

 

 

The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

 

			
	
 
	
COMPUTERSHARE TRUST COMPANY, N.A.

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Kathy Heagerty

	
 
	
Name:
	
Kathy Heagerty

	
 
	
Title:
	
Vice President & Manager

 

 

[Signature Page to Section 382 Rights Agreement]

 

 

EXHIBIT A

FORM

of

CERTIFICATE OF DESIGNATIONS

of

SERIES G CLASS C PREFERRED STOCK

of

LSB INDUSTRIES, INC.

 

(Pursuant to Section 151 of the Delaware General Corporation Law)

 

LSB Industries, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation (the “Board of Directors”) as required by Section 151 of the General Corporation Law on July 2, 2020:

RESOLVED, that pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Restated Certificate of Incorporation of the Corporation, a series of Class C Preferred Stock, no par value, of the Corporation be and it hereby is created, and that the designation and amount thereof and the powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:

	
Section 1.
	
Designation and Amount. The shares of this series shall be designated as Series G Class C Preferred Stock (the “Series G Class C Preferred Stock”), and the number of shares constituting the Series G Class C Preferred Stock shall be 100,000.  Such number of shares may be increased or decreased by resolution of the Board of Directors; 

[Signature Page to Section 382 Rights Agreement]

 

		
provided, that no decrease shall reduce the number of shares of Series G Class C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series G Class C Preferred Stock.

	
Section 2.
	
Dividends and Distributions.

	
(A)
	
Subject to the rights of the holders of any shares of any series of preferred stock of the Corporation (including Preferred Stock, par value $100 per share and Class C Preferred Stock, no par value, the “Preferred Stock”) (or any other stock of the Corporation) ranking prior and superior to the Series G Class C Preferred Stock with respect to dividends, the holders of shares of Series G Class C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series G Class C Preferred Stock, in an amount (if any) per share (rounded to the nearest cent), subject to the provision for adjustment hereinafter set forth, equal to 1,000 multiplied by the aggregate per share amount of all cash dividends, and 1,000 multiplied by the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of common stock, par value $0.10 per share, of the Corporation (the “Common Stock”) or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise) declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series G Class C Preferred Stock.  In the event that the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series G Class C Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

	
(B)
	
The Corporation shall declare a dividend or distribution on the Series G Class C Preferred Stock as provided in paragraph (A) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock).

	
(C)
	
Dividends due pursuant to paragraph (A) of this Section 2 shall begin to accrue and be cumulative on outstanding shares of Series G Class C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such 

- A-2 -

 

		
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series G Class C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series G Class C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series G Class C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

	
Section 3.
	
Voting Rights. The holders of shares of Series G Class C Preferred Stock shall have the following voting rights:

	
(A)
	
Subject to the provision for adjustment hereinafter set forth, each share of Series G Class C Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event that the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series G Class C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

	
(B)
	
Except as otherwise provided in the Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), including any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series G Class C Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

	
(C)
	
Except as set forth herein, or as otherwise required by law, holders of Series G Class C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

	
Section 4.
	
Certain Restrictions.

	
(A)
	
Whenever quarterly dividends or other dividends or distributions payable on the Series G Class C Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series G Class C Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

- A-3 -

 

	

	
(i)declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding‐up) to the Series G Class C Preferred Stock;

	

	
(ii)declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding‐up) with the Series G Class C Preferred Stock, except dividends paid ratably on the Series G Class C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; or

	

	
(iii)redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding‐up) to the Series G Class C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding‐up) to the Series G Class C Preferred Stock.

	
(B)
	
The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

	
Section 5.
	
Reacquired Shares. Any shares of Series G Class C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. The Corporation shall take all such actions as are necessary to cause all such shares to become authorized but unissued shares of Preferred Stock that may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein or in the Certificate of Incorporation, including any Certificate of Designations creating a series of Preferred Stock or any similar stock, or as otherwise required by law.

	
Section 6.
	
Liquidation, Dissolution or Winding‐Up. 

	
(A)
	
Upon any liquidation, dissolution or winding‐up of the Corporation, voluntary or otherwise, no distribution shall be made to the holders of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding‐up) to the Series G Class C Preferred Stock unless, prior thereto, the holders of Series G Class C Preferred Stock shall have received an amount per share (the “Series G Class C Liquidation Preference”) equal to an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 multiplied by the aggregate amount to be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued and unpaid dividends. In the event that the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series G Class 

- A-4 -

 

		
C Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

	
(B)
	
If there are not sufficient assets available to permit payment in full of the Series G Class C Liquidation Preference and the liquidation preferences of all other classes and series of stock of the Corporation, if any, that rank on a parity with the Series G Class C Preferred Stock in respect thereof, then the assets available for such distribution shall be distributed ratably to the holders of the Series G Class C Preferred Stock and the holders of such parity shares in proportion to their respective liquidation preferences.

(C)Neither the merger or consolidation of the Corporation into or with another entity nor the merger or consolidation of any other entity into or with the Corporation shall be deemed to be a liquidation, dissolution or winding‐up of the Corporation within the meaning of this Section 6.

	
Section 7.
	
Consolidation, Merger, Etc. If the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series G Class C Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 multiplied by the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event that the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series G Class C Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

	
Section 8.
	
Amendment. While any Series G Class C Preferred Stock is issued and outstanding, the Certificate of Incorporation shall not be amended in any manner, including in a merger or consolidation, which would alter, change or repeal the powers, preferences or special rights of the Series G Class C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series G Class C Preferred Stock, voting together as a single class.

	
Section 9.
	
Rank. The Series G Class C Preferred Stock shall rank, with respect to the payment of dividends and upon liquidation, dissolution and winding‐up, junior to all other series of Preferred Stock, unless the terms of any such series shall provide otherwise, and shall rank senior to the Common Stock as to such matters.

- A-5 -

 

 

IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its duly authorized officer this __ day of July 2020.

 

	

	
LSB INDUSTRIES, INC.

 

 

	
 
	
By:
	

	
 
	
Name:
	
 

	
 
	
Title: 
	
 

 

 

 

- A-6 -

 

EXHIBIT B

 

 

Form of Right Certificate

 

Certificate No. R-____________ Rights

 

 

NOT EXERCISABLE AFTER THE FINAL EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) OR EARLIER IF REDEMPTION, EXCHANGE OR TERMINATION OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS, MAY BECOME NULL AND VOID.

 

Right Certificate

LSB INDUSTRIES, INC.

This certifies that ___________________________, or his, her or its registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Section 382 Rights Agreement (as may be amended from time to time, the “Rights Agreement”), dated as of July 6, 2020, between LSB Industries, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A., a federally chartered trust company, as rights agent (or any successor rights agent) (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to the Final Expiration Date (as such term is defined in the Rights Agreement) or earlier under certain circumstances set forth in the Rights Agreement, at the office or offices of the Rights Agent designated for such purpose, or at the office of its successor as Rights Agent, one one-thousandth of a fully paid non-assessable share of Series G Class C Preferred Stock, no par value, of the Company (the “Preferred Shares”), at a purchase price of $10.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this Right 

 

 

Certificate with the Form of Election to Purchase properly completed and duly executed, accompanied by such documentation as the Rights Agent may reasonably request. The number of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a Preferred Share which may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of July 6, 2020, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.

From and after the occurrence of a Stock Acquisition Date (as defined in the Rights Agreement), if the Rights evidenced by this Right Certificate are or were acquired or Beneficially Owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person, such Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights.

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are incorporated herein by this reference and made a part hereof, and to which Rights Agreement reference is made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company and the office or offices of the Rights Agent designated for such purpose.

This Right Certificate, with or without other Right Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, accompanied by such documentation as the Rights Agent may reasonably request, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, at the Company’s option, the Rights evidenced by this Certificate (i) may be redeemed by the Company at a redemption price of $0.001 per Right or (ii) may be exchanged in whole or in part for shares of the Company’s common stock, par value $0.10 per share, Preferred Shares, cash, debt securities, or other assets, property or instruments. The shares and other securities transferred as part of the exchange may be transferred to a trust created upon such terms as the Board of Directors of the Company may determine. 

No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

- B-2 -

 

No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise or exchange hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised or exchanged as provided in the Rights Agreement.

This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

- B-3 -

 

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.  Dated as of ____________.

	
Attest:
	
LSB INDUSTRIES, INC.

 

 

_____________________________By:_____________________________

 

Countersigned:

 

_____________________________

Computershare Trust Company, N.A., Rights Agent

 

By:__________________________

Authorized Signature

- B-4 -

 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Right Certificate.)

	
FOR VALUE RECEIVED, ___________________________________ hereby sells, assigns and transfers unto 
	

(Please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _______________________________, Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

 

Date:______________ __________________________________

Signature

 

 

Signature Guaranteed:

Signatures must be guaranteed by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature medallion program).

----------------------------------------------------------------

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not Beneficially Owned by, were not acquired by the undersigned from, and are not being assigned to an Acquiring Person or an Affiliate or Associate thereof and are not issued with respect to Common Shares underlying a Derivative Position described in the definition of Beneficial Owner (as such terms are defined in the Rights Agreement).

__________________________________________Signature

 

----------------------------------------------------------------

- B-5 -

 

Form of Reverse Side of Right Certificate -- continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise the Right Certificate.)

TO LSB INDUSTRIES, INC.:

The undersigned hereby irrevocably elects to exercise _______________ Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise of such Rights and requests that certificates for such Preferred Shares be issued in the name of:

Please insert Social Security or other identifying number:.

 

(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:

Please insert Social Security or other identifying number:.

 

(Please print name and address)

 

Dated: _____________ __, ________________________________________

Signature

 

(Signature must conform to the holder specified on the Right Certificate)

 

Signature Guaranteed:

 

Signatures must be guaranteed by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature medallion program).

- B-6 -

 

Form of Reverse Side of Right Certificate -- continued

----------------------------------------------------------------

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not Beneficially Owned by, were not acquired by the undersigned from, and are not being assigned to an Acquiring Person or an Affiliate or Associate thereof and are not issued with respect to Common Shares underlying a Derivative Position described in the definition of Beneficial Owner (as such terms are defined in the Rights Agreement).

 

 

 

__________________________________

Signature

 

 

----------------------------------------------------------------

 

NOTICE

 

The signature in the foregoing Forms of Assignment and Election to Purchase must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

In the event that the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, such assignment or election to purchase will not be honored.

 

 

- B-7 -

 

EXHIBIT C

 

UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS, MAY BECOME NULL AND VOID

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED SHARES

The Board of Directors of LSB Industries, Inc. (the “Company”) has declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $0.10 per share, of the Company (the “Common Shares”), outstanding on July 16, 2020 (the “Record Date”) to the stockholders of record on that date.  Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series G Class C Preferred Stock, no par value, of the Company (the “Preferred Shares”), at a price of $10.00 per one one-thousandth of a Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment.  The description and terms of the Rights are set forth in a Section 382 Rights Agreement (the “Rights Agreement”), dated as of July 6, 2020, between the Company and Computershare Trust Company, N.A., a federally chartered trust company, as Rights Agent. Capitalized terms used but not defined in this summary have the meanings ascribed to such terms in the Rights Agreement.

The Rights Agreement is intended to, among other things, avoid an “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended, and thereby preserve the ability of the Company to utilize certain net operating loss carryovers and other tax attributes of the Company and its subsidiaries.

Until the earlier to occur of (i) the Close of Business on the tenth day following the acquisition of Beneficial Ownership of 4.9% or more of the outstanding Common Shares (including ownership of a Derivative Position) by a Person or group of affiliated or associated Persons (an “Acquiring Person”) (or, in the event that an exchange is effected in accordance with Section 24 of the Rights Agreement and the Board of Directors determines that a later date is advisable, then such later date) and (ii) ten 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 a tender offer or exchange offer the consummation of which would result in the Beneficial Ownership by a Person or group of 4.9% or more of the outstanding Common Shares (the earlier of such dates, the “Distribution Date”), the Rights will be evidenced by Common Share certificates with a copy of this Summary of Rights attached thereto (unless such Rights are recorded in book-entry); provided, that each certificate (or other evidence of book-entry or other uncertificated ownership) representing Common Shares outstanding as of the Close of Business on the Record Date evidencing the Rights shall be deemed to incorporate by reference the terms of the Rights Agreement.  

 

 

 

A Person shall not be deemed to be an Acquiring Person if such Person, together with all Affiliates and Associates of such Person, at the time of the first public announcement of the Rights Agreement, is a Beneficial Owner of 4.9% or more of the Common Shares then outstanding (a “Grandfathered Stockholder”); provided, that if a Grandfathered Stockholder becomes (other than pursuant to the vesting or exercise of any equity awards issued to a member of the Board of Directors or pursuant to additional grants of any such equity awards to a member of the Board of Directors), after the date of the Rights Agreement, the Beneficial Owner of any additional Common Shares (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of Common Shares then outstanding Beneficially Owned by such Grandfathered Stockholder) then such Grandfathered Stockholder shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional Common Shares, such Person is not the Beneficial Owner of 4.9% or more of the Common Shares then outstanding; provided, further, that upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 4.9%, such Grandfathered Stockholder shall no longer be deemed to be a Grandfathered Stockholder. For the avoidance of doubt, in the event that after the time of the first public announcement of the Rights Agreement, any agreement, arrangement or understanding pursuant to which any Grandfathered Stockholder is deemed to be the Beneficial Owner of Common Shares expires, is settled in whole or in part, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different Common Shares that confers Beneficial Ownership of Common Shares shall be considered the acquisition of Beneficial Ownership of additional Common Shares by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of the Rights Agreement unless, upon such acquisition of Beneficial Ownership of additional Common Shares, such Person is not the Beneficial Owner of 4.9% or more of the Common Shares then outstanding.

 “Beneficial Ownership” shall include any securities (i) which a Person or any of such Person’s Affiliates or Associates (a) would be deemed to actually or constructively own for purposes of Section 382 of the Code or the Treasury Regulations promulgated thereunder, including any coordinated acquisition of securities by any Persons who have a formal or informal understanding with respect to such acquisition (to the extent ownership of such securities would be attributed to such Persons under Section 382 of the Code and the Treasury Regulations promulgated thereunder), (b) beneficially owns, directly or indirectly, within the meaning of Rules 13d-3 or 13d-5 promulgated under the Exchange Act or (c) has the right or ability to vote, or the right to acquire, pursuant to any agreement, arrangement or understanding (except under limited circumstances), (ii) which are directly or indirectly Beneficially Owned by any other Person with which a Person has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of such securities, or changing, obtaining or influencing control of the Company or (iii) which are the subject of, or reference securities for, or that underlie, certain derivative potions of any Person or any such Person’s Affiliates or Associates.

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Any Person, together with all Affiliates and Associates of such Person, who proposes to acquire 4.9% or more of the outstanding Common Shares may apply to the Board of Directors in advance for an exemption in accordance with and pursuant to the terms of the Rights Agreement. 

The Rights Agreement provides that, until the Distribution Date (or the earlier expiration or redemption of the Rights), the Rights will be transferred with and only with the Common Shares. New Rights will accompany any new Common Shares issued by the Company after the Record Date, until the Distribution Date (or the earlier expiration or redemption of the Rights). Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Share certificates issued after the Record Date or upon transfer or new issuance of Common Shares will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Common Shares outstanding as of the Record Date, even without such notation or a copy of this Summary of Rights being attached thereto, will also constitute the transfer of the Rights associated with the Common Shares represented by such certificate.  As soon as practicable following the Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Common Shares as of the Distribution Date, and such separate Right Certificates alone will evidence the Rights (unless such Rights are recorded in book-entry).

The Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest to occur of (i) the Close of Business on the day following the certification of the voting results of the Company’s 2021 annual meeting of stockholders, if at such stockholder meeting a proposal to approve the Rights Agreement has not been passed by the affirmative vote of the majority of the votes cast at the 2021 annual meeting of stockholders or any other meeting of stockholders of the Company duly held prior to such meeting, (ii) the date on which the Board of Directors determines in its sole discretion that (x) the Rights Agreement is no longer necessary for the preservation of material valuable Tax Attributes or (y) the Tax Attributes have been fully utilized and may no longer be carried forward and (iii) the Close of Business on July 6, 2023 (the “Final Expiration Date”).

The Purchase Price payable, and the number of Preferred Shares or other securities or property issuable, upon exercise of the Rights is subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Shares; (ii) upon the grant to holders of the Preferred Shares of certain rights or warrants to subscribe 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 (iii) 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).

The number of outstanding Rights and the number of Preferred Shares issuable upon exercise of each Right are also subject to adjustment in the event of a stock split of the Common Shares or a stock dividend on the Common Shares payable in Common Shares or subdivisions, 

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consolidations or combinations of the Common Shares occurring, in any such case, prior to the Distribution Date.

Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a quarterly dividend payment of 1,000 multiplied by the dividend declared per Common Share. In the event of liquidation, the holders of the Preferred Shares will be entitled to a payment per share equal to 1,000 multiplied by the aggregate payment made per Common Share. Each Preferred Share will have 1,000 votes, voting together with the Common Shares. In the event of any merger, consolidation or other transaction in which Common Shares are exchanged, each Preferred Share will be entitled to receive 1,000 multiplied by the amount received per Common Share. 

From and after the time any Person becomes an Acquiring Person, if the Rights evidenced by a Right Certificate are or were acquired or Beneficially Owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms are defined in the Rights Agreement), such Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights.

If any Person becomes an Acquiring Person, proper provision shall be made so that each holder of a Right, other than Rights Beneficially Owned by the Acquiring Person and its Affiliates and Associates (all of which will thereafter be void), will thereafter have the right to receive upon exercise that number of Common Shares having a market value of two times the exercise price of the Right.  If the Board of Directors so elects, the Company may deliver upon payment of the exercise price of a Right an amount of cash, securities, or other property equivalent in value to the Common Shares issuable upon exercise of a Right.

If, at any time after a Person becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or Earning Power are sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right.  

At any time after any Person becomes an Acquiring Person and prior to the acquisition by any Person or group of a majority of the outstanding Common Shares, the Board of Directors may exchange the Rights (other than Rights owned by such Person or group which have become void), in whole or in part, at an exchange ratio of one Common Share per Right (subject to adjustment).  The shares and other securities transferred as part of the exchange may be transferred to a trust created upon such terms as the Board of Directors of the Company may determine.

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-thousandth of a Preferred Share, which may, at the election of the Company, be 

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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.

At any time prior to the earlier to occur of (i) the Close of Business on the tenth day following the Stock Acquisition Date (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (ii) the Final Expiration Date, the Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”). 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 holders of Rights will be to receive the Redemption Price.

The terms of the Rights may be amended by the Board of Directors without the consent of the holders of the Rights.  However, at any time after the Close of Business on the tenth day following the Stock Acquisition Date (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), the Rights Agreement shall not be amended or supplemented in any manner which would adversely affect the interests of the holders of Rights (other than an Acquiring Person and its Affiliates and Associates).

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.

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Current Report on Form 8‐K.  A copy of the Rights Agreement is available free of charge from the Company.  The foregoing summary of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.

 

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