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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 31, 2000
_______________________
LSB INDUSTRIES, INC.
_______________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-7677 73-1015226
_________________ __________________ _______________________
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
16 South Pennsylvania Avenue, Oklahoma City, Oklahoma 73107
______________________________________________________ ____________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 235-4546
____________________
Not applicable
_______________________________________________________________________
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
____________________________________
On August 23, 2000, a wholly owned subsidiary (the "Subsidiary") of
LSB Industries, Inc. (the "Company"), and Orica USA, Inc. ("Orica") entered
into a letter agreement (the "Letter Agreement") wherein the Subsidiary
agreed to acquire certain assets comprising LaRoche Industries, Inc.'s
("LaRoche") ammonium nitrate manufacturing business located in Cherokee,
Alabama and Crystal City, Missouri (the "Assets") in the event Orica was
the successful bidder in a bankruptcy court managed action of the nitrogen
products manufacturing business of LaRoche. The bankruptcy court approved
the sale of LaRoche's nitrogen manufacturing business to Orica. Pursuant
to the terms of the Letter Agreement, Orica and its wholly owned subsidiary
assigned to subsidiaries of the Company its right to purchase all of the
Assets directly from LaRoche, effective October 31, 2000.
The purchase price for the Assets was paid in cash from the working
capital of the Company. The amount of the purchase price is subject to a
confidentiality request filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 as promulgated under the Securities and Exchange Act
of 1934, as amended. In any event, the purchase price is not considered to
be a material amount based upon the Company's total assets.
The Assets consist of two chemical plants: one located in Cherokee,
Alabama ("Cherokee Plant") and the other located in Crystal City, Missouri
("Crystal City Plant"). The Assets also include all inventory, machinery
and equipment, and real property, associated with the two chemical plants.
The Cherokee Plant produces anhydrous ammonia, nitric acid, aqua
ammonia, agricultural grade ammonium nitrate fertilizer, urea ammonium
nitrate fertilizer and ammonium nitrate solution as a blasting product
ingredient. The Cherokee Plant will remain in operation on at least a
temporary basis while the Company evaluate's the plant's profitability.
The Crystal City Plant is capable of producing industrial grade
ammonium nitrate and agricultural grade ammonium nitrate. The Crystal City
Plant will not be operated by the Company because the Company believes that
the selling price for the ammonium nitrate produced at the Crystal City
Plant could not support the cost of operating the plant.
Orica has a one year option to acquire the nitric acid plant located
within the Crystal City Plant along with any contracts and agreements to
manufacture, toll or sale industrial grade ammonium nitrate prill or
solution from such plant. The Crystal City Plant cannot produce nitrogen
products without the nitric acid plant. The exercise price of the option
to acquire the nitric acid plant and related contracts is $150,000, and
Orica has indicated that it intends to exercise this option. During the
one year option period, the Company has agreed to maintain the nitric acid
plant, at Orica's expense, in substantially its current operating condition.
-2-
Item 7. Financial Statements and Exhibits.
_________________________________
(a) Financial Statements of Businesses Acquired. The financial
statements which may be required by Item 7(a) of Form 8-K are not
included herein, but will be filed by amendment to this Form 8-K
not later than 60 days after November 15, 2000.
(b) Pro Forma Financial Information. The pro forma financial information
which may be required by Item 7(b) of Form 8-K is not included herein,
but will be filed by amendment to this Form 8-K not later than 60
days after November 15, 2000.
(c) Exhibits.
________
2.1 Letter Agreement, dated August 23, 2000, between LSB Chemical
Corp. and Orica USA, Inc.
2.2 Agreement, dated October 31, 2000, between Orica Nitrogen,
L.L.C., Orica USA, Inc. and LSB Chemical Corp.
10.1 Press Release, dated November 3, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 15, 2000.
LSB INDUSTRIES, INC.
By: /s/ Tony M. Shelby
________________________________
Tony M. Shelby,
Senior Vice President and
Chief Financial Officer
-3-
ORICA
David P. Taylor
Chief Executive Officer
Orica USA Inc.
9781 South Meridian Boulevard
Suite 400
Englewood, Colorado 80112
Telephone: 303-268-5000
August 23, 2000
BY MAIL AND VIA FACSIMILE: 405-236-0728
James L. Wewers, President
LSB Chemical Corp.
Post Office Box 754
Oklahoma City. Oklahoma 73101
Re: Purchase of LaRoche Assets*
__________________________
Dear Mr. Ewers:
Orica USA Inc. and/or an affiliate of ("Orica") intends to
submit to LaRoche Industries, Inc. ("LaRoche") a bid (the "Bid") to
acquire certain of the assets of LaRoche's ammonium nitrate
manufacturing business (as specified in the Bid, the "Acquired
Assets"). Orica and LSB Chemical Corp. ("LSB") intend that LSB will
acquire certain of the Acquired Assets directly from LaRoche. When
executed by an authorized signatory of LSB, this letter shall
constitute the agreement of arica and LSB relating to the matters
set forth below:
1. The parties agree that Orica shall, in its sole
discretion. have the ability to attend an auction being
held for the sale of the Acquired Assets on August 24,
2000 in Atlanta, Georgia. Orica shall have the authority
to submit a Bid that, if successful, will obligate LS13
to the terms of this letter.
2. The parties contemplate that Orica will submit an initial
Bid for an aggregate cash purchase price for the Acquired
Assets of $36.140,000.00 (the "Purchase Price"). Orica
may thereafter, in its sole discretion, increase the
amount of said Bid. Any such Bid shall include an amount
of *** attributable and allocated to that portion of the
Acquired Assets comprising LaRoche's manufacturing
business located in Cherokee, Alabama and in Crystal
City, Missquri ("collectively, the "LSB Acquired
Assets").
Page 1 of 5
*INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS PUBLIC
FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF
SUCH REQUEST.
3. No later than 9:30 a.m., Denver local time, on August 23;
2000, LSB shall transmit by wire transfer to Orica a
refundable deposit in the amount of *** representing
LSB's portion of the earnest money deposit required by
LaRoche. Orica shall provide complete account information
for said wire transfer to LSB. Orica intends to make a
$3,614,000.00 earnest money deposit to LaRoche in
conjunction with the Bid, which will include the *** from
LSB. In the event Orica is not the successful bidder at
auction, Orica shall promptly refund said deposit to LSB
upon receipt of its aggregate earnest money deposit from
LaRoche.
4. In the event Orica is the successful bidder at auction,
Orica shall enter into an Asset Purchase Agreement with
LaRoche, whereby LaRoche shall be directed to assign all
right, title and interest to the LSB Acquired Assets
directly to LSB or, in the case of real property
interests included within the LSB Acquired Assets, to
LSB's agent, designee or nominee. Subject only to
execution and delivery of said Asset Purchase Agreement,
and closing of the transactions contemplated therein.
LSB unconditionally agrees to pay to Orica a total of ***
(the "LSB Purchase Price), less the aforementioned
deposit, in consideration of the assignment of said
assets. The LSB Purchase Price shall be adjusted
downward in the event the actual inventory quantities
included in the LSB Acquired Assets are less than the
inventory quantities set forth in Exhibit A to this
letter agreement. In the event the actual inventory
quantities are more than the inventory quantities set
forth in Exhibit A, LSB agrees to reimburse Orica for any
amount over the Purchase Price Orica is required to pay
to LaRoche due to such increase in inventory.
5. In consideration of its execution and performance of this
letter agreement, and for other good and valuable
consideration, LSB hereby grants, and Orica shall have,
an option to acquire, with an obligation to physically
remove from the site , the 550 ton/day Weatherly nitric
acid plant located at the Crystal City, Missouri site
(the "Nitric Acid Plant") and the contracts and
agreements to manufacture, toll or sell industrial grade
ammonium nitrate priil or solution at or from the Nitric
Acid Plant (the "AN Contracts") from LSB. Such option
shall be exercisable, if at all, by the delivery to LSB
of a written election notice within 365 days of closing
(the "Option Period") under the Asset Purchase Agreement.
The parties shall determine a mutually. acceptable date
of closing of the option transaction, on which date Orica
shall pay LSB an option exercise price of $150,000.00 in
consideration of the delivery by LSB of title to and
possession of the Nitric Acid Plant and AN Contracts,
free and clear of any liens, claims or encumbrances
created by, through or under LSB, but not otherwise.
During the Option Period, LSB shall maintain the Nitric
Acid Plant, at Orica's expense, in substantially its
current operating condition.
6. Orica and LSB acknowledge and agree that although this
letter agreement contemplates the purchase by LSB of
owned and leased real property included in the LSB
Acquired Assets, LSB shall, subject to the consent of
Page 2 of 5
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF
SUCH REQUEST.
LaRoche, have the right to assign and delegate its rights
and obligations to acquire such real property to a third
party, and that of the LSB Purchase Price, $5,000 shall be
allocated to such real property and paid or reimbursed by
such third party.
7. The factual terms of the letter agreement are
confidential, and shall not be disclosed by either party
to a third party without the prior written consent of the
nondisclosing party.
8. This letter agreement shall be interpreted in accordance
with the laws of the State of Delaware, without regard to
its conflict of law provisions. The parties agree that
venue for the resolution of any dispute arising from this
letter agreement shall be proper in and only in a court
of competent subject matter jurisdiction in the State of
Delaware, and the parties each agree to submit to the
personal jurisdiction of the courts therein.
Sincerely,
ORICA USA INC.
/s/ Milt MacGregory
__________________________
Milt B. MacGregor
VP - Ammonium Nitrate
ACKNOWLEDGED AND AGREED TO:
LSB CHEMICAL CORP.
By: /s/ James L. Wewers
______________________________
James L. Wewers
President
Page 3 of 5
EXHIBIT A
CHEROKEE, AL
ADJUSTMENT
UNIT OF PRICE
VOLUME* MEASURE ($/UNIT)
______ _______ _________
Finished Goods and Raw Materials (LaRoche information as of June 30, 2000)
Ammonia 1,318.97 Tons ***
High Density A.N. 2,683.38 Tons ***
Nitric Acid 490.30 Tons ***
A.N. 83% Solution 3,152.28 Tons ***
A.N. Ammonia Solution 164.70 Tons ***
Magnesium Oxide 99.31 Tons ***
Galoryl 8.33 Tons ***
Ammonium Thiosultate 23.07 Tons ***
Inhibitor 0.75 Tons ***
Nitrogen Solution (UAN) 1,590.79 Tons ***
Stores Inventory $ *** Actual
(LaRoche information as of June 30, 2000) Stores Value
Precious Metals
(LaRoche information as of June 30, 2000)
Platinum 3,244.76 Troy Ounce 400.00
Rhodium 170.78 Troy Ounce 440.00
*Based on quantities and costs associated with the Cherokee Plant as of
June 30, 2000
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES
AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
Page 4 of 5
EXHIBIT A (continued)
CRYSTAL CITY, MISSOURI
ADJUSTMENT
UNIT OF PRICE
VOLUME** MEASURE ($/UNIT)
_______ _______ __________
Finished Goods and Raw Materials (LaRoche information as of June 30, 2000)
Ammonia 1,616.95 Tons ***
High Density A.N. 5,400.88 Tons ***
Nitric Acid 30.00 Tons ***
Nitrogen Solution (UAN) 981.81 Tons ***
Lilamin 4.33 Tons ***
Galoryl 8.00 Tons ***
A.N. 83% Solution 805.09 Tons ***
Stores Inventory $ *** Actual
(LaRoche information as of June 30, 2000) Stores Value
Precious Metals
(LaRoche information as of June 30, 2000)
Platinum 675.99 Troy Ounce 400.00
Rhodium 35.58 Troy Ounce 440.00
**Based on quantities and costs associated with the Crystal City Plant as of
June 30, 2000
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES
AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
Page 5 of 5
AGREEMENT*
Effective Date: October 31, 2000
______________
Parties: Orica Nitrogen LLC
_______ 9781 South Meridian Boulevard
Suite 400
Englewood, Colorado 80112
("ON")
Orica USA Inc.
9781 South Meridian Boulevard
Suite 400
Englewood, Colorado 80112
("Orica")
and
LSB Chemical Corp.
Cherokee Nitrogen Company
Crystal City Nitrogen Company
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73107
Recitals:
________
A. Orica, which owns 100 percent of the equity interests in ON, and
LSB Chemical Corp. ("LSB") entered into a letter agreement dated
August 23, 2000 (the "Preliminary Agreement") setting forth
certain of the terms and conditions under which LSB or an
affiliate would acquire certain assets comprising LaRoche
Industries Inc.'s ammonium nitrate manufacturing businesses
located in Cherokee, Alabama and Crystal City, Missouri (other
than accounts receivable, the "LSB Acquired Assets") in the event
Orica or an affiliate successfully bid for, and entered into an
agreement for the purchase of, certain of the assets (the
"Acquired Assets") of the ammonium nitrate manufacturing business
of LaRoche Industries Inc. ("LaRoche"). Cherokee Nitrogen Company
and Crystal City Nitrogen Company (collectively, "NC") are the
affiliated assignees of LSB. Orica, ON, LSB and NC are sometimes
collectively referred to herein as the "Parties".
*INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS PUBLIC
FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
B. ON was the successful bidder for the Acquired Assets, and ON
and LaRoche entered into an Asset Purchase Agreement dated August
28, 2000 (the "Asset Purchase Agreement"). Capitalized terms
which are not otherwise defined herein shall have the meanings
assigned them in the Asset Purchase Agreement.
C. The Asset Purchase Agreement provides that ON may designate
a third party to acquire certain of the Acquired Assets directly
from LaRoche and which of such Acquired Assets shall be so
acquired, and ON has designated NC as the purchasers of the LSB
Acquired Assets.
D. The Parties desire to enter into an agreement to supplement
the Preliminary Agreement, and to set forth additional terms and
conditions upon which NC will acquire the LSB Acquired Assets.
Agreements:
__________
In consideration of the foregoing recitals, and other good
and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:
1. Ratification of Preliminary Agreement. Except as amended
hereby, the Preliminary Agreement is hereby ratified and
confirmed and shall continue in full force and effect as written.
To the extent that any term of the Preliminary Agreement is
inconsistent with this Agreement, such terms shall be deemed
superseded hereby.
2. Assignment of Asset Purchase Agreement: Payment of NC
Purchase Price. ON has transferred and assigned its rights, and
delegated its obligations, under the Asset Purchase Agreement to
NC insofar and only insofar as such rights and obligations affect
or relate to the LSB Acquired Assets (which shall include four
used gauzes belonging to the Cherokee Plant (the "Gauzes")). At
and subject to the Closing, NC shall pay LaRoche the sum of ***
by wire transfer of immediately available funds (being the sum of
*** (the "NC Purchase Price") less the sum of *** heretofore paid
by LSB to reimburse Orica for a portion of the Earnest Money
Deposit under the Asset Purchase Agreement) as the purchase price
for the LSB Acquired Assets.
3. ON Payment. On or before the second business day following
Closing, ON shall pay NC the sum of $760,000 by wire transfer
of immediately available funds in consideration of the purchase
of the precious metals contained in the Gauzes, which amount
shall not be subject to any offset, claim or reduction of any
kind whatsoever.
4. Deferred Payment. The Asset Purchase Agreement provides that
ON shall pay a portion of the Purchase Price in two Deferred
Payments after Closing. LSB has no obligation to pay any portion
of the Deferred Payment, and LSB acknowledges and agrees that it
shall have no rights hereunder or under the Asset Purchase
Agreement to set-off any amounts which may be owed by LaRoche to
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
LSB under the Asset Purchase Agreement against the Deferred
Payments.
5. Earnest Money Deposit. In the event the Asset Purchase
Agreement is terminated and the Earnest Money Deposit is returned
by LaRoche under Section 10.2 thereof, LSB shall be entitled to
the share of the Earnest Money Deposit paid by it, being ***,
plus interest thereon at a per annum rate equal to the prevailing
money market rate of Wells Fargo Bank, N.A. from time to time
between the date of Closing and the date the Earnest Money
Deposit is returned by LaRoche.
6. Allocation of Liabilities Indemnities.
a. LSB shall pay, perform and discharge, and shall
protect, defend, indemnify and hold harmless ("Indemnify"), the
ON Indemnitees from and against any and all Losses resulting
from, relating to or arising out of, any Assumed Liabilities
relating to any executory contracts assigned by LaRoche to NC.
b. ON shall pay, perform and discharge, and shall
Indemnify LSB and NC, and its and their members, shareholders,
partners, officers, directors, employees, agents and
representatives, and any person or entity claiming through any of
them (collectively, the "LSB Indemnitees") from and against any
and all Losses resulting from, relating to or arising out of, any
Assumed Liabilities relating to any executory contracts assigned
by LaRoche to ON.
c. LSB shall Indemnify the ON Indemnitees from and against
any and all Losses resulting from, relating to or arising out of
(i) the ownership or operation of the LSB Acquired Assets from
and after the Closing, (ii) any breach by NC of any
representation or warranty contained in Article 5 of the Asset
Purchase Agreement or any default by NC in the performance of any
covenant contained in the Asset Purchase Agreement required to be
performed after the Closing, (iii) any claim for indemnity made
by LaRoche under Section 11.3(a) of the Asset Purchase Agreement
to the extent such claim relates to an act or omission of NC or
to the LSB Acquired Assets, (iv) the hiring or engagement by NC
of any of LaRoche's employees, or (v) any breach by LSB or NC of
this Agreement, the Preliminary Agreement or the Asset Purchase
Agreement.
d. ON shall Indemnify the LSB Indemnitees from and against
any and all Losses resulting from, relating to or arising out of
(i) the ownership or operation of the Acquired Assets (other than
the LSB Acquired Assets and other than any Joint Assets to the
extent benefiting or used by NC) from and after the Closing, (ii)
any breach by ON of any representation or warranty contained in
Article 5 of the Asset Purchase Agreement or any default by ON in
the performance of any covenant contained in the Asset Purchase
Agreement required to be performed after the Closing, (iii) any
claim for indemnity made by LaRoche under Section 11.3(a) of the
Asset Purchase Agreement to the extent such claim relates to an
act or omission of ON or to the Acquired Assets (other than the
LSB Acquired Assets or other than any Joint Assets to the extent
benefiting or used by NC),
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
(iv) any breach by ON of this Agreement, the Preliminary
Agreement or the Asset Purchase Agreement, or (v) provided that
NC shall have exercised its commercially reasonable efforts to
attempt to cause, and taken all necessary actions on its part to
enable, LaRoche to cause such liens to be released or discharged
and provided that 90 days shall have elapsed from the date
hereof, the failure of LaRoche to convey title to the LSB
Acquired Assets free and clear of the liens identified on
Attachment B hereto.
e. ON and NC agree to reasonably cooperate in aggregating
claims for indemnity under Section 11.2(a) of the Asset Purchase
Agreement for Losses attributable to misrepresentations of
LaRoche or breaches by LaRoche of warranties or covenants until
such time as the aggregate amount of such claims exceeds
$200,000.
f. Without the prior written consent of ON, NC shall not
make claims for indemnity under Section 11.2(a) of the Asset
Purchase Agreement for Losses attributable to misrepresentations
of LaRoche or breaches by LaRoche of warranties or covenants
which in the aggregate exceed $132,260.
7. Costs of Cure and Default Payments. With respect to any
executory contracts of LaRoche which are assigned to NC, NC shall
be solely responsible for, and shall Indemnify LaRoche and the ON
Indemnitees from and against, any and all cure or damage amounts
payable under Section 365 of the Bankruptcy Code.
8. Proration Items. As between ON and NC, ON shall be solely
responsible for, and shall be solely entitled to payments from
LaRoche in respect of, Proration Items (as defined in Section
7.10 of the Asset Purchase Agreement) which relate to the
Acquired Assets (other than the LSB Acquired Assets or the Joint
Assets to the extent benefiting or used by NC), and NC shall be
solely responsible for, and shall be solely entitled to payments
from LaRoche in respect of, Proration Items which relate to the
LSB Acquired Assets or the Joint Assets to the extent benefiting
or used by NC.
9. Closing Obligation. The Parties acknowledge and agree that
LSB's or its subsidiaries' obligation to acquire and pay for the
LSB Acquired Assets is conditioned only upon the closing of the
acquisition by ON of the Acquired Assets other than the LSB
Acquired Assets, and that LSD or its subsidiaries are
unconditionally obligated to acquire the LSD Acquired Assets if
ON consummates its acquisition of the Acquired Assets (exclusive
of the LSD Acquired Assets).
10. Nitric Acid Plant. In the event Orica or an affiliate
exercises the option under the Preliminary Agreement to acquire
the Nitric Acid Plant, and notwithstanding such purchase, the
Parties agree that such Plant may be decommissioned and remain on
the Crystal City, Missouri plant site until such time (not to
exceed two years from the date hereof) as Orica or its affiliate
disassembles the Plant and moves it to another location. Orica or
an affiliate shall be responsible for all direct costs
attributable to storage and decommissioning of such Plant, and
the Parties shall cooperate to develop a plan for storage and
decommissioning of such Plant.
11. Employees. ON and NC shall cooperate in determining which of
LaRoche's employees who are employed in connection with LaRoche's
manufacturing business located in Cherokee, Alabama or Crystal
City, Missouri shall be hired by ON or by NC, it being understood
that ON is obligated to hire a certain number of LaRoche's
employees under the Asset Purchase Agreement.
12. Nelson Plant. NC acknowledges that an affiliate of Orica,
Nelson Brothers, LLC ("Nelson"), currently leases from LaRoche
certain real property and a pipeline which are part of the LSB
Acquired Assets located at Cherokee, Alabama for the purpose of
operating an emulsion manufacturing plant (the "Nelson Plant").
Pursuant to the Asset Purchase Agreement, NC has assumed
LaRoche's obligations under such lease which continues in force
and effect. In the event NC elects to terminate operations at or
decommission the Cherokee, Alabama plant acquired from LaRoche,
NC will make available to Nelson, by lease or sale on
commercially reasonable terms, the rail siding and ammonium
nitrate solution tank located at the Cherokee, Alabama plant in
order to permit the supply by rail of ammonium nitrate solution
to the Nelson Plant by a third party producer. Pursuant to the
Asset Purchase Agreement, NC has assumed LaRoche's obligations
under an ammonium nitrate solution supply contract to Nelson.
Orica is the supplier of ammonium nitrate solution to Nelson. NC
agrees to terminate the existing supply agreement for ammonium
nitrate solution to Nelson, and to enter into a new supply
agreement which shall be based on the terms set forth in
Attachment A hereto.
13. Miscellaneous.
a. The fact and terms of this Agreement are confidential,
and shall not be disclosed by either Party to a third party
without the prior written consent of the nondisclosing Party,
except for disclosures required under applicable or compelled by
regulatory. authorities.
b. This Agreement shall be interpreted in accordance with
the laws of the State of Delaware, without regard to conflict of
law provisions. The Parties agree that venue for the resolution
of any dispute arising from this Agreement shall be proper in and
only in a court of competent subject matter jurisdiction in the
State of Delaware, and the Parties each agree to submit to the
personal jurisdiction of the courts therein.
c. This Agreement and the Preliminary Agreement, to the
extent not amended hereby, represent the entire agreement of the
Parties with respect to the subject matter hereof and thereof,
and supersede any earlier written or oral agreement or
understanding between the Parties concerning the subject matter
hereof or thereof.
d. This Agreement may not be assigned by any Party without
the prior written consent of the other Party. This Agreement is
binding on and inures to the benefit of each Party and its
successors and permitted assigns.
e. The covenants and agreements contained in this
Agreement are for the sole benefit of the Parties, and they shall
not be construed as conferring any rights on any other persons.
f. This Agreement may be executed in counterparts, each of which
shall be binding and all of which together shall constitute one
and the same instrument.
g. The Parties acknowledge that discussions regarding
their respective rights to the proceeds of any precious metals or
sludge containing precious metals, as derived from the nitric
acid plants at the Cherokee Plant and the Crystal City Plant, are
continuing and not yet concluded.
[This space left blank intentionally.]
IN WITNESS WHEREOF, each Party has caused this Agreement to
be executed on its behalf by a duly authorized officer, all as of
the Effective Date.
ORICA NITROGEN LLC LSB CHEMICAL CORP.
By: /s/ Peter J. Watson By: /s/ James L. Wewers
__________________________ ______________________
Peter J. Watson James L. Wewers
Secretary President
ORICA USA INC. CHEROKEE NITROGEN COMPANY
By: /s/ Milt B. MacGregor By: /s/ James L. Wewers
___________________________ _______________________
Milt B. MacGregor Name: James L. Wewers
Vice President __________________
Title: President
_________________
CRYSTAL CITY NITROGEN COMPANY
By: /s/ James L. Wewers
___________________________
Name: James L. Wewers
______________________
Title: President
_____________________
ATTACHMENT A
to
AGREEMENT AMONG ON, ORICA, LSB and NC
Terms Sheet
Ammonium Nitrate Solution Supply Agreement
Nelson Emulsion Facility at Cherokee, Alabama
_____________________________________________
Quantity: Estimated monthly requirement of 6,000 to 10,000 short
(2,000 lbs.) tons.
Delivery: Product to be shipped by pipeline.
Term: (i) Initial term of November 1, 2000 to June 30, 2001.
(ii) Parties shall review agreement on February 1, 2001
and, on the basis of such review, each party shall have a one
time opportunity to propose amendments to the supply agreement
for negotiation by the parties.
Price: The invoice price for ammonium nitrate solution shall
be based on actual plant variable costs per ton and
actual direct plant fixed costs per ton to manufacture
the ammonium nitrate, plus *** per ton, but in no event
more than *** per short ton or less than *** per short
ton of 100% basis of contained ammonium nitrate;
provided that if the cost of natural gas delivered to
NC's Cherokee, Alabama facility is less than *** per
mcf, then the invoice price will be reduced by *** per
ton for each *** decrease in natural gas cost below
***, and if such cost exceeds *** per ton, then the
invoice price will be increased by *** per ton for
each *** increase in natural gas cost above ***. Such
adjustments shall be made on a monthly basis.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
ATTACHMENT B
To
AGREEMENT AMONG ORICA, ON, LSB and NC
Liens
_____
1. $213,863.34 for 2000 Taxes due and payable November 1, 2000
(Crystal City)
2. $49,366.40 - Mechanic's Lien filed August 23, 2000 by T.
Luckey Sons. Inc. (Crystal City)
3. $57,463.98 for 2000 Taxes due and payable prior to
October 1, 2000 (Cherokee)
4. $4,788.67 for 2001 Taxes not yet due and payable (Cherokee)
COMPANY CONTACT: Tony M. Shelby
Chief Financial Officer
(405) 235-4546
KCSA CONTACT: Leslie A. Schupak/Joe Mansi
(212) 682-6300, ext. 205/207
November 3, 2000
OTC: LSBD
LSB INDUSTRIES, INC. COMPLETES ACQUISITION
OF CERTAIN LAROCHE ASSETS IN ORDER
TO EXPAND ITS MARKET AREAS AND PRODUCT OFFERING
Oklahoma City, Oklahoma . . . November 3, 2000 . . . LSB
Industries, Inc. (OTC Bulletin Board: LSBD), through wholly
owned subsidiaries, has completed the acquisition of certain
assets located in Crystal City, Missouri and Cherokee, Alabama,
of LaRoche Industries, Inc. ("LaRoche"). The acquisition was
pursuant to an agreement between LSB and Orica USA,
Inc.("Orica"). Orica was the successful bidder in a court
managed auction process to acquire the LaRoche nitrogen products
businesses.
Under the terms of the court approved agreement, the LSB
subsidiaries acquired the Crystal City and Cherokee assets
directly from LaRoche. The assets acquired will be used in
LSB's chemical business, which consists of the manufacture and
sale of nitrogen products for the mining, agricultural and
industrial markets.
Jack E. Golsen, Chairman and President of the Company, stated
that "due to the sustained severe weather conditions in our
traditional Texas agricultural markets over the last four years
it is necessary to expand to other geographical areas and
markets. These assets should allow us to enter new markets with
weather patterns which differ from the Texas weather. In
addition, our chemical business will now produce liquid nitrogen
products as well as solid ammonium nitrate."
LSB Industries is a manufacturing, marketing, and engineering
company with activities on a world-wide basis. The Company's
principal business activities consist of the manufacture and sale
of chemical products, the manufacture and sale of commercial and
residential climate control products, the provision of
specialized engineering services, and other activities.
This press release contains certain "Forward-Looking Statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. All statements in this press release other than
statements of historical facts that address activities, events,
or developments that the Company expects, believes, or
anticipates will or may occur in the future are Forward-Looking
Statements. This press release includes the Forward-Looking
Statement that these assets should allow us to enter new markets.
An important factor that could cause this Forward-Looking
Statement to differ materially would be the inability of the
Company to successfully sell these products in the new markets.
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