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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(a)
RENTECH, INC
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
[ 760112102 ]
(CUSIP Number)
JOAN C. SONNEN
FOREST OIL CORPORATION
1600 BROADWAY, SUITE 2200
DENVER, COLORADO 80202
(303) 812-1400
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
MARCH 18, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box. / /
(Continued on following pages)
(Page 1 of 5 )
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CUSIP NO. [ 760112102 ] Page 2 of 5
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1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
Forest Oil Corporation
I.R.S. Employer Identification No. 25-0484900
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2 Check the appropriate box if a member of a group(1) (a) / /
(b) /X/
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3 SEC use only
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4 Source of Funds WC
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5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) / /
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6 Citizenship or Place of Organization New York, United States
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7 Sole Voting Power(1)(2) 4,000,000
Number of Shares Beneficially ------------------------------------------------
8 Shared Voting Power 0
Owned by Each Reporting ------------------------------------------------
9 Sole Dispositive Power(1)(2) 4,000,000
Person With ------------------------------------------------
10 Shared Dispositive Power 0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting
Person(2) 4,000,000
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares / /
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13 Percent of Class Represented by Amount in Row (11)(2) 6.5%
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14 Type of Reporting Person CO
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(1) The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
(2) Includes shares of Common Stock that the Reporting Person may purchase
pursuant to (a) stock options expiring on December 31, 2001 that
are immediately exercisable to purchase 2,000,000 shares of Common
Stock with an exercise price of $1.25 per share, and (b) stock
options expiring on December 31, 2004 that are immediately exercisable
to purchase 1,000,000 shares of Common Stock with an exercise price of
$5.00 per share. See Items 5 and 6.
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Page 3 of 5
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this Schedule 13D (this
"Statement") relates is the Common Stock, par value $.01 per share (the
"Common Stock"), of Rentech, Inc., a Colorado corporation (the "Issuer"). The
address of the Issuer's principal executive offices is 1331 17th Street,
Suite 720, Denver, Colorado 80202.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The name of the Person filing this Statement (the "Reporting
Person") is Forest Oil Corporation.
(b) The state of organization of the Reporting Person is the State
of New York.
(c) The principal business of the Reporting Person is the
acquisition, exploration, development, production and
marketing of natural gas and liquids.
(d) The address of the Principal Business and the principal office
of the Reporting Person is 1600 Broadway, Suite 2200, Denver,
Colorado 80202.
(e) The Reporting Person has not, during the last five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(f) The Reporting Person has not, during the last five years, been
a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities
laws or finding any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 6 below, on March 18, 2000, the
Reporting Person purchased from the Issuer the number of shares of Common
Stock and the number of Options to purchase shares of Common Stock at the
purchase price set forth below.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
NUMBER OF PURCHASABLE PURCHASABLE
SHARES PURCHASED PURSUANT TO 2001 OPTIONS PURSUANT TO 2004 OPTIONS PURCHASE PRICE
<S> <C> <C> <C>
1,000,000 2,000,000 1,000,000 $ 650,000
</TABLE>
The Reporting Person obtained funds for the purchase price of its
shares of Common Stock and its Options from working capital.
ITEM 4. PURPOSE OF THE TRANSACTION.
The Reporting Person consummated the transactions described herein
in order to acquire an interest in the Issuer for investment purposes. The
Reporting Person intends to review continuously its position in the Issuer.
Depending upon future evaluations of the business prospects of the Issuer and
upon other developments including, but not limited to, general economic and
business conditions and stock market conditions, the Reporting Person may
retain or from time to time increase its holdings or may dispose of all or a
portion of its holdings, subject to any applicable legal and contractual
restrictions on its ability to do so.
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Page 4 of 5
In addition, the matters set forth in Item 6 below are incorporated
in this Item 4 by reference as if fully set forth herein.
Except as set forth in this Item 4 (including the matters described
in Item 6 below which are incorporated in this Item 4 by reference), the
Reporting Person has no present plans or proposals that relate to or that
would result in any of the actions specified in clauses (a) through (j) of
Item 4 of Schedule 13D of the Exchange Act.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Person is the record and beneficial owner of
1,000,000 shares of Common Stock, 2,000,000 options to purchase Common Stock
pursuant to the 2001 Options, and 1,000,000 options to purchase Common Stock
pursuant to the 2004 Options. Assuming exercise of all such options, the
Reporting Person is the beneficial owner of 4,000,000 shares of Common Stock
which, based on calculations made in accordance with Rule 13d-3 of the
Exchange Act and, as of March 22, 2000, there being 61,494,080 shares of
Common Stock outstanding, represents approximately 6.5% of the outstanding
shares of Common Stock, including the shares we have a right to acquire
within 60 days.
The Reporting Person expressly disclaims (a) the existence of any
group and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such Reporting Person.
(b) The information set forth in Items 7 through 11 of the cover
page hereto is incorporated herein by reference.
(c) Except as set forth herein, the Reporting Person has not
effected any transactions in shares of Common Stock during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The matters set forth in Item 2 are incorporated in this Item 6 by
reference as if fully set forth herein.
(a) Stock Purchase Agreement
Pursuant to the Stock Purchase Agreement (the "Stock Purchase
Agreement") dated as of March 18, 2000, by and between the Issuer and the
Reporting Person, the Issuer agreed to sell to the Reporting Person, and the
Reporting Person agreed to purchase from the Issuer, 1,000,000 shares of
Common Stock ("Purchased Common Shares"), options to purchase 2,000,000
shares of Common Stock having an exercise price of $1.25 per share and
expiring December 31, 2001 ("2001 Options"), and options to purchase
1,000,000 shares of Common Stock having an exercise price of $5.00 per share
and expiring December 31, 2004 ("2004 Options"), collectively referred to as
the "Purchased Securities", for an aggregate purchase price of $650,000.00.
The 2001 Options and the 2004 Options are subject to the terms of their
respective option agreements.
The foregoing description of the Stock Purchase Agreement is not,
and does not purport to be, complete and is qualified in its entirety by
reference to the Stock Purchase Agreement, a copy of which is filed herewith
as Exhibit 10.1 and is incorporated herein by reference.
(b) Registration Rights Agreement
The Issuer, the Reporting Person and Anschutz Investment Company
entered into a Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of March 18, 2000, pursuant to which the Issuer agreed
to use its best efforts to file a registration statement within 30 days from
the date thereof , and to cause it to become effective within 90 days
thereof, covering the resale of all of Reporting Person's Registrable
Securities. In addition, the Reporting Person has certain piggyback
registration rights in connection with registrations of the Issuer's
securities under the Securities Act of 1933 (the "Securities Act").
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Page 5 of 5
As used in this statement, "Registrable Securities" means the
Purchased Common Shares, the shares purchasable under the 2001 Options and
the 2004 Options, and any shares of capital stock issued or issuable with
respect to the Purchased Securities as a result of any sale or issuance of
Common Stock by the Issuer for less than its then prevailing fair market
value, any stock split, stock dividend, recapitalization, exchange or similar
event.
The foregoing description of the Registration Rights Agreement is
not, and does not purport to be, complete and is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which is filed as
Exhibit 10.2 hereto and is incorporated herein by reference.
(c) Option Agreements
In furtherance of the Stock Purchase Agreement, the Issuer and the
Reporting Person entered into two Option Agreements (the "Option
Agreements"), both dated as of March 18, 2000, in respect of the 2001 Options
and the 2004 Options. Under the 2001 Option Agreement, the Reporting Person
or its permitted assignee is entitled to purchase from the Issuer an
aggregate of 2,000,000 shares of Common Stock at an exercise price of $1.25
per share, as adjusted from time to time pursuant to the terms thereof. The
2001 Option Agreement expires on December 31, 2001. Under the 2004 Option
Agreement, the Reporting Person or its permitted assignee is entitled to
purchase from the Issuer an aggregate of 1,000,000 shares of Common Stock at
an exercise price of $5.00 per share as adjusted from time to time pursuant
to the terms thereof. The 2004 Option Agreement expires on December 31, 2004.
The foregoing description of the 2001 Option Agreement and the 2004
Option Agreement is not, and does not purport to be, complete and is
qualified in its entirety by reference to the Option Agreements. A copy of
the 2001 Option Agreement is filed as Exhibit 10.3(a) hereto, and is
incorporated herein by reference, and a copy of the 2004 Option Agreement is
filed as Exhibit 10.3(b) hereto, and is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 10.1: Stock Purchase Agreement, dated as of March 18, 2000,
between the Issuer and the Reporting Person relating
to the purchase and sale of Common Stock, and options
to purchase Common Stock, of Rentech, Inc..
Exhibit 10.2: Registration Rights Agreement, dated as of
March 18, 2000, by and among the Issuer, the
Reporting Person, and Anschutz Investment Company.
Exhibit 10.3(a): 2001 Option Agreement dated as of March 18, 2000,
between the Issuer and the Reporting Person.
Exhibit 10.3(b): 2004 Option Agreement dated as of March 18, 2000,
between the Issuer and the Reporting Person.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
March 28, 2000
Forest Oil Corporation
By: /s/ Joan C. Sonnen
------------------------------------
Name: Joan C. Sonnen
TItle: Vice President, Controller
and Corporate Secretary
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EXHIBIT INDEX
Exhibit 10.1: Stock Purchase Agreement, dated as of March 18, 2000,
between the Issuer and the Reporting Person relating
to the purchase and sale of Common Stock, and options
to purchase Common Stock, of Rentech, Inc..
Exhibit 10.2: Registration Rights Agreement, dated as of March 18,
2000, by and among the Issuer, the Reporting Person,
and Anschutz Investment Company.
Exhibit 10.3(a): 2001 Option Agreement dated as of March 18, 2000,
between the Issuer and the Reporting Person.
Exhibit 10.3(b): 2004 Option Agreement dated as of March 18, 2000,
between the Issuer and the Reporting Person.
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EXECUTION COPY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of
March 18, 2000, by and between RENTECH, INC., a corporation organized under
the laws of the State of Colorado, with headquarters located at 1331 17th
Street, Suite 720, Denver, Colorado 80202 (the "Company") and FOREST OIL
CORPORATION, a corporation organized under the laws of the State of New York,
with headquarters located at 1600 Broadway, Suite 2200, Denver, Colorado
80202 (the "Buyer").
BACKGROUND CIRCUMSTANCES.
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Buyer desires to purchase from the Company, and the Company
desires to sell to the Buyer, for the amount and upon the terms and
conditions stated in this Agreement, in a closing or closings as herein
described, 1,000,000 shares of the Company's common stock, par value $.01 per
share ("Common Stock"), an option to purchase 2,000,000 shares of Common
Stock having an exercise price of $1.25 per share and expiring December 31,
2001, and an option to purchase 1,000,000 shares of Common Stock having an
exercise price of $5.00 per share and expiring December 31, 2004. The options
are granted in separate agreements executed by the parties concurrently with
this Agreement (the "Option Agreements").
NOW, THEREFORE, in consideration of their respective promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Company and
the Buyer hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES.
(a) PURCHASE. The Buyer hereby agrees to purchase from the Company,
and the Company agrees to sell to the Buyer, 1,000,000 shares of Common Stock
("Stock"), an option to purchase 2,000,000 shares of Common Stock having an
exercise price of $1.25 per share and expiring December 31, 2001 ("2001
Option"), and an option to purchase 1,000,000 shares of Common Stock having
an exercise price of $5.00 per share and expiring December 31, 2004 ("2004
Option" and, together with the Stock and the 2001 Option, the "Securities").
The 2001 Option and the 2004 Option (collectively, the "Options") shall be
subject to the terms and conditions of the Option Agreements.
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(b) PURCHASE PRICE. The purchase price for the Stock and the 2001
Option is $600,000. The purchase price for the 2004 Option is $50,000. The
aggregate purchase price for the Securities is $650,000 (the "Purchase
Price").
2
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(c) THE CLOSING. The date of the Closing shall be March 20, 2000.
The Purchase Price shall be delivered to the Company by cashier's check or by
wire transfer of immediately available funds in United States Dollars. At the
Closing, the Company shall deliver certificates representing the Stock, duly
issued and executed by the authorized officers on behalf of the Company, to
the Buyer, and the Company and Buyer shall sign and the Company shall deliver
to Buyer the Option Agreements and the Registration Rights Agreement (as
defined below).
SECTION 2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer understands, agrees with, and represents and warrants to
the Company with respect to its purchase hereunder, that:
(a) INVESTMENT PURPOSES; COMPLIANCE WITH 1933 ACT. The Buyer is
purchasing the Securities for its own account for investment only and not
with a view towards, or in connection with, the public sale or distribution
thereof, except pursuant to sales registered under or exempt from the 1933
Act. The Buyer is not purchasing the Securities for the purpose of covering
short sale positions in Common Stock established on or prior to the date of
the Closing. The Buyer agrees to offer, sell or otherwise transfer the
Securities only (i) in accordance with the terms of this Agreement and the
Option Agreements, as the same may be applicable, and (ii) pursuant to
registration under the 1933 Act or to a transaction for which registration
under the 1933 Act is not required. Except as set forth in Section 2(f) of
that certain Registration Rights Agreement dated as of the date hereof by and
among the Company, Buyer and Anschutz Investment Company (the "Registration
Rights Agreement") the Buyer does not by its representations contained in
this Section 2(a) agree to hold the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time
pursuant to a registration statement or in accordance with an exemption from
registration under the 1933 Act, in all cases in accordance with applicable
state and federal securities laws.
(b) ACCREDITED INVESTOR STATUS. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D. The Buyer
has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of an investment made pursuant
to this Agreement. The Buyer is aware that it may be required to bear the
economic risk of an investment made pursuant to this Agreement for an
indefinite period of time, and is able to bear such risk for an indefinite
period.
(c) RELIANCE ON EXEMPTIONS. The Buyer understands the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of the applicable United States federal and state
securities laws and that the Company is relying upon the truth and accuracy
of, and the Buyer's compliance with, the representations, warranties,
acknowledgments, understandings, agreements and covenants of the Buyer set
forth herein in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire the Securities.
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(d) INFORMATION. The Buyer and its advisors, if any, have been
furnished with the Company's Form 10-KSB as filed with the SEC for the fiscal
year ended September 30, 1999, the Company's Form 10-QSB for the fiscal
quarter ended December 31, 1999, and the Company's private placement
memorandum dated October 12, 1999 that was not prepared for the offer and
sale of the Securities. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. The Buyer
understands that its investment in the Securities involves a high degree of
risk. The Buyer has sought such accounting, legal and tax advice as it has
considered necessary to an informed investment decision with respect to the
investment made pursuant to this Agreement.
(e) NO GOVERNMENT REVIEW. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities, nor have
such authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) TRANSFER OR RESALE. The Buyer understands that: (i) the
Securities have not been and are not being registered under the 1933 Act or
any state securities laws, and that the Stock may not be offered for sale,
sold, assigned or transferred unless either (x) subsequently registered
thereunder or (y) the Buyer shall have delivered to the Company, if so
requested by the Company, a legal opinion reasonably satisfactory to the
Company's outside counsel to the effect that the securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, (ii) the sale, assignment or transfer of
the Options or any shares of Common Stock issuable upon the exercise thereof
are subject to certain restrictions as set forth in the Option Agreements and
(iii) except as set forth in the Registration Rights Agreement, neither the
Company nor any other person is under any obligation to register such
securities under the 1933 Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder.
(g) LEGEND. The Buyer understands that unless the resale of the
shares of the Stock or Common Stock underlying the Options (collectively, the
"Subject Shares") has been registered under the 1933 Act or may be sold by
the Buyer pursuant to paragraph (k) of Rule 144 (as amended, or any
applicable rule which operates to replace said Rule) promulgated under the
1933 Act ("Rule 144"), the stock certificates representing the Common Stock
will bear a restrictive legend (the "Legend") in substantially the following
form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS.
The Legend will be removed and the Company will issue certificates without
the Legend to the transferee of the applicable Subject Shares upon which the
Legend is stamped, if, unless otherwise required by state securities laws,
(a) such Subject Shares were resold pursuant to and in accordance
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with the registration of same under the 1933 Act, or (b) in connection with a
resale transaction, such holder provides the Company an opinion by counsel
reasonably acceptable to the Company's outside counsel, to the effect that a
public sale, assignment or transfer of the Common Stock may be made without
registration under the 1933 Act.
(h) AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered by the Buyer and is a valid and
binding agreement of the Buyer enforceable against Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and
to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
(i) NO BROKERS; NO GENERAL SOLICITATION. Buyer has taken no action
that would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments relating to this Agreement and the
transactions contemplated hereby. Buyer acknowledges that no broker was
involved with respect to the transactions contemplated hereby.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company understands, agrees with, and represents and warrants to
the Buyer that:
(a) ORGANIZATION AND QUALIFICATION: REPORTING COMPANY STATUS. The
Company and its subsidiaries are corporations duly organized and existing in
good standing under the laws of the respective jurisdictions in which they
are incorporated and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each of the
Company and its subsidiaries are duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary. The
Company has registered its Common Stock pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and sales of its
Common Stock are reported by the National Quotation Bureau, Inc. on the Over
the Counter Bulletin Board.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and
the other agreements contemplated hereby or referred to herein (collectively,
the "Agreements") and to issue and sell the Securities in accordance with the
terms hereof, (ii) the execution, delivery and performance of the Agreements
by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or
its stockholders is required, (iii) the Agreements and, on the date of the
Closing, the Securities sold at the Closing, have been duly and validly
authorized, executed and delivered by the Company, and (iv) the Agreements
constitute the valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting, generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application. The Company
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(and its legal counsel) have examined this Agreement and is satisfied in its
sole discretion that this Agreement and the accompanying Exhibits, Schedules
and the Addenda, if any, are in accordance with Regulation D.
(c) CAPITALIZATION. As of December 31, 1999, the authorized Common
Stock of the Company consists of 100,000,000 shares of Common Stock of which
52,619,372 shares were issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. No shares of
Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances, whether or not contingent. Except as disclosed in
the Company's Form 10-KSB for the year ended September 30, 1999, and its Form
10-QSB for the fiscal quarter ended December 31, 1999, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries, and (ii) there are no outstanding debt
securities. The Company has made available to the Buyer true and correct
copies of the Company's Articles of Incorporation, as amended, as in effect
on the date hereof ("Certificate of Incorporation"), and the Company's
Bylaws, as in effect on the date hereof ("Bylaws").
(d) ISSUANCE OF SECURITIES. The Stock is all duly authorized and
reserved for issuance, and shall be validly issued, fully paid and
non-assessable, free from all taxes, liens and charges with respect to the
issue thereof, and will not be subject to preemptive rights or other similar
rights of stockholders of the Company.
(e) NO REGISTRATION REQUIREMENTS. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers
to buy any security under circumstances which would prevent the parties
hereto from consummating the sale contemplated hereby pursuant to an
exemption from registration under the 1933 Act and specifically in accordance
with the provisions of Regulation D. The sale contemplated hereby is exempt
from the registration requirements of the 1933 Act, assuming the accuracy of
the representations and warranties contained herein of the Buyer.
(f) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Articles of Incorporation or Bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to
the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected. Neither the
Company nor any of its subsidiaries is in violation of its Articles of
Incorporation or other organizational documents, and neither the Company nor
any of its subsidiaries are in default (and no event has occurred which, with
notice or lapse of time or both, would put the Company or any
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of its subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party. The business of the Company and its subsidiaries is
not being conducted, and shall not be conducted so long as the Buyer owns any
of the Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this Agreement
and as required under the 1933 Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement, in accordance with the terms hereof.
(g) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 1997, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act") (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules hereto and documents
(other than exhibits) incorporated by reference therein, being hereinafter
referred to as the "SEC Documents"). The Company has made available to the
Buyer true and complete copies of the SEC Documents. As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. Except as set forth
in the financial statements of the Company included in the SEC Documents and
a finder's fee claim by John M. King IV, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities subsequent to the date of
such financial statements incurred in the ordinary course of business and
consistent with past practice and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and consistent with
past practice and not required under generally accepted accounting principles
to be reflected in such financial statements, in each case of clause (i) and
(ii) next above which, individually or in the aggregate, are not material to
the financial condition, business, operations, properties, operating results
or prospects of the Company. Except for the finder's fee claim of John M.
King IV, the SEC Documents contain a description of the general nature of all
material undischarged written and oral contracts, agreements, leases or other
instruments to which the Company or any subsidiary is a party or by which the
Company or any subsidiary is subject (each a "Contract"). None of the
Company, its subsidiaries or, to the best of the Company's knowledge, any of
the other parties thereto, is in breach or violation of any Contract. No
event, occurrence or condition exists which, with the lapse of time, the
giving of notice, or both, or the happening of any further event or
condition, would become a default by the Company or its subsidiaries
thereunder which would, individually or in the aggregate with any other such
defaults by the Company or its subsidiaries, have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on the
operations, properties or financial condition of the Company and its
subsidiaries taken as a whole.
(h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, there has
been no material adverse change and no material adverse development in the
business, properties, operation, financial condition, results of operations
or prospects of the Company.
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(i) ABSENCE OF LITIGATION. Except as specifically disclosed in the
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of
the Company, threatened against or affecting the Company.
(j) NO BROKERS; NO GENERAL SOLICITATION. The Company has taken no
action that would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this Agreement and
the transactions contemplated hereby. The Company acknowledges that no broker
was involved with respect to the transactions contemplated hereby.
(k) INTELLECTUAL PROPERTY. (i) As used herein, "Intellectual
Property" shall mean all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, mask works and all
applications, registrations and renewals in connection therewith, trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals), proprietary software, proprietary rights and
copies and tangible embodiments thereof (in whatever form or medium).
(ii) Except as set forth on SCHEDULE 3(k)(ii) hereto, the
Company and its subsidiaries own or are licensed or otherwise have the right
to use, without payment to any other person, the Intellectual Property used
in or necessary for each of their businesses, as presently conducted. Neither
the Company nor any of its subsidiaries has entered into any agreement that
restricts or affects its use and/or location of use of any of its
Intellectual Property.
(iii) Without limiting the scope of the Company's warranty
and representation in sub-paragraph (ii) above, (w) each trademark
registration included in the Intellectual Property exists and is owned by the
Company or any of its subsidiaries and has been maintained in good standing;
(x) each patent and application included in the Intellectual Property exists,
is owned by or licensed to the Company or one of its subsidiaries, and has
been maintained in good standing; (y) each copyright registration included in
the Intellectual Property exists and is owned by the Company or one of it
subsidiaries; and (z) to the Company's knowledge, no other firm, corporation,
association or person claims the right to use in connection with similar or
related goods and in any geographic area, any mark, logo, name, symbol,
device, or slogan which is identical or confusingly similar to any of the
trademarks included in the Intellectual Property or which could serve to
dilute the distinctiveness of such trademarks.
(iv) The Company and its subsidiaries' ownership and/or use
of Intellectual Property in their businesses, as presently conducted, does
not conflict with, or result in any violation
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of, or default (with or without notice or lapse of time or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation, or result in any loss of a material benefit under, or the
creation of any lien in or upon any of the properties or assets of the
Company or its subsidiaries under, any contract between the Company and any
person or, to the Company's knowledge, any other intellectual property rights
of any other person, except for any such conflict, violation, default, right
of termination, cancellation acceleration, loss of material benefit or
creation of any lien which would not have a material adverse effect with
respect to the Company.
(v) The Company has not received any communications
alleging that the Company or one of its subsidiaries has violated or, by
conducting its business, would infringe upon the intellectual property rights
of any other person. The Company is not aware of any infringement or
misappropriation by others of any of its or its subsidiaries' Intellectual
Property.
(l) PERMITS AND LICENSES. The Company holds all material licenses,
permits and other authorizations of any agency, public, regulatory or other
governmental authority necessary to conduct its business as now being
conducted or, under currently applicable statutes, rules, ordinances,
regulations or other laws, to continue to conduct its business as now being
conducted. Such licenses, permits and other authorizations held by the
Company are valid and in full force and effect, and there are no legal
actions pending or, to the knowledge of the Company, threatened that could
result in the termination, impairment or nonrenewal thereof.
(m) OTHER INFORMATION. No representation or warranty of the Company
in this Agreement, nor any statement, certificate or other document furnished
or to be furnished by the Company to the Buyer pursuant to this Agreement,
nor any exhibits or schedules hereto, contains any untrue statement of a
material fact, or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4. COVENANTS.
(a) BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.
(b) SECURITIES LAWS. The Company agrees to timely file a Form D (or
equivalent form required by applicable state law) with respect to the
Securities if and as required under Regulation D and applicable state
securities laws. The Company shall, on or before the date of the Closing,
take such action as is necessary to sell the Securities being sold to the
Buyer under applicable securities laws of the United States, and shall if
specifically so requested provide evidence of any such action so taken to the
Buyer on or prior to the Closing Date.
(c) REPORTING STATUS. So long as the Buyer beneficially owns any of
the Securities, the Company shall file all reports required to be filed with
the SEC pursuant to the 1934 Act on a timely
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basis, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations hereunder would permit such termination.
(d) USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Securities for the Company's internal working capital purposes,
including costs and expenses of the Company's business operations and payment
of certain outstanding obligations of the Company, research and development,
and to the extent deemed advisable by the Company, for the purchase of new
technologies for use by the Company and its subsidiaries, and for the
purchase of additional subsidiaries and the development and marketing of
their technologies.
(e) RESERVATION OF SHARES. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the issuance of the Securities and any
Common Stock issuable upon the exercise or conversion thereof.
(f) PROSPECTUS DELIVERY REQUIREMENT. The Buyer understands that the
1933 Act requires under certain circumstances the delivery of a prospectus
relating to the Common Stock in connection with any resale thereof, and the
Buyer shall comply with any applicable prospectus delivery requirements of
the 1933 Act in connection with any such sale.
(g) INTENTIONAL ACTS OR OMISSIONS. Neither party shall intentionally
perform any act which if performed, or omit to perform any act which if
omitted to be performed, would prevent or excuse the performance of this
Agreement or any of the transactions contemplated hereby.
SECTION 5. REMOVAL OF LEGEND.
The Legend will be removed and the Company will issue certificates
without the Legend to the transferee of the applicable Subject Shares upon
which the Legend is stamped, if, unless otherwise required by state
securities laws, (a) such Subject Shares were resold pursuant to and in
accordance with the registration of same under the 1933 Act, or (b) in
connection with a resale transaction, such holder provides the Company an
opinion by counsel reasonably acceptable to the Company's outside counsel, to
the effect that a public sale, assignment or transfer of the Common Stock may
be made without registration under the 1933 Act. The Buyer agrees that its
resale of all Common Stock, shall be made only pursuant to an effective
registration statement and to deliver a prospectus in connection with such
sale, or in a transaction in which registration is not required under the
registration requirements of the 1933 Act. In the event the Legend is removed
from any certificate for Common Stock or any Common Stock is issued without
the Legend and thereafter the effectiveness of a registration statement
covering the sales of such Common Stock is suspended or the Company
determines that a supplement or amendment thereto is required by applicable
securities laws, then upon reasonable advance notice to the holder of such
Security, the Company shall be entitled to require that the Legend be placed
upon any such Security which cannot then be sold pursuant to an effective
registration statement or with respect to which the opinion referred to in
clause (b) next above has not been rendered, which Legend shall be removed
when such Common
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Stock may be sold pursuant to an effective registration statement or at such
time as such holder provides the opinion with respect thereto described in
clause (b) next above.
SECTION 6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Securities at
the Closing is subject to the satisfaction, on or before the date of the
Closing as described herein, of each of the following conditions, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion:
(a) The parties shall have executed this Agreement, and the parties
shall have delivered executed originals of the documents to the other party.
(b) The Buyer shall have delivered to the Company the Purchase Price
for the Securities, as provided in this Agreement.
(c) The representations and warranties of the Buyer shall be true
and correct in all material respects as of the date made and as of the date
of the Closing as though made at that time (except for representations and
warranties that refer to a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the date of
the Closing.
(d) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self
regulatory organization having authority over the matters contemplated hereby
which restricts or prohibits the consummation of any of the transactions
contemplated herein.
SECTION 7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer to purchase the Securities is subject to
the satisfaction, on or before the date of the Closing, of each of the
following conditions, provided that these conditions are for the sole benefit
of the Buyer and may be waived by the Buyer at any time in its sole
discretion:
(a) The parties shall have executed this Agreement and the
Registration Rights Agreement, and the parties shall have delivered executed
originals of the respective documents to the other party.
(b) The Company shall have delivered to the Buyer the Securities
(including the Option Agreements executed on behalf of the Company), as
provided in this Agreement.
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(c) The representations and warranties of the Company shall be true
and correct in all material respects as of the date made and as of the date
of the Closing as though made at that time (except for representations and
warranties that refer to a specific date), and the Company shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the date
of the Closing. The Buyer may require a certificate, executed by the Chief
Executive Officer or a Vice President of the Company, dated as of the date of
the Closing, to the foregoing effect.
(d) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self
regulatory organization having authority over the matters contemplated hereby
which restricts or prohibits the consummation of any of the transactions
contemplated herein.
(e) An opinion of counsel to the Company, in form and substance
acceptable to the Buyer.
SECTION 8. GOVERNING LAW; MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado without
regard to the principles of conflict of laws. In the event of any litigation
regarding the interpretation or application of this Agreement, the parties
irrevocably consent to jurisdiction in any of the state or federal courts
located in the State of Colorado and waive their rights to object to venue in
any such court, regardless of the convenience or inconvenience thereof to any
party. Service of process in any civil action relating to or arising out of
this Agreement (including also all Exhibits or Addenda hereto, if any), or
the transactions contemplated herein may be accomplished in any manner
provided by law. The parties hereto agree that a final, non-appealable
judgment in any such suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each party and signature pages from such counterparts have been delivered to
the other party. In the event any signature page is delivered by facsimile
transmission (which the parties agree is an acceptable form of delivery), the
party using such means of delivery shall cause two (2) additional originally
executed signature pages to be physically delivered to the other party within
three (3) business days of the execution and delivery hereof.
(c) HEADINGS; GENDER, ETC. The headings of this Agreement are for
convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer
to the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the
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context clearly requires otherwise, the words "herein," "hereunder" and
"hereby," shall refer to this entire Agreement and not only to the Section or
paragraph in which such word appears. If any date specified herein falls upon
a Saturday, Sunday or public or legal holidays, the date shall be construed
to mean the next business day following such Saturday, Sunday or public or
legal holiday. For purposes of this Agreement, a "business day" is any day
other than a Saturday, Sunday or public or legal holiday.
(d) SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than
by an instrument in writing signed by the party to be charged with
enforcement.
(f) NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by U. S. Mail or delivered personally
or by courier or via facsimile (if via facsimile, to be followed within three
(3) business days by an original of the notice document via U.S. Mail or
courier) and shall be effective five (5) days after being placed in the mail,
if mailed, certified or registered, return receipt requested, or upon
receipt, if delivered personally or by courier or by facsimile, in each case
properly addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Rentech, Inc.
1331 17th Street, Suite 720
Denver, Colorado 80202
Telephone: (303) 298-8008
Facsimile: (303) 298-8010
Attention: Mr. Ronald C. Butz, Vice President & COO
If to the Buyer, at the address on the signature page of this Agreement. Each
party shall provide written notice to the other party of any change in
address.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors. Neither
party shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party (which consent shall not
be unreasonably withheld or delayed), except that Buyer may assign its rights
hereunder in whole or in part to (i) any entity or person that directly, or
indirectly through one or more intermediaries, is controlled by, or is under
common control with Buyer (an "Affiliate") or (ii) any director, officer,
employee, representative or agent of Buyer or any of its Affiliates. Any
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assignee of the Buyer shall be an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D, and no assignment shall be made by
the Buyer unless it is made in accordance with any applicable securities laws.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
permitted assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
(i) SURVIVAL. The representations and warranties of the Company and
the Buyer contained in Sections 2 and 3 and the agreements and covenants set
forth in Sections 4 shall survive the Closing of the purchase and sale of
Securities purchased and sold hereby.
(j) FURTHER ASSURANCE. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
(k) REMEDIES. No provision of this Agreement providing for any
specific remedy to a party shall be construed to limit such party to the
specific remedy described, and any other remedy that would otherwise be
available to such party at law or in equity shall be so available. Nothing in
this Agreement shall limit any rights a party may have with any applicable
federal or state securities laws with respect to the transactions
contemplated hereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Buyer and the Company have caused this Stock
Purchase Agreement to be duly executed as of the date first written above.
Rentech, Inc. Forest Oil Corporation
By:/s/ Dennis L. Yakobson By:/s/ David H. Keyte
---------------------------- --------------------------
Dennis L. Yakobson David H. Keyte
President Executive Vice President
Forest Oil Corporation
1600 Broadway, Suite 2200
Denver, Colorado 80202
<PAGE>
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), is made and
entered into as of the 18th day of March, 2000, by and among RENTECH, INC., a
Colorado corporation (the "Company"), and FOREST OIL CORPORATION and ANSCHUTZ
INVESTMENT COMPANY (each of whom is individually referred to as a "Purchaser"
and all of whom collectively are referred to as the "Purchasers").
Capitalized terms used in this Agreement and not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreements (as
defined below).
BACKGROUND
In connection with the consummation of the transactions contemplated
by those certain Stock Purchase Agreements (the "Purchase Agreements") of
even date herewith by and between the Company and each of the Purchasers
respectively in connection with a private placement by the Company pursuant
to Rule 506 under Regulation D of the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute (the
"1933 Act"), the Company has agreed, upon the terms and subject to the
conditions of the Purchase Agreements, to issue and sell to each of the
Purchasers 1,000,000 shares of Common Stock (the "Purchased Common Shares")
and to issue stock options (the "Options") to each of the Purchasers for the
purchase by each Purchaser of an aggregate of 3,000,000 shares of Common
Stock (as the same may be adjusted in accordance with the agreements
governing such options, the "Option Shares"). Collectively, the Purchased
Common Shares and the Option Shares are hereinafter collectively referred to
as the "Purchased Securities". To induce Purchasers to execute and deliver
their respective Purchase Agreements, the Company has agreed to file a
Registration Statement covering the Purchased Common Shares and the Option
Shares under the 1933 Act and applicable state securities laws.
For and in consideration of the background circumstances and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Purchasers hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following capitalized terms are used
with the meanings there after ascribed.
(a) "Investor" means any Purchaser and any permitted
transferee or assignee thereof to whom any Purchaser assigns its rights
under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with Section 9.
<PAGE>
(b) "Person" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof, or a
governmental agency.
(c) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the
United States Securities and Exchange Commission (the "SEC").
(d) "Registrable Securities" means the Purchased Common
Shares, and the Option Shares and any shares of capital stock issued or
issuable with respect to the Purchased Securities or the Option Shares
as a result of any sale or issuance of Common Stock by the Company for
less than its then prevailing fair market value, any stock split, stock
dividend, recapitalization, exchange, or similar event.
(e) "Registration Statement" means a registration statement of
the Company filed under the 1933 Act. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement.
SECTION 2. REGISTRATION.
(a) MANDATORY REGISTRATION. (i) The Company shall use its best
efforts to prepare, and, on or before the date that is thirty (30) days
after the date hereof, file with the SEC a Registration Statement or
Registration Statements (as necessary) on Form S-3 (or, if such form is
unavailable for such a registration, on such other form as is available
for such a registration of all of the Registrable Securities) (any of
which may contain a combined prospectus with other registrations by the
Company), covering the resale of all of the Registrable Securities,
which Registration Statement(s), to the extent allowable under the 1933
Act and the rules promulgated thereunder (including without limitation
Rule 416), shall state that such Registration Statement(s) also covers
such indeterminate number of additional shares (the "Indeterminate
Shares") of Common Stock as may become issuable upon the adjustment of
the Options as the result of any sale or issuance of Common Stock by
the Company for less than its then prevailing fair market value or any
stock splits, stock dividends or similar transactions requiring
adjustment of the number of Option Shares issuable upon the exercise or
conversion of the Options in accordance with the Option Agreements.
(ii) To the extent the Indeterminate Shares for any
reason cannot be registered under the Registration Statement(s)
required under Section 2(a)(i) above, then with respect to such
Indeterminate Shares, the Company shall use its best efforts to
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prepare, and, on or before the date that is thirty (30) days after the
Indeterminate Shares become issuable, file with the SEC a Registration
Statement or Registration Statements (as necessary) on Form S-3 (or, if
such form is unavailable for such a registration, on such other form as
is available for such a registration of all of the Indeterminate
Shares) (any of which may contain a combined prospectus with other
registrations by the Company), covering the resale of all of the
Indeterminate Shares.
(iii) A copy of the Registration Statement(s) (and
each amendment or supplement thereto, and each request for acceleration
of effectiveness thereof) shall be provided to (and subject to the
approval of the Investors, which approval shall not be unreasonably
withheld or denied) the Investors and their counsel prior to its filing
or other submission.
(iv) The Company shall use its best efforts to obtain
effectiveness of the Registration Statement(s) as soon as practicable.
(b) MAINTENANCE OF EFFECTIVENESS; REGISTRATION PERIOD. The
Company shall use its best efforts to cause the Registration
Statement(s) relating to the Registrable Securities filed in accordance
with Section 2(a) to become effective as soon as possible after such
filing, but in no event later than the Registration Deadline (as
defined below), and to keep the Registration Statement(s) effective
pursuant to Rule 415 at all times until the earlier of (i) the date on
which all of the Registrable Securities have been sold (and no further
Registrable Securities may be issued in the future) or (ii) the date as
of which the Investors may immediately sell all of the Registrable
Securities without restriction pursuant to Rule 144 promulgated under
the 1933 Act (or successor thereto) or otherwise, not to exceed seven
(7) years from the effective date(s) of the Registration Statement(s)
(the "Registration Period").
(c) PIGGY-BACK REGISTRATIONS. If at any time prior to the
expiration of the Registration Period the Company proposes to file with
the SEC a Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its
securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit
plans) the Company shall promptly send to each Investor who holds
Registrable Securities written notice of the Company's intention to
file a Registration Statement and of such Investor's rights under this
Section 2(c) and, if within twenty (20) days after receipt of such
notice, such Investor shall so request in writing, the Company shall
include in such Registration Statement all or any part of the
Registrable Securities that such Investor requests to be registered,
subject to the priorities set forth in Section 2(d) below. No right to
registration of Registrable Securities under this Section
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2(c) shall be construed to limit any registration required under
Section 2(a) hereof. The obligations of the Company under this Section
2(c) may be waived by each individual Investor holding Registrable
Securities, in its sole discretion, without effect to any other
Investor. If an offering in connection with which an Investor
is entitled to registration under this Section 2(c) is an
underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement
shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this
Agreement, on the same terms and conditions as other shares of Common
Stock included in such underwritten offering.
(d) PRIORITY IN PIGGY-BACK REGISTRATION RIGHTS. If the
registration referred to in Section 2(c) is to be an underwritten
public offering for the account of the Company and the managing
underwriter(s) advise the Company in writing that, in their reasonable
good faith opinion, marketing or other factors dictate that a
limitation on the number of shares of Common Stock which may be
included in the Registration Statement is necessary to facilitate and
not adversely affect the proposed offering, then the Company shall
include in such registration: (i) first, all securities the Company
proposes to sell for its own account, (ii) second, up to the full
number of securities proposed to be registered for the account of the
holders of securities entitled to inclusion of their securities in the
Registration Statement by reason of demand registration rights, (iii)
third, the securities requested to be registered by the Investors, pro
rata based on the number of Registrable Shares each has requested to be
included in such registration, and (iv) fourth, the other holders of
securities entitled to participate in the registration, drawn from them
pro rata based on the number each has requested to be included in such
registration.
(e) ELIGIBILITY FOR FORM S-3. The Company represents, warrants
and covenants that it has filed and shall file all reports required to
be filed by the Company with the SEC in a timely manner so as to obtain
and maintain such eligibility for the use of Form S-3. In the event
that Form S-3 is not available for sale by the Investors of the
Registrable Securities, then (i) the Company, with the consent of each
Investor pursuant to Section 2(a), shall register the sale of the
Registrable Securities on another appropriate form, such as Form SB-2,
and (ii) the Company shall undertake to register the Registrable
Securities on Form S-3 as soon as such form is available.
(f) LOCK-UP PERIOD. Each Purchaser agrees (y) not to offer,
sell, contract to sell or otherwise dispose of any of its Purchased
Common Shares during the 90-day period beginning on the date of the
closing of its respective Purchase Agreement, and (z) upon the
expiration of the aforesaid 90-day period, not to offer, sell, contract
to sell or otherwise dispose of more than 50% of its Purchased Common
Shares for an additional 90-day period beginning on the day following
the expiration of the aforesaid 90-day period.
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SECTION 3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities
be registered pursuant to Section 2(c) hereof, or at such time as the Company
is obligated to file a Registration Statement with the SEC pursuant to
Section 2(a) hereof, the Company will use its best efforts to effect the
registration of the Registrable Securities in accordance with the respective
method of disposition thereof as required by such provisions and, pursuant
thereto, and the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities
within the time provided in Section 2(a) for the registration of
Registrable Securities pursuant to Section 2(a) or Section 2(c), if
applicable, and use its best efforts to cause such Registration
Statement(s) relating to Registrable Securities to become effective as
soon as possible after such filing and in any event within sixty (60)
days after filing with the SEC (the "Registration Deadline") and
PROVIDED FURTHER that the Registration Deadline shall not exceed ninety
(90) days from the date hereof, and keep the Registration Statement(s)
effective pursuant to Rule 415 at all times until the completion of the
Registration Period. The Registration Statement(s) (including any
amendments or supplements thereto and prospectuses contained therein)
shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which
they were made, not misleading.
(b) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in connection
with the Registration Statement(s), which prospectus(es) are to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep the Registration Statement(s) effective at all times
during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement(s). In the event the number of shares available
under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities, the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case,
as soon as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the Common
Stock and other relevant factors on which the Company reasonably elects
to rely) or upon reasonable request therefor by any Investor. The
Company shall use its best efforts to cause such
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amendment and/or new Registration Statement to become effective as soon
as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of
the Registrable Securities" if at any time the number of
Registrable Securities issued or issuable is in excess of the
number of shares of Common Stock eligible for resale under the then
effective Registration Statement(s) filed to cover the Registrable
Securities in accordance with this Agreement.
(c) The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel, without charge, (i) promptly after the same is
prepared and filed with the SEC, at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference, and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus) and all correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and all
correspondence from the SEC or the staff of the SEC to the Company or
its representatives, related to such Registration Statement(s), (ii)
upon the effectiveness of any Registration Statement, such number of
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto as such Investor may reasonably
request, and (iii) such other documents, including any preliminary
prospectus, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor.
(d) The Company shall (i) register and qualify the Registrable
Securities covered by the Registration Statement(s) under such other
securities or "blue sky" laws of such jurisdictions in the United
States as any Investor reasonably requests, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as
may be necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions, Provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions, and further provided that (anything
in this Section to the contrary notwithstanding with respect to the
bearing of expenses) if any jurisdiction in which the securities shall
be qualified shall require that expenses incurred in connection with
the qualification of the securities in that jurisdiction be borne by
selling shareholders pro rata, to the extent required by such
jurisdiction. The Company shall promptly notify each Investor who holds
Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the
securities or "blue sky" laws of any jurisdiction
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in the United States or its receipt of actual notice of the initiation
or threatening of any proceeding for such purpose.
(e) In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering.
(f) As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which, the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may
reasonably request. The Company shall also promptly notify each
Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor
by facsimile by the next business day of such effectiveness and by
overnight mail), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate.
(g) The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment, and to notify each
Investor who holds Registrable Securities being sold (and, in the event
of an underwritten offering, the managing underwriters) of the issuance
of such order and the resolution thereof, or its receipt of actual
notice of the initiation, or threatened initiation of any proceeding
for such purpose.
(h) The Company shall permit each Investor a single firm of
counsel or such other counsel as thereafter designated as selling
stockholders' counsel by the Investors who hold a majority of the
Registrable Securities being sold, to review and comment upon the
Registration Statement(s) and all amendments and supplements thereto at
least seven (7) days prior to their filing with the SEC, and not file
any document in a form to
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which such counsel reasonably objects. The Company shall not submit
a request for acceleration of the effectiveness of a Registration
Statement(s) or any amendment or supplement thereto without the prior
approval of such counsel, which consent shall not be unreasonably
withheld.
(i) At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if
any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope, and substance as is customarily
given in an underwritten public offering, addressed to the underwriters
and the Investors.
(j) The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by each Investor, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "Inspectors") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors, and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; Provided
However, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (A) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (B) the release
of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or
(C) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any
other agreement. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.
(k) The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure
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of such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
(l) The Company shall use its best efforts to secure the
inclusion for quotation on the Over the Counter Bulletin Board for the
Registrable Securities, and, to arrange for at least two market makers
to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities. The
Company shall pay all fees and expenses in connection with satisfying
its obligation under this Section 3(l).
(m) The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, any
managing underwriter or underwriters, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant
to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as any managing
underwriter or underwriters or the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters,
if any, or the Investors may request. Not later than the date on which
any Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its
transfer agent instructions, accompanied by any reasonably required
opinion of counsel, that permit sales of unlegended securities in a
timely fashion that complies with then mandated securities settlement
procedures for regular way market transactions.
(n) The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
(o) The Company shall provide a transfer agent and registrar
of all such Registrable Securities not later than the effective date of
such Registration Statement.
(p) If requested by the managing underwriters or an Investor,
the Company shall promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and the Investors agree should be included therein relating to the sale
and distribution of Registrable Securities, including, without
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<PAGE>
limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being
paid therefor by such underwriters, and with respect to any other terms
of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a shareholder
or any underwriter of such Registrable Securities.
(q) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement
to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of
such Registrable Securities.
(r) The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
SECTION 4. OBLIGATIONS OF THE INVESTORS.
(a) At least seven (7) days prior to the first anticipated
filing date of the Registration Statement(s), the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement(s). It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the
intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect the registration of such
Registrable Securities, and shall execute such documents in connection
with such registration as the Company may reasonably request.
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement(s).
(c) In the event Investors holding a majority of the
Registrable Securities being registered determine to engage the
services of an underwriter, each Investor agrees to enter into and
perform such Investor's obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and
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<PAGE>
contribution obligations, with the managing underwriter of such
offering and take such other actions as are reasonably required
in order to expedite or facilitate the disposition of the Registrable
Securities, unless such Investor notifies the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement(s).
(d) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
SECTION 5. EXPENSES OF REGISTRATION.
All expenses incurred in connection with registrations, filings, or
qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers and printing
fees, accounting fees, and fees and disbursements of counsel for the Company
and fees and disbursements of one counsel for the Investors, shall be borne
by the Company.
SECTION 6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) The Company will, and hereby does, indemnify, hold
harmless, and defend each Investor who holds such Registrable
Securities, the directors, officers, partners, employees, agents, and
each Person, if any, who controls any Investor within the meaning of
the 1933 Act or the Securities Exchange Act of 1934, as amended (the
"1934 ACT"),
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<PAGE>
and any underwriter (as defined in the 1933 Act) for the
Investors, and the directors and officers of, and each Person, if any,
who controls, any such underwriter within the meaning of the 1933 Act
or the 1934 Act (each, an "Indemnified Person"), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges,
costs, attorneys' fees, amounts paid in settlement or expenses, joint
or several (collectively, "Claims") incurred in investigating,
preparing, or defending any action, claim, suit, inquiry, proceeding,
investigation, or appeal taken from the foregoing by or before any
court or governmental, administrative, or other regulatory agency, body
or the SEC, whether pending or threatened, whether or not an
indemnified party is or may be a party thereto ("Indemnified Damages"),
to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement
or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable
Securities are offered ("Blue Sky Filing"), or the omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which the statements therein were made, not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective
date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, or, (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934
Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale
of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(d)
with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable,
for reasonable legal fees or other expenses incurred by them in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement(s) or any such amendment
thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c); (ii) with respect to
any preliminary prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Securities that
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<PAGE>
are the subject thereof (or to the benefit of any person controlling
such person) if the untrue statement or mission of material fact
contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c),
and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice,
used the incorrect prospectus; (iii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or
to cause to be delivered the prospectus made available by the Company;
and (iv) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
(b) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers, and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement(s).
(c) Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim,
such Indemnified Person shall, if a Claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to
the indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and, to
the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person; Provided However, that an Indemnified
Person shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the
indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding. The Company shall pay
reasonable fees for only one separate legal counsel for the Investors,
and such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The Indemnified
Person shall cooperate fully with the indemnifying party in connection
with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Person fully apprised at all
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<PAGE>
times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its
written consent, Provided However, that the indemnifying party
shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified
Person, consent to entry of any judgment or enter into any settlement
or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the
Indemnified Person with respect to all third parties, firms, or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall
not relieve such indemnifying party of any liability to the Indemnified
Person under this Section 6, except to the extent that the indemnifying
party is prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
(e) The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified
Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the
law.
SECTION 7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise
be liable under Section 6 to the fullest extent permitted by law; provided
however, that: (i) no contribution shall be made under circumstances where
the party against whom indemnification is otherwise sought would not have
been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any seller of Registrable Securities who was
not guilty of fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount
of proceeds received by such seller from the sale of such Registrable
Securities.
SECTION 8. REPORTS UNDER THE 1934 ACT.
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With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the investors to sell
securities of the Company to the public without registration ("RULE 144"),
the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act, and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the investors to sell such
securities pursuant to Rule 144 without registration.
SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any permitted transferee of all or any portion of Registrable Securities
according to the provisions of the Purchase Agreements and the Stock Option
Agreements if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment; (ii) the Company
is, within a reasonable time after such transfer or assignment, furnished
with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration
rights are being transferred or assigned; (iii) immediately following such
transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the 1933 Act and applicable state
securities laws; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreements; (vi)
such transferee shall be an "accredited investor" as that term is defined in
Rule 501 of Regulation D promulgated under the 1933 Act; and (vii) in the
event the assignment occurs subsequent to the date of effectiveness of the
Registration Statement(s) required to be filed pursuant to Section
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2(a), the transferee agrees to pay all reasonable expenses of amending or
supplementing such Registration Statement(s) to reflect such assignment.
SECTION 10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of the
Company and Investors who hold two-thirds of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be
binding upon each Investor and the Company.
SECTION 11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices, or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice, or election received
from the registered owner of such Registrable Securities.
(b) Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company: RENTECH, INC.
1331 17th Street, Suite 720
Denver, CO 80202
Attn: Ronald C. Butz, Vice President
Telephone: (303) 298-8008
Facsimile: (303) 298-8010
with a copy (which shall not constitute notice) to:
Loren L. Mall, Esq.
16
<PAGE>
Brega & Winters, P.C.
1700 Lincoln Street, Suite 2222
Denver, CO 80203
Telephone: (303) 866-9400
Facsimile: (303) 861-9109
If to a Purchaser, to its address and facsimile
number on the Schedule of Purchasers, with copies to such Purchaser's
counsel as set forth on the Schedule of Purchasers. Each party shall
provide five (5) days prior written notice to the other party of any
change in address or facsimile number.
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
(e) This Agreement, the Purchase Agreements and the Option
Agreements constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties, or undertakings, other than those
set forth or referred to herein and therein. This Agreement supersedes
all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
(f) Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
(h) This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
17
<PAGE>
(i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments, and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
[Signature Page Follows]
18
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY:
RENTECH, INC.
By:/s/ Dennis L. Yakobson
--------------------------------
Dennis L. Yakobson, President
FOREST OIL CORPORATION ANSCHUTZ INVESTMENT COMPANY
By:/s/ David H. Keyte By:/s/ Clifford Hickey
------------------------------ --------------------------------
Authorized Agent Authorized Agent
Address:_________________________ Address:___________________________
Telephone:_______________________ Telephone:_________________________
Facsimile:_______________________ Facsimile:_________________________
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS.
RENTECH, INC.
OPTION TO PURCHASE SHARES OF COMMON STOCK
OF
RENTECH, INC.
FOR VALUE RECEIVED, FOREST OIL CORPORATION ("Optionee"), is entitled
to purchase, subject to the provisions of this Option, from RENTECH, INC., a
Colorado corporation ("Company"), at any time not later than 5.00 P.M.,
Denver time, on December 31, 2001 (the "Expiration Date"), 2,000,000 shares
of common stock, having $.01 par value per share, of the Company ("Common
Stock") at an exercise price, subject to adjustment as set forth below, of
$1.25 per share. The number of shares of Common Stock to be received upon the
exercise of this Option and the price to be paid for a share of Common Stock
are subject to adjustment from time to time as hereinafter set forth.
1. OPTION PRICE; FAIR MARKET VALUE.
(a) The option price is $1.25 for each share of Common Stock., as
the same may be adjusted from time to time in accordance with Section 4
hereof; provided, however, that the maximum aggregate option price for all
shares of Common Stock issuable upon the exercise of this Option (or the
aggregate of all Options resulting from the subdivision of this Option) shall
not exceed $2,500,000.00.
(b) For purposes of this Option, but only if and to the extent
applicable, the fair market value of such Common Stock (the "Fair Market
Value") shall be determined as follows: (i) if the Common Stock is listed on
a national securities exchange or admitted to unlisted trading privileges on
such exchange, then the Fair Market Value shall be the last reported sale
price of the Common Stock on the composite tape of such exchange, or, if no
such sale is made on any trading day, the average closing bid and asked
prices for such day on the composite tape of such exchange; or (ii) if the
Common Stock is not so listed or admitted to unlisted trading privileges, the
Fair Market Value shall be the average of the last reported bid and asked
prices reported by the National Association of Securities Dealers Quotation
System (or if not quoted on NASDAQ, by the National Quotation Bureau, Inc. or
other reporting medium, including the Over the Counter Bulletin Board); or
(iii) otherwise the Fair Market Value shall be an amount not less than book
value determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company (the "Board"). If an Optionee disagrees with the
Fair Market Value as determined by the Board pursuant to clause (iii) of the
preceding sentence, such Optionee may provide written notice of such
disagreement to the Company that states in reasonable detail the basis of the
disagreement and such Optionee's determination of the Fair Market Value (a
"Dispute Notice"). The Board and the Optionee shall attempt to resolve the
disagreement as to the Fair Market Value within ten days after the Dispute
Notice is given to the Company, and if they are unable to do so within such
time period, the Board and/or the Optionee may submit the dispute to a "big
five" independent accounting firm (that directly represents neither the
Company nor the Optionee and the selection of which shall be mutually agreed
upon) (the "Accountant") in Denver, Colorado. The determination of the
Accountant as to the Fair Market Value shall be conclusive and binding upon
the Optionee and the Company. The Company and the Optionee shall bear equally
the fees and expenses of the Accountant unless the determination of the
Accountant results in a net increase of the Fair Market Value of more than
five percent over the amount determined by the Board, in which case the
Company shall be solely responsible for the payment of such fees and expenses.
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<PAGE>
2. OPTION PERIOD. This Option may be exercised not later than 5:00
P.M., Denver time, on December 31, 2001. The Option granted shall be void if
not exercised during the option period.
3. EXERCISE OF OPTION. Unless the Option is terminated as provided
pursuant to this Option, an Optionee may exercise this option for up to, but
not in excess of, the amounts of shares subject to the Option. The Option may
be exercised, in whole or in part, and at any time and from time to time
within its term.
(a) METHOD OF EXERCISE. This Option shall be exercisable by a
written notice delivered to the Company (the "Notice of Exercise") which
shall:
(i) State the election to exercise the Option, the number
of shares of Common Stock in respect of which it is being exercised (which
must be in multiples of one hundred shares), and the entity in whose name the
stock certificate or certificates for such shares of Common Stock is to be
registered, with that entity's address and taxpayer identification number; and
(ii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any entity or
entities other than the Optionee, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such entity or entities to exercise
the Option.
(b) PAYMENT OF OPTION PRICE. Payment of the option price for any
shares of Common Stock with respect to which the Option is being exercised
shall be by wire transfer, cash, certified check or other means acceptable to
the Company, and shall be delivered with the Notice of Exercise. The
certificate or certificates for shares of Common Stock as to which the Option
shall be exercised shall be registered in the name of the entity or entities
indicated in the notice of exercise in accordance with Section 3(a)(i).
(c) RESTRICTIONS ON EXERCISE. As a condition to exercise of this
Option, the Company may require the person or entity exercising this Option
to make any representation and warranty as may be required by any applicable
law or regulation.
4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In order to prevent
dilution of the rights granted under this Option, the option price and the
number of shares purchasable hereunder shall be subject to adjustment from
time to time as follows:
(a) ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK UPON ISSUANCE OF
COMMON STOCK OR COMMON STOCK EQUIVALENTS. If and whenever the Company issues
or sells, or in accordance with paragraph (b) is deemed to have issued or
sold, any Common Stock for a consideration per share less than the Fair
Market Value per share at the time of such issue or sale (not including the
issuance of the Permitted Stock (as defined below)) then forthwith upon such
issue or sale, the shares of Common Stock subject to this Option (the
"Subject Shares") will be increased by multiplying such number by a fraction,
(A) the numerator of which is the Fair Market Value per share at the time of
such issue or sale and (B) the denominator of which is the amount determined
by dividing (a) the sum of (1) the product derived by multiplying the Fair
Market Value per share at the time of such issue or sale times the number of
shares of Common Stock outstanding on a Fully-Diluted Basis immediately prior
to such issue or sale, plus (2) the aggregate consideration, if any, received
by the Company upon such issue or sale, by (b) the number of shares of Common
Stock outstanding on a Fully-Diluted Basis immediately after such issue or
sale.
(b) EFFECT ON SUBJECT SHARES OF CERTAIN EVENTS. For purposes of
determining the adjusted Subject Shares under paragraph (a) above, the
following will be applicable:
(i) ISSUANCE OF COMMON STOCK EQUIVALENTS. If the Company in
any manner grants any Common Stock Equivalent (as defined below) (other
than Permitted Stock) and the lowest price per share for which any one
share of Common Stock of the Company is issuable upon the exercise of
any such Common Stock Equivalent is less than the Fair Market Value of
the Common Stock at the time of the granting of such
2
<PAGE>
Common Stock Equivalent, then all of such shares of Common Stock will
be deemed to have been issued and sold by the Company for such price
per share (other than pursuant to antidilutive adjustments to the
Options). For purposes of this paragraph, the "lowest price per share
for which any one share is issuable" will be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share upon the exercise of the Common
Stock Equivalent (whether by conversion, exchange or otherwise) or
other similar indication of the price per share as of the time of
granting (such as the floor value for stock appreciation rights).
No further adjustment of the Subject Shares will be made upon the
actual issue of such shares of Common Stock or upon the exercise of
any right under the Common Stock Equivalents.
(ii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Common Stock Equivalent (other than
Permitted Stock), the additional consideration, if any, payable upon
the issue, conversion or exchange of any Common Stock Equivalent, or
the rate at which any Common Stock Equivalent is convertible into or
exchangeable for shares of Common Stock changes at any time, the
Subject Shares in effect at the time of such change will be readjusted
to the Subject Shares which would have been in effect at such time had
such Common Stock Equivalent still outstanding provided for such
changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or
sold.
(iii) TREATMENT OF EXPIRED AND UNEXERCISED COMMON STOCK
EQUIVALENTS. Upon the expiration of any Common Stock Equivalent or the
termination of any right to convert or exchange any Common Stock
Equivalent without the exercise of such Common Stock Equivalent, the
Subject Shares then in effect will be adjusted to the Subject Shares
which would have been in effect at the time of such expiration or
termination had such Common Stock Equivalent, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(iv) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock or Common Stock Equivalents (other than Permitted Stock) are
issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net amount
received by the Company. In case any Common Stock or Common Stock
Equivalents (other than Permitted Stock) are issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Company will be the fair market value of such
consideration. In case any Common Stock or Common Stock Equivalents
(other than Permitted Stock) are issued to the owners of the
non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be
deemed to be the fair market value of such portion of the net assets
and business of the nonsurviving entity as is attributable to such
Common Stock or Common Stock Equivalents, as the case may be.
(v) INTEGRATED TRANSACTIONS. In case any Common Stock
Equivalent (other than Permitted Stock) is issued in connection with
the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific
consideration is allocated to such Common Stock Equivalent by the
parties thereto, the Common Stock Equivalent will be deemed to have
been issued without consideration.
(vi) RECORD DATE. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or Common Stock
Equivalents or (B) to subscribe for or purchase Common Stock or Common
Stock Equivalents, then such record date will be deemed to be the date
of the issue or sale of the Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the case may be.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding Common Stock into a greater
number of shares of Common Stock, the Subject Shares in effect immediately prior
to such subdivision will be proportionately increased. If the Company at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock, the Subject Shares in effect immediately
prior to such combination will be proportionately decreased.
3
<PAGE>
(d) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to another
person or entity or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "Organic Change." Prior to
the consummation of any Organic Change, the Company will make appropriate
provision (in form and substance reasonably satisfactory to the Optionees
holding Options representing a majority of the Subject Shares issuable under
all Options then outstanding) to insure that each of the Optionees will
thereafter have the right to acquire in lieu of the Subject Shares
immediately theretofore acquirable and receivable upon the exercise of such
Optionee's Option, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the Subject Shares
immediately theretofore acquirable and receivable upon exercise of such
Optionee's Option had such Organic Change not taken place. In any such case,
the Company will make appropriate provision (in form and substance
satisfactory to the Optionees holding Options representing a majority of the
Subject Shares issuable under all Options then outstanding) with respect to
such Optionees' rights and interests to insure that the provisions of this
Section 4 will thereafter be applicable to the Options (including, in the
case of any such consolidation, merger or sale in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of
the option price to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment
in the Subject Shares, if the value so reflected is less than the option
price in effect immediately prior to such consolidation, merger or sale). The
Company will not effect any such consolidation, merger or sale, unless prior
to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the corporation purchasing such
assets assumes by written instrument (in form and substance satisfactory to
the Optionees), the obligation to deliver to each such Optionee such shares
of stock, securities or assets as, in accordance with the foregoing
provisions, such Optionee may be entitled to acquire.
(e) NOTICES.
(i) Immediately upon any adjustment of the Subject Shares, the
Company will give written notice thereof to the Optionee, setting forth
in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Optionee at
least twenty (20) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining
rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii) The Company will also give written notice to the
Optionees at least twenty (20) days prior to the date on which any
Organic Change, dissolution or liquidation will take place.
(f) LIQUIDATING DIVIDENDS. If the Company declares or pays a
dividend or makes a distribution upon the Common Stock payable otherwise than
in cash out of earnings or earned surplus (determined in accordance with
generally accepted accounting principles) except for a dividend payable in
Common Stock (a "Liquidating Dividend"), then the Company will pay to each
Optionee at the time of payment thereof the Liquidating Dividend which would
have been paid to such Optionee on the Common Stock had the Options been
fully exercised immediately prior to the date on which a record is taken for
such Liquidating Dividend, or, if no record is taken, the date as of which
the record holders of Common Stock entitled to such dividends are to be
determined.
(g) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the option price for the number of shares of Common Stock or
other securities issuable upon exercise of the Options, if the Option is then
exercisable pursuant to this Section 4, the Company, at its expense, shall
compute such adjustment or readjustment in accordance with the provisions
hereof and prepare a certificate showing such adjustment or readjustment, and
shall mail such certificate, by first class mail, postage prepaid, to each
registered Optionee at the Optionee's address as shown in the Company's
books. The certificate shall set forth such adjustment or readjustment,
showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (i) the consideration received or deemed to
be received by the Company for any additional shares of Common Stock issued
or sold or deemed to have been issued or
4
<PAGE>
sold, (ii) the option price at the time in effect, (iii) the number of
additional shares of Common Stock, and (iv) the type and amount, if any, of
other property which at the time would be received upon exercise of Options.
(h) CERTAIN DEFINITIONS. As used in this Section 4, the following
terms shall have the meanings ascribed to them:
(i) "Common Stock Equivalent" means any option, warrant, right
or similar security exercisable into, exchangeable for, or convertible
to Common Stock or the economic equivalent value of Common Stock, other
than any Permitted Stock.
(ii) "Control Basis" means the valuation of securities by
determining on an aggregate basis the fair market value of all
securities of such type on the basis of the securities being sold in
the aggregate to a third party buyer in an arm's length transaction
with conveyance of control, without discount for minority interests,
illiquidity or restrictions on transfer, and then dividing such amount
by the number of all securities of such type on a Fully-Diluted Basis.
(v) "fair market value" means (a) as to securities regularly
traded in the organized securities markets, the average of the Closing
Price for the security in question for the thirty (30) trading days
immediately preceding the date of determination; and (b) as to all
securities not regularly traded in the securities markets and other
property, the fair market value of such securities, on a Control Basis,
or property as of the date of the delivery of a notice from a Optionee
necessitating the determination of fair market value (unless some other
date of valuation is provided herein) as determined in good faith by
the Board (provided that any such determination by the Board shall be
subject to the same rights of dispute and resolution on the part of the
Optionee as set forth in Section 1(b) hereof). Notwithstanding the
foregoing, the Fair Market Value of any shares of Common Stock shall be
as determined in accordance with Section 1(b).
(vi) "Fully-Diluted Basis" when used means including as
outstanding all Common Stock and Common Stock Equivalents including,
without limitation, the Common Stock issuable upon exercise of Options.
(vii) "Permitted Stock" shall include all shares of Common
Stock or Common Stock Equivalents issued or issuable on or prior to the
date of this Option.
5. NOTICES. Each notice relating to this Option shall be in writing
and delivered in person or by certified mail to the proper address. Each
notice shall be deemed to have been given on the date it is received. Each
notice to the Company shall be addressed to it at its principal office,
attention of the Secretary. Each Optionee or other person or persons then
entitled to exercise the Option shall be addressed to the Optionee at the
Optionee's address set forth below the Optionee's signature. Anyone to whom a
notice may be given under this Option may designate a new address by notice
to that effect.
6. BENEFITS OF OPTION. All obligations imposed upon the Company and
all rights granted to the Optionee under this Option shall be binding upon
the Company's successors. All obligations imposed upon the Optionee and all
rights granted to the Company under this Option shall be binding upon the
Optionee's successors or assignees. This Option shall be the sole and
exclusive source of any and all rights which the Optionee, and successors or
assignees of Optionee, may have in respect to any options for purchase of
shares of Common Stock granted hereunder.
7. TRANSFER OF OPTION.
(a) OPTION REGISTER. The Company will maintain a register (the
"Option Register") containing the names and addresses of the Optionee or
Optionees. Any Optionee of this Option or any portion thereof may change his
or her address as shown on the Option Register by written notice to the
Company requesting such change. Any notice or written communication required
or permitted to be given to the Optionee may be delivered or given by mail to
such
5
<PAGE>
Optionee as shown on the Option Register and at the address shown on the
Option Register. Until this Option is transferred on the Option Register of
the Company, the Company may treat the holder as shown on the Option Register
as the absolute owner of this Option for all purposes, notwithstanding any
notice to the contrary.
(b) OPTION AGENT. The Company may, by written notice to the
Optionee, appoint an agent for the purpose of maintaining the Option Register
referred to in Section 7(a) above, issuing the Common Stock or other
securities then issuable upon the exercise of this Option, exchanging this
Option, replacing this Option, or any or all of the foregoing. Thereafter,
any such registration, issuance, exchange, or replacement, as the case may
be, shall be made at the office of such agent.
(c) TRANSFERABILITY AND NON-NEGOTIABILITY OF OPTION. This Option may
not be transferred or assigned, in whole or in part, without compliance with
all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company's outside counsel, if
such are requested by the Company) and without the prior written consent of
the Company (which consent shall not be unreasonably withheld or delayed)
except that the Optionee may assign its rights hereunder in whole or in part,
to (i) any entity or person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Optionee (an "Affiliate") or (ii) any director, officer, employee,
representative or agent of Optionee or any of its Affiliates. Subject to the
provisions of this Option, title to this Option may be transferred by
endorsement and delivery in the same manner as a negotiable instrument
transferable by endorsement and delivery.
(d) EXCHANGE OF OPTION UPON A TRANSFER. On surrender of this Option
for exchange, properly endorsed and subject to the provisions of this Option
with respect to compliance with the Securities Act of 1933, as amended (the
"Act"), and with the limitations on assignments and transfers contained in
this Section 7, the Company at its expense shall issue to or on the order of
the Optionee a new Option or Options of like tenor, in the name of the
Optionee or as the Optionee (on payment by the Optionee of any applicable
transfer taxes) may direct, for the number of shares of Common Stock issuable
upon exercise hereof.
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) The Optionee of this Option, by acceptance hereof,
acknowledges that this Option and the shares of Common Stock to be issued
upon exercise hereof or conversion thereof are being acquired solely for the
Optionee's own account and not as a nominee for any other party, and for
investment, and that the Optionee will not offer, sell or otherwise dispose
of this Option or any shares of Common Stock to be issued upon exercise
hereof or conversion thereof except under circumstances that will not result
in a violation of the Act or any state securities laws. Upon exercise of this
Option, the Optionee shall, if requested by the Company, confirm in writing,
in a form reasonably satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired solely for the Optionee's own account
and not as a nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) This Option and all shares of Common Stock issued upon
exercise hereof or conversion thereof shall be stamped or imprinted with a
legend in substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR
EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
The Company may place an appropriate stop transfer order with the Company's
transfer agent with respect to the shares of Common Stock represented by such
certificates.
6
<PAGE>
8. REPLACEMENT OF OPTION. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Option and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the
Company or, in the case of mutilation, on surrender and cancellation of this
Option, the Company at its expense shall execute and deliver, in lieu of this
Option, a new option of like tenor and amount.
9. AMENDMENTS.
(a) Any term of this Option may be amended only with the written
consent of the Board and the Optionee.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Option, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term,
condition or provision.
10. GOVERNING LAW. This Option shall be governed by and construed in
accordance with the laws of the State of Colorado (without giving effect to
the choice of law principles thereof).
[SIGNATURE PAGE FOLLOWS]
7
<PAGE>
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Option to be executed as of March 18, 2000.
OPTIONEE:
FOREST OIL CORPORATION RENTECH, INC.
By:/s/ David H. Keyte By:/s/ Dennis L. Yakobson
---------------------------------- ---------------------------------
David H. Keyte, Dennis L. Yakobson, President
Executive Vice President
Forest Oil Corporation
1600 Broadway, Suite 2200
Denver, Colorado 80202
<PAGE>
RENTECH, INC.
NOTICE OF EXERCISE OF STOCK OPTION ISSUED
To: Rentech, Inc.
1331 17th Street, Suite 720
Denver, CO 80202
I hereby exercise my Option dated ______________________________ to
purchase ____________________ shares of $.01 par value common stock of the
Company at the option exercise price of $_______________ per share. Enclosed
is a certified or cashier's check in the total amount of $_______________, or
payment in such other form as the Company has specified and agreed to accept,
which is described at the bottom of this notice.
I represent to you that I am acquiring said shares for investment
purposes and not with a view to any distribution thereof. I understand that
my stock certificate may bear an appropriate legend restricting the transfer
of my shares and that a stop transfer order may be placed with the Company's
transfer agent with respect to such shares.
I request that my shares be issued in the name of:
_______________________________________________________________________________
(Print your name in the form in which you wish
to have the shares registered)
_______________________________________________________________________________
(Social Security Number)
_______________________________________________________________________________
(Street and Number)
_______________________________________________________________________________
(City) (State) (Zip Code)
Optionee:
Dated: _______________________, 20____. ________________________________
Signature: By:_____________________________
Authorized Agent
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS.
RENTECH, INC.
OPTION TO PURCHASE SHARES OF COMMON STOCK
OF
RENTECH, INC.
FOR VALUE RECEIVED, FOREST OIL CORPORATION ("Optionee"), is entitled
to purchase, subject to the provisions of this Option, from RENTECH, INC., a
Colorado corporation ("Company"), at any time not later than 5.00 P.M.,
Denver time, on December 31, 2004 (the "Expiration Date"), 1,000,000 shares
of common stock, having $.01 par value per share, of the Company ("Common
Stock") at an exercise price, subject to adjustment as set forth below, of
$5.00 per share. The number of shares of Common Stock to be received upon the
exercise of this Option and the price to be paid for a share of Common Stock
are subject to adjustment from time to time as hereinafter set forth.
1. OPTION PRICE; FAIR MARKET VALUE.
(a) The option price is $5.00 for each share of Common Stock., as
the same may be adjusted from time to time in accordance with Section 4
hereof; provided, however, that the maximum aggregate option price for all
shares of Common Stock issuable upon the exercise of this Option (or the
aggregate of all Options resulting from the subdivision of this Option) shall
not exceed $5,000,000.00.
(b) For purposes of this Option, but only if and to the extent
applicable, the fair market value of such Common Stock (the "Fair Market
Value") shall be determined as follows: (i) if the Common Stock is listed on
a national securities exchange or admitted to unlisted trading privileges on
such exchange, then the Fair Market Value shall be the last reported sale
price of the Common Stock on the composite tape of such exchange, or, if no
such sale is made on any trading day, the average closing bid and asked
prices for such day on the composite tape of such exchange; or (ii) if the
Common Stock is not so listed or admitted to unlisted trading privileges, the
Fair Market Value shall be the average of the last reported bid and asked
prices reported by the National Association of Securities Dealers Quotation
System (or if not quoted on NASDAQ, by the National Quotation Bureau, Inc. or
other reporting medium, including the Over the Counter Bulletin Board); or
(iii) otherwise the Fair Market Value shall be an amount not less than book
value determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company (the "Board"). If an Optionee disagrees with the
Fair Market Value as determined by the Board pursuant to clause (iii) of the
preceding sentence, such Optionee may provide written notice of such
disagreement to the Company that states in reasonable detail the basis of the
disagreement and such Optionee's determination of the Fair Market Value (a
"Dispute Notice"). The Board and the Optionee shall attempt to resolve the
disagreement as to the Fair Market Value within ten days after the Dispute
Notice is given to the Company, and if they are unable to do so within such
time period, the Board and/or the Optionee may submit the dispute to a "big
five" independent accounting firm (that directly represents neither the
Company nor the Optionee and the selection of which shall be mutually agreed
upon) (the "Accountant") in Denver, Colorado. The determination of the
Accountant as to the Fair Market Value shall be conclusive and binding upon
the Optionee and the Company. The Company and the Optionee shall bear equally
the fees and expenses of the Accountant unless the determination of the
Accountant results in a net increase of the Fair Market Value of more than
five percent over the amount determined by the Board, in which case the
Company shall be solely responsible for the payment of such fees and expenses.
<PAGE>
2. OPTION PERIOD. This Option may be exercised not later than 5:00
P.M., Denver time, on December 31, 2004. The Option granted shall be void if
not exercised during the option period.
3. EXERCISE OF OPTION. Unless the Option is terminated as provided
pursuant to this Option, an Optionee may exercise this option for up to, but
not in excess of, the amounts of shares subject to the Option. The Option may
be exercised, in whole or in part, and at any time and from time to time
within its term.
(a) METHOD OF EXERCISE. This Option shall be exercisable by a
written notice delivered to the Company (the "Notice of Exercise") which
shall:
(i) State the election to exercise the Option, the number
of shares of Common Stock in respect of which it is being exercised (which
must be in multiples of one hundred shares), and the entity in whose name the
stock certificate or certificates for such shares of Common Stock is to be
registered, with that entity's address and taxpayer identification number; and
(ii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any entity or
entities other than the Optionee, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such entity or entities to exercise
the Option.
(b) PAYMENT OF OPTION PRICE. Payment of the option price for any
shares of Common Stock with respect to which the Option is being exercised
shall be by wire transfer, cash, certified check or other means acceptable to
the Company, and shall be delivered with the Notice of Exercise. The
certificate or certificates for shares of Common Stock as to which the Option
shall be exercised shall be registered in the name of the entity or entities
indicated in the notice of exercise in accordance with Section 3(a)(i).
(c) RESTRICTIONS ON EXERCISE. As a condition to exercise of this
Option, the Company may require the person or entity exercising this Option
to make any representation and warranty as may be required by any applicable
law or regulation.
4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In order to prevent
dilution of the rights granted under this Option, the option price and the
number of shares purchasable hereunder shall be subject to adjustment from
time to time as follows:
(a) ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK UPON ISSUANCE OF
COMMON STOCK OR COMMON STOCK EQUIVALENTS. If and whenever the Company issues
or sells, or in accordance with paragraph (b) is deemed to have issued or
sold, any Common Stock for a consideration per share less than the Fair
Market Value per share at the time of such issue or sale (not including the
issuance of the Permitted Stock (as defined below)) then forthwith upon such
issue or sale, the shares of Common Stock subject to this Option (the
"Subject Shares") will be increased by multiplying such number by a fraction,
(A) the numerator of which is the Fair Market Value per share at the time of
such issue or sale and (B) the denominator of which is the amount determined
by dividing (a) the sum of (1) the product derived by multiplying the Fair
Market Value per share at the time of such issue or sale times the number of
shares of Common Stock outstanding on a Fully-Diluted Basis immediately prior
to such issue or sale, plus (2) the aggregate consideration, if any, received
by the Company upon such issue or sale, by (b) the number of shares of Common
Stock outstanding on a Fully-Diluted Basis immediately after such issue or
sale.
(b) EFFECT ON SUBJECT SHARES OF CERTAIN EVENTS. For purposes of
determining the adjusted Subject Shares under paragraph (a) above, the
following will be applicable:
(i) ISSUANCE OF COMMON STOCK EQUIVALENTS. If the Company in
any manner grants any Common Stock Equivalent (as defined below) (other
than Permitted Stock) and the lowest price per share for which any one
share of Common Stock of the Company is issuable upon the exercise of
any such Common Stock Equivalent is less than the Fair Market Value of
the Common Stock at the time of the granting of such
2
<PAGE>
Common Stock Equivalent, then all of such shares of Common Stock will
be deemed to have been issued and sold by the Company for such price
per share (other than pursuant to antidilutive adjustments to the
Options). For purposes of this paragraph, the "lowest price per share
for which any one share is issuable" will be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share upon the exercise of the Common
Stock Equivalent (whether by conversion, exchange or otherwise) or
other similar indication of the price per share as of the time of
granting (such as the floor value for stock appreciation rights). No
further adjustment of the Subject Shares will be made upon the actual
issue of such shares of Common Stock or upon the exercise of any right
under the Common Stock Equivalents.
(ii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Common Stock Equivalent (other than
Permitted Stock), the additional consideration, if any, payable upon
the issue, conversion or exchange of any Common Stock Equivalent, or
the rate at which any Common Stock Equivalent is convertible into or
exchangeable for shares of Common Stock changes at any time, the
Subject Shares in effect at the time of such change will be readjusted
to the Subject Shares which would have been in effect at such time had
such Common Stock Equivalent still outstanding provided for such
changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or
sold.
(iii) TREATMENT OF EXPIRED AND UNEXERCISED COMMON STOCK
EQUIVALENTS. Upon the expiration of any Common Stock Equivalent or the
termination of any right to convert or exchange any Common Stock
Equivalent without the exercise of such Common Stock Equivalent, the
Subject Shares then in effect will be adjusted to the Subject Shares
which would have been in effect at the time of such expiration or
termination had such Common Stock Equivalent, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(iv) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock or Common Stock Equivalents (other than Permitted Stock) are
issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net amount
received by the Company. In case any Common Stock or Common Stock
Equivalents (other than Permitted Stock) are issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Company will be the fair market value of such
consideration. In case any Common Stock or Common Stock Equivalents
(other than Permitted Stock) are issued to the owners of the
non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be
deemed to be the fair market value of such portion of the net assets
and business of the nonsurviving entity as is attributable to such
Common Stock or Common Stock Equivalents, as the case may be.
(v) INTEGRATED TRANSACTIONS. In case any Common Stock
Equivalent (other than Permitted Stock) is issued in connection with
the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific
consideration is allocated to such Common Stock Equivalent by the
parties thereto, the Common Stock Equivalent will be deemed to have
been issued without consideration.
(vi) RECORD DATE. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or Common Stock
Equivalents or (B) to subscribe for or purchase Common Stock or Common
Stock Equivalents, then such record date will be deemed to be the date
of the issue or sale of the Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the case may be.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding Common Stock into a greater
3
<PAGE>
number of shares of Common Stock, the Subject Shares in effect immediately
prior to such subdivision will be proportionately increased. If the Company
at any time combines (by reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock, the Subject Shares in
effect immediately prior to such combination will be proportionately
decreased.
(d) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to another
person or entity or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "Organic Change." Prior to
the consummation of any Organic Change, the Company will make appropriate
provision (in form and substance reasonably satisfactory to the Optionees
holding Options representing a majority of the Subject Shares issuable under
all Options then outstanding) to insure that each of the Optionees will
thereafter have the right to acquire in lieu of the Subject Shares
immediately theretofore acquirable and receivable upon the exercise of such
Optionee's Option, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the Subject Shares
immediately theretofore acquirable and receivable upon exercise of such
Optionee's Option had such Organic Change not taken place. In any such case,
the Company will make appropriate provision (in form and substance
satisfactory to the Optionees holding Options representing a majority of the
Subject Shares issuable under all Options then outstanding) with respect to
such Optionees' rights and interests to insure that the provisions of this
Section 4 will thereafter be applicable to the Options (including, in the
case of any such consolidation, merger or sale in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of
the option price to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment
in the Subject Shares, if the value so reflected is less than the option
price in effect immediately prior to such consolidation, merger or sale). The
Company will not effect any such consolidation, merger or sale, unless prior
to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the corporation purchasing such
assets assumes by written instrument (in form and substance satisfactory to
the Optionees), the obligation to deliver to each such Optionee such shares
of stock, securities or assets as, in accordance with the foregoing
provisions, such Optionee may be entitled to acquire.
(e) NOTICES.
(i) Immediately upon any adjustment of the Subject Shares, the
Company will give written notice thereof to the Optionee, setting forth
in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Optionee at
least twenty (20) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining
rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii) The Company will also give written notice to the
Optionees at least twenty (20) days prior to the date on which any
Organic Change, dissolution or liquidation will take place.
(f) LIQUIDATING DIVIDENDS. If the Company declares or pays a
dividend or makes a distribution upon the Common Stock payable otherwise than
in cash out of earnings or earned surplus (determined in accordance with
generally accepted accounting principles) except for a dividend payable in
Common Stock (a "Liquidating Dividend"), then the Company will pay to each
Optionee at the time of payment thereof the Liquidating Dividend which would
have been paid to such Optionee on the Common Stock had the Options been
fully exercised immediately prior to the date on which a record is taken for
such Liquidating Dividend, or, if no record is taken, the date as of which
the record holders of Common Stock entitled to such dividends are to be
determined.
4
<PAGE>
(g) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the option price for the number of shares of Common Stock or
other securities issuable upon exercise of the Options, if the Option is then
exercisable pursuant to this Section 4, the Company, at its expense, shall
compute such adjustment or readjustment in accordance with the provisions
hereof and prepare a certificate showing such adjustment or readjustment, and
shall mail such certificate, by first class mail, postage prepaid, to each
registered Optionee at the Optionee's address as shown in the Company's
books. The certificate shall set forth such adjustment or readjustment,
showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (i) the consideration received or deemed to
be received by the Company for any additional shares of Common Stock issued
or sold or deemed to have been issued or sold, (ii) the option price at the
time in effect, (iii) the number of additional shares of Common Stock, and
(iv) the type and amount, if any, of other property which at the time would
be received upon exercise of Options.
(h) CERTAIN DEFINITIONS. As used in this Section 4, the following
terms shall have the meanings ascribed to them:
(i) "Common Stock Equivalent" means any option, warrant, right
or similar security exercisable into, exchangeable for, or convertible
to Common Stock or the economic equivalent value of Common Stock, other
than any Permitted Stock.
(ii) "Control Basis" means the valuation of securities by
determining on an aggregate basis the fair market value of all
securities of such type on the basis of the securities being sold in
the aggregate to a third party buyer in an arm's length transaction
with conveyance of control, without discount for minority interests,
illiquidity or restrictions on transfer, and then dividing such amount
by the number of all securities of such type on a Fully-Diluted Basis.
(v) "fair market value" means (a) as to securities regularly
traded in the organized securities markets, the average of the Closing
Price for the security in question for the thirty (30) trading days
immediately preceding the date of determination; and (b) as to all
securities not regularly traded in the securities markets and other
property, the fair market value of such securities, on a Control Basis,
or property as of the date of the delivery of a notice from a Optionee
necessitating the determination of fair market value (unless some other
date of valuation is provided herein) as determined in good faith by
the Board (provided that any such determination by the Board shall be
subject to the same rights of dispute and resolution on the part of the
Optionee as set forth in Section 1(b) hereof). Notwithstanding the
foregoing, the Fair Market Value of any shares of Common Stock shall be
as determined in accordance with Section 1(b).
(vi) "Fully-Diluted Basis" when used means including as
outstanding all Common Stock and Common Stock Equivalents including,
without limitation, the Common Stock issuable upon exercise of Options.
(vii) "Permitted Stock" shall include all shares of Common
Stock or Common Stock Equivalents issued or issuable on or prior to the
date of this Option.
5. NOTICES. Each notice relating to this Option shall be in writing
and delivered in person or by certified mail to the proper address. Each
notice shall be deemed to have been given on the date it is received. Each
notice to the Company shall be addressed to it at its principal office,
attention of the Secretary. Each Optionee or other person or persons then
entitled to exercise the Option shall be addressed to the Optionee at the
Optionee's address set forth below the Optionee's signature. Anyone to whom a
notice may be given under this Option may designate a new address by notice
to that effect.
6. BENEFITS OF OPTION. All obligations imposed upon the Company and
all rights granted to the Optionee under this Option shall be binding upon
the Company's successors. All obligations imposed upon the Optionee and all
5
<PAGE>
rights granted to the Company under this Option shall be binding upon the
Optionee's successors or assignees. This Option shall be the sole and
exclusive source of any and all rights which the Optionee, and successors or
assignees of Optionee, may have in respect to any options for purchase of
shares of Common Stock granted hereunder.
7. TRANSFER OF OPTION.
(a) OPTION REGISTER. The Company will maintain a register (the
"Option Register") containing the names and addresses of the Optionee or
Optionees. Any Optionee of this Option or any portion thereof may change his
or her address as shown on the Option Register by written notice to the
Company requesting such change. Any notice or written communication required
or permitted to be given to the Optionee may be delivered or given by mail to
such Optionee as shown on the Option Register and at the address shown on the
Option Register. Until this Option is transferred on the Option Register of
the Company, the Company may treat the holder as shown on the Option Register
as the absolute owner of this Option for all purposes, notwithstanding any
notice to the contrary.
(b) OPTION AGENT. The Company may, by written notice to the
Optionee, appoint an agent for the purpose of maintaining the Option Register
referred to in Section 7(a) above, issuing the Common Stock or other
securities then issuable upon the exercise of this Option, exchanging this
Option, replacing this Option, or any or all of the foregoing. Thereafter,
any such registration, issuance, exchange, or replacement, as the case may
be, shall be made at the office of such agent.
(c) TRANSFERABILITY AND NON-NEGOTIABILITY OF OPTION. This Option may
not be transferred or assigned, in whole or in part, without compliance with
all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company's outside counsel, if
such are requested by the Company) and without the prior written consent of
the Company (which consent shall not be unreasonably withheld or delayed)
except that the Optionee may assign its rights hereunder in whole or in part,
to (i) any entity or person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Optionee (an "Affiliate") or (ii) any director, officer, employee,
representative or agent of Optionee or any of its Affiliates. Subject to the
provisions of this Option, title to this Option may be transferred by
endorsement and delivery in the same manner as a negotiable instrument
transferable by endorsement and delivery.
(d) EXCHANGE OF OPTION UPON A TRANSFER. On surrender of this Option
for exchange, properly endorsed and subject to the provisions of this Option
with respect to compliance with the Securities Act of 1933, as amended (the
"Act"), and with the limitations on assignments and transfers contained in
this Section 7, the Company at its expense shall issue to or on the order of
the Optionee a new Option or Options of like tenor, in the name of the
Optionee or as the Optionee (on payment by the Optionee of any applicable
transfer taxes) may direct, for the number of shares of Common Stock issuable
upon exercise hereof.
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) The Optionee of this Option, by acceptance hereof,
acknowledges that this Option and the shares of Common Stock to be issued
upon exercise hereof or conversion thereof are being acquired solely for the
Optionee's own account and not as a nominee for any other party, and for
investment, and that the Optionee will not offer, sell or otherwise dispose
of this Option or any shares of Common Stock to be issued upon exercise
hereof or conversion thereof except under circumstances that will not result
in a violation of the Act or any state securities laws. Upon exercise of this
Option, the Optionee shall, if requested by the Company, confirm in writing,
in a form reasonably satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired solely for the Optionee's own account
and not as a nominee for any other party, for investment, and not with a view
toward distribution or resale.
6
<PAGE>
(ii) This Option and all shares of Common Stock issued upon
exercise hereof or conversion thereof shall be stamped or imprinted with a
legend in substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH
ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
The Company may place an appropriate stop transfer order with the Company's
transfer agent with respect to the shares of Common Stock represented by such
certificates.
8. REPLACEMENT OF OPTION. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Option and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the
Company or, in the case of mutilation, on surrender and cancellation of this
Option, the Company at its expense shall execute and deliver, in lieu of this
Option, a new option of like tenor and amount.
9. AMENDMENTS.
(a) Any term of this Option may be amended only with the written
consent of the Board and the Optionee.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Option, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term,
condition or provision.
10. GOVERNING LAW. This Option shall be governed by and construed in
accordance with the laws of the State of Colorado (without giving effect to
the choice of law principles thereof).
[SIGNATURE PAGE FOLLOWS]
7
<PAGE>
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Option to be executed as of March 18, 2000.
OPTIONEE:
FOREST OIL CORPORATION RENTECH, INC.
By:/s/ David H. Keyte By:/s/ Dennis L. Yakobson
---------------------------------- ---------------------------------
David H. Keyte, Executive Dennis L. Yakobson,
Vice President President
1600 Broadway, Suite 2200
Denver, Colorado 80202
<PAGE>
RENTECH, INC.
NOTICE OF EXERCISE OF STOCK OPTION ISSUED
To: Rentech, Inc.
1331 17th Street, Suite 720
Denver, CO 80202
I hereby exercise my Option dated ______________________________ to
purchase ____________________ shares of $.01 par value common stock of the
Company at the option exercise price of $_______________ per share. Enclosed
is a certified or cashier's check in the total amount of $_______________, or
payment in such other form as the Company has specified and agreed to accept,
which is described at the bottom of this notice.
I represent to you that I am acquiring said shares for investment
purposes and not with a view to any distribution thereof. I understand that
my stock certificate may bear an appropriate legend restricting the transfer
of my shares and that a stop transfer order may be placed with the Company's
transfer agent with respect to such shares.
I request that my shares be issued in the name of:
_______________________________________________________________________________
(Print your name in the form in which you wish
to have the shares registered)
_______________________________________________________________________________
(Social Security Number)
_______________________________________________________________________________
(Street and Number)
_______________________________________________________________________________
(City) (State) (Zip Code)
Optionee:
Dated: ________________, 20____. _______________________________________
Signature: By:_____________________________
Authorized Agent
