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      10 12 06 8k
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>UNITED
        STATES </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
        AND EXCHANGE COMMISSION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>WASHINGTON,
        D.C. 20549</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>FORM
        8-K</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
        REPORT</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>PURSUANT
        TO SECTION 13 OR 15(d) OF</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>THE
        SECURITIES EXCHANGE ACT OF 1934</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Date
          of
          report (Date of earliest event reported)&#160;October 6, 2006</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>LSB
        INDUSTRIES, INC.</strong></font>
        <div>
          <hr style="COLOR: black" align="left" noshade size="1" width="100%">
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
        name of registrant as specified in its charter)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>&#160;</div>
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        <table cellpadding="0" cellspacing="0" width="100%">

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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Delaware</font></div>
              </td>
              <td width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1-7677</font></div>
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            </tr>
            <tr>
              <td valign="top" width="15%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
                  <hr style="COLOR: black" align="left" noshade size="1" width="100%">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                  or other jurisdiction</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                  incorporation)</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td valign="top" width="15%">
                <hr style="COLOR: black" align="left" noshade size="1" width="100%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                  File</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Number)</font></div>
              </td>
              <td width="5%">&#160;</td>
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                <hr style="COLOR: black" align="left" noshade size="1" width="100%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                  Employer</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification
                  No.)</font></div>
              </td>
            </tr>
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              </td>
              <td width="5%">&#160;</td>
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              <td width="5%">&#160;</td>
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            <tr>
              <td colspan="3" valign="top" width="35%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>16
                  South Pennsylvania, Oklahoma City, Oklahoma<br></strong></font>
                  <hr style="COLOR: black" align="left" noshade size="1" width="100%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                  of principal executive offices)</font></div>
              </td>
              <td width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;<strong>73107</strong>&#160;
                  </font>
                  <hr style="COLOR: black" align="left" noshade size="1" width="100%">
                </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;(Zip
                Code)</font></td>
            </tr>
            <tr>
              <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="5%">&#160;</td>
              <td valign="top" width="15%">&#160;</td>
              <td width="5%">&#160;</td>
              <td valign="top" width="15%">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Registrant's
        telephone number, including area code (405) 235-4546</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Not
        applicable</strong></font>
        <div>
          <hr style="COLOR: black" align="left" noshade size="1" width="100%">
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
        name or former address, if changed since last report)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
        the
        appropriate box below if the Form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions (see General Instruction A.2. below):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></font></div>
                </div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Written
                  communications pursuant to Rule 425 under the Securities Act (17
                  CFR
                  230.425)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
                  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                  240.14a-12)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                  communications pursuant to Rule 14d-2(b) under the Exchange Act
                  (17 CFR
                  240.14d-2(b))</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></font></div>
                </div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                  communications pursuant to Rule 13e-4(c) under the Exchange Act
                  (17 CFR
                  240.13e-4(c))</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
      <div>
        <hr style="COLOR: black" noshade size="2"><font size="3">&#160;</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Section
        1 - Registrant's Business and Operations </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
        1.01
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Entry
        into a Material Definitive Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;On
        October 6,
        2006, LSB Industries, Inc. (the "Company") entered into two Exchange Agreements.
        One Exchange Agreement with Paul J. Denby and his affiliates ("Denby") and
        the
        second with James W. Sight ("Sight"). Each Exchange Agreement provides for
        </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
        the
        issuance to Denby and Sight of 7.4 shares of the Company's common stock in
        exchange for each share of the Company's</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        $3.25
        Convertible Exchangeable Class C Preferred Stock, Series 2 (the "Series 2
        Preferred") beneficially </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">owned
        by
        each of them and (b) the waiver by Denby and Sight of all of their rights
        to all
        accrued and unpaid dividends on the Series 2 Preferred. Pursuant to the terms
        of
        each Exchange Agreement, the Company will (a) issue to Denby 303,400 shares
        of
        common stock in exchange for the 41,000 shares of Series 2 Preferred owned
        by
        Denby and (b) issue to Sight 262,167 shares of common stock in exchange for
        the
        35,428 shares of Series 2 Preferred owned by Sight.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;On
        October
        11, 2006, the Company entered into separate Exchange Agreements with each
        of
        Brian J. Denby and his affiliates and Brent Cohen. Each such Exchange Agreement
        was substantially similar to the Exchange Agreements entered into with Denby
        and
        Sight. Pursuant to the terms of each such Exchange Agreement, the Company
        will
        (a) issue to Brian J. Denby and his affiliates 51,800 shares of common stock
        in
        exchange for the 7,000 shares of Series 2 Preferred owned by them and (b)
        issue
        to Cohen 29,600 shares of common stock in exchange for the 4,000 shares of
        Series 2 Preferred owned by Cohen. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant
        to
        the foregoing Exchange Agreements, the Company will issue an aggregate of
        646,967 shares of its common stock in exchange for an aggregate of 87,428
        shares
        of Series 2 Preferred. As of September 30, 2006, the accrued and unpaid dividend
        on the Series 2 Preferred was $23.2625 per share. Accordingly, the holders
        of
        Series 2 Preferred that entered into the Exchange Agreements waived an aggregate
        of approximately $2,033,794 in accrued and unpaid dividends on the shares
        of
        Series 2 Preferred to be surrendered to the Company in accordance with the
        Exchange Agreements. The Exchange Agreements are subject to the Company listing
        the shares of common stock to be issued in connection with the Exchange
        Agreements on the AMEX.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Each
        Exchange
        Agreement was separately solicited by and negotiated with the respective
        holder
        of the Company's Series 2 Preferred. Neither the Company nor the holders
        of the
        Company's Series 2 Preferred have paid or given, or agreed to pay or give,
        directly or indirectly, any commission or other remuneration for soliciting
        each
        exchange. Each of the exchanges will be conducted under the exemption from
        registration provided by Sections 3(a)(9) the Securities Act of 1933, as
        amended
        (the "Act"). The Series 2 Preferred is registered with the Securities and
        Exchange Commission under the Form S-2 Registration Statement No. 33-61640,
        effective May 19, 1993, and, as such, the Company believes that the shares
        of
        common stock issued pursuant to Section 3(a)(9) of the Act in exchange for
        the
        Series 2 Preferred will be freely tradable by the recipients of the shares
        and
        will not be considered restricted securities under Rule 144 of the Act.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Upon
        completion of the foregoing exchanges, (a) 516,222 shares of Series 2 Preferred
        (excluding 18,300 shares of Series 2 Preferred held by LSB in treasury) will
        remain issued and outstanding and (b) there will a total of approximately
        $12,008,614 in accrued and unpaid dividends relating to such issued and
        outstanding Series 2 Preferred. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>This
        report is not an offer or a solicitation of an offer to sell or exchange
        any
        security.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Section&#160;3
        - Securities and Trading Markets </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item&#160;3.02:
        </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Unregistered
        Sales of Equity Securities</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exchange
        Agreements</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the Exchange Agreements discussed in Item 1.01 of this report, which
        disclosure is hereby incorporated by reference in this Item 3.02, the Company
        will be issuing a total of 646,967 shares of its common stock, par value
        $.10
        per share, in unregistered exchanges of 87,428 shares of its Series 2 Preferred.
        The exchanges will be conducted under the exemption from registration provided
        by Sections 3(a)(9) the Act. Each exchange is subject to listing of the shares
        of common stock with the AMEX.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Debenture
        Conversion</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        September 22, 2006, Technology Yield Fund (&#8220;Technology&#8221;) exercised its right to
        convert $250,000 principal amount of the Company&#8217;s 7% Convertible Senior
        Subordinated Debentures due 2011 (the &#8220;Debentures&#8221;). As a result of the
        conversion, the Company has issued to Technology 35,313 shares of the common
        stock of the Company. Pursuant to the terms of the Indenture, dated March
        3,
        2006, governing the Debentures, the conversion rate was 141.25 shares of
        common
        stock for each $1,000 principal amount of converted Debentures. The issuance
        of
        the common stock upon conversion of the Debentures was made in reliance on
        the
        exemption from registration provided by Section 3(a)(9) of the Act. The
        conversion was made without any form of general solicitation or general
        advertising. No commission or other remuneration was paid directly or indirectly
        for soliciting the conversion. The shares of common stock issued upon conversion
        of the outstanding Debentures are registered for resale under the Company&#8217;s Form
        S-1 Registration Statement, file number 333-134111, declared effective May
        26,
        2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
        a
        result of the above described conversion, $14.25 million of the principal
        amount
        of the Debentures remains outstanding. During the period from September 1,
        2006
        to February 28, 2009, the conversion rate of the Debentures declines every
        six
        months, starting at 141.25 shares and ending at 129.23 shares per $1,000
        principal amount of Debentures (representing an approximate conversion price
        of
        between $7.08 and $7.74 during such period). On and after March 1, 2009,
        the
        conversion rate is 125 shares per $1,000 principal amount of Debentures
        (representing a conversion price of $8.00 per share). The conversion rate
        is
        subject to certain anti-dilution adjustments.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>This
        report is not an offer or a solicitation of an offer to sell or exchange
        any
        security.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>SIGNATURES</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Company has
      duly
      caused this report to be signed on its behalf by the undersigned hereunto duly
      authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      October
      12, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font>LSB
      INDUSTRIES, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      </font></font>By:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>&#160;/s/
      Tony M. Shelby<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<br></u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;&#160;Tony
      M. Shelby,
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-FAMILY: Times New Roman"><font size="2">&#160;&#160;&#160;&#160;
<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;</font>&#160;Senior
      Vice President and </font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Chief
      Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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{"company-data": {"conformed-name": "LSB INDUSTRIES INC", "cik": "0000060714", "assigned-sic": "2810", "irs-number": "731015226", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-07677", "film-number": "061142813"}, "business-address": {"street1": "16 S PENNSYLVANIA", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73101", "phone": "4052354546"}, "mail-address": {"street1": "16 SOUTH PENNSYLVANIA", "city": "OKLAHOMA", "state": "OK", "zip": "73101"}}
10 12 06 8k
UNITED
        STATES
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 6, 2006
LSB
        INDUSTRIES, INC.
(Exact
        name of registrant as specified in its charter)
Delaware
1-7677
73-1015226
(State
                  or other jurisdiction
of
                  incorporation)
(Commission
                  File
Number)
(IRS
                  Employer
Identification
                  No.)
16
                  South Pennsylvania, Oklahoma City, Oklahoma
(Address
                  of principal executive offices)
73107
(Zip
                Code)
Registrant's
        telephone number, including area code (405) 235-4546
Not
        applicable
(Former
        name or former address, if changed since last report)
Check
        the
        appropriate box below if the Form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions (see General Instruction A.2. below):
o
Written
                  communications pursuant to Rule 425 under the Securities Act (17
                  CFR
                  230.425)
o
Soliciting
                  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                  240.14a-12)
o
Pre-commencement
                  communications pursuant to Rule 14d-2(b) under the Exchange Act
                  (17 CFR
                  240.14d-2(b))
o
Pre-commencement
                  communications pursuant to Rule 13e-4(c) under the Exchange Act
                  (17 CFR
                  240.13e-4(c))
Section
        1 - Registrant's Business and Operations
Item
        1.01
Entry
        into a Material Definitive Agreement
.
On
        October 6,
        2006, LSB Industries, Inc. (the "Company") entered into two Exchange Agreements.
        One Exchange Agreement with Paul J. Denby and his affiliates ("Denby") and
        the
        second with James W. Sight ("Sight"). Each Exchange Agreement provides for
(a)
        the
        issuance to Denby and Sight of 7.4 shares of the Company's common stock in
        exchange for each share of the Company's
$3.25
        Convertible Exchangeable Class C Preferred Stock, Series 2 (the "Series 2
        Preferred") beneficially
owned
        by
        each of them and (b) the waiver by Denby and Sight of all of their rights
        to all
        accrued and unpaid dividends on the Series 2 Preferred. Pursuant to the terms
        of
        each Exchange Agreement, the Company will (a) issue to Denby 303,400 shares
        of
        common stock in exchange for the 41,000 shares of Series 2 Preferred owned
        by
        Denby and (b) issue to Sight 262,167 shares of common stock in exchange for
        the
        35,428 shares of Series 2 Preferred owned by Sight.
On
        October
        11, 2006, the Company entered into separate Exchange Agreements with each
        of
        Brian J. Denby and his affiliates and Brent Cohen. Each such Exchange Agreement
        was substantially similar to the Exchange Agreements entered into with Denby
        and
        Sight. Pursuant to the terms of each such Exchange Agreement, the Company
        will
        (a) issue to Brian J. Denby and his affiliates 51,800 shares of common stock
        in
        exchange for the 7,000 shares of Series 2 Preferred owned by them and (b)
        issue
        to Cohen 29,600 shares of common stock in exchange for the 4,000 shares of
        Series 2 Preferred owned by Cohen.
Pursuant
        to
        the foregoing Exchange Agreements, the Company will issue an aggregate of
        646,967 shares of its common stock in exchange for an aggregate of 87,428
        shares
        of Series 2 Preferred. As of September 30, 2006, the accrued and unpaid dividend
        on the Series 2 Preferred was $23.2625 per share. Accordingly, the holders
        of
        Series 2 Preferred that entered into the Exchange Agreements waived an aggregate
        of approximately $2,033,794 in accrued and unpaid dividends on the shares
        of
        Series 2 Preferred to be surrendered to the Company in accordance with the
        Exchange Agreements. The Exchange Agreements are subject to the Company listing
        the shares of common stock to be issued in connection with the Exchange
        Agreements on the AMEX.
Each
        Exchange
        Agreement was separately solicited by and negotiated with the respective
        holder
        of the Company's Series 2 Preferred. Neither the Company nor the holders
        of the
        Company's Series 2 Preferred have paid or given, or agreed to pay or give,
        directly or indirectly, any commission or other remuneration for soliciting
        each
        exchange. Each of the exchanges will be conducted under the exemption from
        registration provided by Sections 3(a)(9) the Securities Act of 1933, as
        amended
        (the "Act"). The Series 2 Preferred is registered with the Securities and
        Exchange Commission under the Form S-2 Registration Statement No. 33-61640,
        effective May 19, 1993, and, as such, the Company believes that the shares
        of
        common stock issued pursuant to Section 3(a)(9) of the Act in exchange for
        the
        Series 2 Preferred will be freely tradable by the recipients of the shares
        and
        will not be considered restricted securities under Rule 144 of the Act.
Upon
        completion of the foregoing exchanges, (a) 516,222 shares of Series 2 Preferred
        (excluding 18,300 shares of Series 2 Preferred held by LSB in treasury) will
        remain issued and outstanding and (b) there will a total of approximately
        $12,008,614 in accrued and unpaid dividends relating to such issued and
        outstanding Series 2 Preferred.
This
        report is not an offer or a solicitation of an offer to sell or exchange
        any
        security.
Section 3
        - Securities and Trading Markets
Item 3.02:
Unregistered
        Sales of Equity Securities
Exchange
        Agreements
.
Pursuant
        to the Exchange Agreements discussed in Item 1.01 of this report, which
        disclosure is hereby incorporated by reference in this Item 3.02, the Company
        will be issuing a total of 646,967 shares of its common stock, par value
        $.10
        per share, in unregistered exchanges of 87,428 shares of its Series 2 Preferred.
        The exchanges will be conducted under the exemption from registration provided
        by Sections 3(a)(9) the Act. Each exchange is subject to listing of the shares
        of common stock with the AMEX.
Debenture
        Conversion
.
On
        September 22, 2006, Technology Yield Fund ("Technology") exercised its right to
        convert $250,000 principal amount of the Company's 7% Convertible Senior
        Subordinated Debentures due 2011 (the "Debentures"). As a result of the
        conversion, the Company has issued to Technology 35,313 shares of the common
        stock of the Company. Pursuant to the terms of the Indenture, dated March
        3,
        2006, governing the Debentures, the conversion rate was 141.25 shares of
        common
        stock for each $1,000 principal amount of converted Debentures. The issuance
        of
        the common stock upon conversion of the Debentures was made in reliance on
        the
        exemption from registration provided by Section 3(a)(9) of the Act. The
        conversion was made without any form of general solicitation or general
        advertising. No commission or other remuneration was paid directly or indirectly
        for soliciting the conversion. The shares of common stock issued upon conversion
        of the outstanding Debentures are registered for resale under the Company's Form
        S-1 Registration Statement, file number 333-134111, declared effective May
        26,
        2006.
As
        a
        result of the above described conversion, $14.25 million of the principal
        amount
        of the Debentures remains outstanding. During the period from September 1,
        2006
        to February 28, 2009, the conversion rate of the Debentures declines every
        six
        months, starting at 141.25 shares and ending at 129.23 shares per $1,000
        principal amount of Debentures (representing an approximate conversion price
        of
        between $7.08 and $7.74 during such period). On and after March 1, 2009,
        the
        conversion rate is 125 shares per $1,000 principal amount of Debentures
        (representing a conversion price of $8.00 per share). The conversion rate
        is
        subject to certain anti-dilution adjustments.
This
        report is not an offer or a solicitation of an offer to sell or exchange
        any
        security.
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Company has
      duly
      caused this report to be signed on its behalf by the undersigned hereunto duly
      authorized.
Dated:
October
      12, 2006.
LSB
      INDUSTRIES, INC.
By:
/s/
      Tony M. Shelby
Tony
      M. Shelby,
Senior
      Vice President and
Chief
      Financial Officer