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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 7, 1997
RENTECH, INC.
(Exact name of registrant as specified in charter)
Colorado 0-19260 84-0957421
(State or other Commission I.R.S. Employer
jurisdiction of File No. Identification No.
incorporation or
organization)
1331 17th Street, Suite 720, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 298-8008
Item 7. Financial Statements and Exhibits.
The following exhibits are filed as a part of this report.
EX-3.(i).3 Articles of Amendment to Articles of Incorporation
- Preferences, Limitations and Relative Rights of
Convertible Preferred Stock, Series 1998-A.
EX-3.(i).4 Articles of Amendment to Articles of Incorporation
- Preferences, Limitations and Relative Rights of
Convertible Preferred Stock, Series 1998-B.
EX-4.2 Form of Warrant to Purchase Common Stock for 200,000
Shares of Common Stock.
EX-4.3 Form of Registration Rights Agreement dated October 1997.
EX-4.4 Form of Registration Rights Agreement dated February 1998.
EX-4.5 Form of Warrant to Purchase Series 1998-B Preferred Shares
dated February 9, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RENTECH, INC.
Date: March 2, 1998 By: (signature)
---------------------------------------
James P. Samuels, Vice President
- Finance, Chief Financial Officer
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ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF
PREFERRED STOCK, SERIES 1998-A
OF
RENTECH, INC.
RENTECH, INC., a Colorado corporation (the "Corporation"), does
hereby certify that pursuant to the authority conferred upon the Board of
Directors by the Amended and Restated Articles of Incorporation, as
amended, of the Corporation and pursuant to Section 7-106-102 of the
Colorado Business Corporation Act, said Board of Directors, at a duly
convened special meeting held on January 22, 1998, duly adopted the
following resolution:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of RENTECH, INC., a Colorado corporation
(the "Corporation"), by the Amended and Restated Articles of
Incorporation, as amended, of the Corporation, the Board of Directors
hereby creates out of the authorized preferred stock, $10.00 par value
per share, of the Corporation a series of preferred stock to consist of
not more than 200,000 shares, and the Board of Directors hereby fixes the
designation and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of such series
as follows:
1. Designation. This resolution shall provide for a single series
of preferred stock, the designation of which shall be "Preferred
Stock Series 1998-A" (hereinafter the "Preferred Series 1998-A Shares" or
the "Preferred Shares") and the number of authorized shares constituting
the Preferred Series 1998-A Shares is 200,000. The number of authorized
Preferred Series 1998-A Shares may be reduced or increased by a further
resolution duly adopted by the Board of Directors of the Corporation and
by the filing of an amendment to the Corporation's Articles of
Incorporation pursuant to the provisions of the Colorado Business
Corporation Act stating that such reduction or increase has been so
authorized.
2. Voting. Except as expressly required by the laws of the State
of Colorado, the holders of the Preferred Shares shall have no voting
rights and shall not be entitled to notice of meetings of shareholders,
and the exclusive voting power shall be vested in the holders of the
shares of the Corporation's Common Stock, $.01 par value per share (the
"Common Stock"), and/or in any other series of the Corporation's
preferred stock now or at any time hereafter issued and outstanding
having voting rights. Any corporate action that may require a vote of
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the holders of the Preferred Shares as a class shall be deemed to have
been approved by that class upon the affirmative vote by the holders of a
majority of the issued and outstanding Preferred Shares unless a higher
voting requirement is imposed by the Colorado Business Corporation Act.
If any corporate action shall require a vote of the holders of the
Preferred Shares other than as a class, the Preferred Shares shall vote
as a group with the Common Stock.
3. Dividends.
3.1 Rate. Holders of Preferred Shares shall be entitled to
receive, out of any funds of the Corporation legally available for that
purpose, cumulative dividends from the date of issuance at the rate of
$.90 per year per Preferred Share, payable quarterly (pro-rated for
partial quarters) in cash, or, at the option of the Corporation, in
shares of its Free-Trading Common Stock (as defined herein), on the first
day of April, July, October and January of each year commencing April 1,
1998 (each such date being hereinafter individually referred to as the
"Dividend Payment Date" and collectively as the "Dividend Payment
Dates"). Each such dividend shall be paid to the holders of record of
the Preferred Shares as they appear on the books of the Corporation on
the record date which shall be not less than 30 days prior to the related
Dividend Payment Date. Dividends on the Preferred Shares shall be
declared and paid to the extent the Corporation is legally able to do so
and shall be cumulative to the extent not declared and paid. Holders of
Preferred Shares shall not be entitled to any dividends, whether payable
in cash, property or stock, in excess of full dividends as herein
provided on the Preferred Shares. "Free-Trading Common Stock" shall mean
shares of Common Stock that are not "restricted securities" as defined in
Rule 144 under the Securities Act of 1933 (the "Securities Act").
3.2 Dividends on Common Stock. No dividends (other than those
payable solely in Common Stock) shall be paid with respect to the Common
Stock during any fiscal year of the Corporation unless all accumulated
and unpaid dividends and the quarterly dividend on the shares of
Preferred Stock for the then current dividend period shall have been
declared and a sum sufficient for the payment thereof set apart. No
shares of Common Stock shall be purchased, redeemed or acquired by the
Corporation, and no funds shall be paid into or set aside or made
available for a sinking fund for the purchase, redemption or acquisition
thereof except (A) in transactions aggregating not more than $100,000.00
per year, (B) in transactions resulting from the legal obligation of the
Corporation to redeem, purchase or otherwise acquire its securities, or
(C) pursuant to Section 5.1 herein.
4. Redemption. Except as provided in Section 3.2 herein, the
Preferred Shares shall not be redeemable at any time prior to September
30, 1999. Thereafter, the Corporation, on the sole authority of its
Board of Directors, may, at its option and at any time prior to notice of
conversion of the Preferred Shares by the holder thereof as hereinafter
provided, redeem all or any part of the Preferred Shares at the time
issued and outstanding for an amount in cash equal to $11.50 per share
plus any accumulated and unpaid dividends. Except as provided in Section
3.2 herein, if less than all the Preferred Shares are to be redeemed,
then such redemption shall be pro rata based on the number of Preferred
Shares owned of record by each Preferred Shareholder. Written notice of
redemption stating the date and place of redemption and the amount of the
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redemption price shall be mailed by the Corporation not less than 30 days
nor more than 60 days prior to the redemption date to the record holders
of the shares to be redeemed directed to their last known address as
shown by the Corporation records. If notice of redemption is given as
provided above and if on the redemption date the Corporation has set
apart in trust for the purpose sufficient funds for such redemption, then
from and after the redemption date, notwithstanding that any certificate
for such shares has not been surrendered for cancellation, the Preferred
Shares called for redemption shall no longer be deemed to be outstanding
and all rights with respect to such shares shall forthwith cease and
terminate, except only the right of the holders thereof to receive the
redemption price without interest upon surrender of certificates
representing the shares called for redemption. Any monies remaining in
trust after one year from the redemption date shall be returned to the
Corporation and thereafter holders of certificates for such shares shall
look only to the Corporation for the redemption price thereof. Upon
conversion of any Preferred Shares called for redemption into Common
Stock, then the portion of the monies held in trust for redemption of
such shares shall forthwith be returned to the Corporation.
5. Conversion.
5.1 Prohibition Against Short Sales. No holder of Preferred
Shares shall directly or indirectly effect a short sale of the
Corporation's Common Stock for the holder's own account or for the
account of a Related Person. "Short sale" shall mean any sale of a
security which the seller does not beneficially own or any sale which is
consummated by the delivery of a security borrowed by, or for the account
of, the seller, in either case whether or not the seller is the owner of
Common Stock at the time of such sale. "Related Person" shall mean (A)
any member of the holder's immediate family; (B) any entity of which the
holder is an officer, director, or holder of a position having comparable
duties or responsibilities; (C) any entity in which the holder is the
owner of an equity interest; and (D) any person which would be deemed to
be an "affiliate" of the holder as that term is defined in the Securities
Act of 1933 or the rules and regulations promulgated thereunder.
(a) In the event of any violation of this prohibition
against short sales, the Preferred Shares owned by the violating holder
shall cease to be convertible into shares of the Corporation's Common
Stock, and the Corporation shall have the assignable right, exercisable
at any time thereafter, to redeem all Preferred Shares and all shares of
Common Stock issued upon conversion of Preferred Shares beneficially
owned by the violating holder for an amount equal to 50% of the
following, whichever is applicable: (i) the par value of the Preferred
Shares, or (ii) the market value of the shares of Common Stock issued,
or which would have been issuable but for such violation, upon full
conversion of such Preferred Shares. In the event a holder of Preferred
Shares effects a short sale and thereafter converts all or any portion of
such Preferred Shares and sells or otherwise disposes of the shares of
Common Stock issued upon such conversion, the Corporation shall be
entitled, at any time thereafter, to recover from such holder the profit
made or realized by such holder upon sale or other disposition of such
Common Stock.
(b) In the event of any breach of this short sale
prohibition by any holder of Preferred Shares, then such holder agrees to
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indemnify and hold harmless the Corporation, its officers, directors,
shareholders, employees, agents, affiliates, and their respective heirs,
personal representatives, successors and assigns, from and against any
and all claims, damages, demands, judgments, liabilities costs and
expenses of any nature whatsoever relating to or arising out of such
breach and to promptly reimburse all such persons for any and all costs
and expenses incurred by them in connection with or relating to such
default, including costs of investigation and reasonable fees of its or
their lawyers, accountants and other experts.
5.2 Conversion Rate. So long as a holder of Preferred Shares
is not in breach of Section 5 herein and subject to Section 5.8 herein,
such holder shall have the right, exercisable at any time after 120 days
from the date of issuance of the Preferred Shares (the "Hold Period"),
and on or before the close of business on the second full business day
preceding the date, if any, fixed for the redemption of such shares as
provided herein, to surrender the certificate or certificates evidencing
such shares and receive in lieu and in conversion thereof, and in lieu of
accumulated and unpaid dividends thereon, that number of shares of the
Corporation's Common Stock as equals $10.00 per share of Preferred Stock
tendered for conversion, plus accumulated and unpaid dividends thereon,
divided by the greater of (A) 100% of the average of the closing bid
prices per share of the Corporation's Common Stock on the Nasdaq Stock
Market, any national securities exchange, the OTC Bulletin Board or any
other market on which the Common Stock is listed for trading for the five
trading days preceding ----------, 1998 [date of payment for shares], or
(B) 82.5% of the average of the closing bid prices per share similarly
determined for the five trading days preceding the date such conversion
is deemed to have been made, as subsequently defined herein.
Notwithstanding anything herein contained to the contrary, one share of
Preferred Stock shall not be convertible into more than ten shares of
Common Stock, and if the closing bid price per share falls below $1.00,
no more than 20% of the amount of Preferred Stock owned by any Holder at
the time may be converted by that Holder into Common Stock in any
calendar month in which the closing bid price falls below $.875.
5.3 Mechanics of Conversion.
(a) Holder's Delivery Requirements. To convert Preferred
Shares into full shares of Common Stock, the holder thereof shall (A)
deliver or transmit by facsimile, for receipt on or prior to 4:00 p.m.,
Denver time (the "Conversion Notice Deadline") on the date of conversion,
a copy of the fully executed notice of conversion ("Notice of
Conversion") to the Corporation at the office of the Corporation or its
designated transfer agent (the "Transfer Agent"), and (B) surrender to a
common carrier for delivery to the office of the Corporation or the
Transfer Agent, the original certificates representing the Preferred
Shares being converted (the "Preferred Stock Certificates"), duly
endorsed for cancellation. The holder of the Preferred Shares shall have
the right to convert fewer than the full number of Preferred Shares held
at any given time.
(b) Corporation's Response. Upon receipt by the
Corporation of a facsimile copy of such Notice of Conversion, the
Corporation shall send, via facsimile, a confirmation of receipt of such
Notice of Conversion to such holder, which shall specify that the Notice
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of Conversion has been received and the name and telephone number of a
contact person at the Corporation whom the holder should contact
regarding information related to such conversion. Upon receipt by the
Corporation or the Transfer Agent of the Preferred Stock Certificates to
be converted pursuant to a Notice of Conversion (or an indemnification
undertaking reasonably satisfactory to the Corporation with respect to
such shares in the case of their loss, theft or destruction) together
with the originally executed Notice of Conversion, the Corporation or the
Transfer Agent (as applicable) shall, within two business days after the
date of receipt (or the next business day if received after 11:00 a.m.
local time of the Corporation or Transfer Agent, as applicable) (the
"Deadline"), issue and surrender to a common carrier for either overnight
or (if delivery is outside the United States) two (2) day delivery to the
address as specified in the Notice of Conversion, a certificate for the
number of shares of Common Stock to which the holder shall be entitled as
aforesaid. In the case of a dispute as to the calculation of the
conversion rate, the Corporation shall promptly issue to the holder the
number of shares of Common Stock that is not disputed and shall submit
the disputed calculations to its outside accountant via facsimile within
four (4) days of receipt of such holder's Notice of Conversion. The
Corporation shall cause the accountant to perform the calculations and
notify the Corporation and the holder of the results no later than
forty-eight (48) hours from the time it receives the disputed
calculations. Such accountant's calculation shall be deemed conclusive
absent manifest error. Should the Notice of Conversion specify a smaller
number of Preferred Shares to be converted than are represented by the
Preferred Stock Certificate surrendered to the Corporation, then the
Corporation shall immediately issue a new Preferred Stock Certificate
representing the number of Preferred Shares not yet converted, and
deliver the same to the holder thereof along with the Common Stock as
stated above.
(c) Date of Conversion. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date set
forth in such Notice of Conversion, provided (A) that the advance copy of
the Notice of Conversion is faxed to the Corporation before 4:00 p.m.,
Denver time, on the Date of Conversion, and (B) that the original
Preferred Stock Certificates representing the Preferred Shares to be
converted, together with the originally executed Notice of Conversion,
are surrendered by depositing such certificates and Notice with a common
carrier, as provided above, and received by the Transfer Agent or the
Corporation on or prior to the second (2nd) business day following the
Date of Conversion. In the event the Preferred Stock Certificates and
the originally executed Notice of Conversion are not received within
three (3) business days after the date of the Notice of Conversion, the
Notice of Conversion shall be deemed null and void and no conversion of
Preferred Shares shall be effected thereby. The person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated, as of three (3) business days after the Date
of Conversion, for all purposes as the record holder or holders of such
shares of Common Stock on the Date of Conversion.
(d) Notwithstanding anything contained herein to the
contrary, if any action is required herein to be taken by the Company or
the Transfer Agent on a day which is not a business day, then such action
shall be deemed to be timely if taken on the next following business day.
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5.4 Optional Conversion. At the option of the Company, if any
Preferred Shares remain outstanding on December 31, 1999, then all or any
part of such Preferred Shares as the Company elects shall be converted in
accordance with Section 5.3 as if the holders of such Preferred Shares
had given the Notice of Conversion effective as of that date, and the
Date of Conversion had been fixed as of December 31, 1999 for all
purposes of Paragraph 5.3. All holders of Preferred Stock certificates
shall thereupon and within five (5) business days thereafter surrender
all Preferred Stock certificates, duly endorsed for cancellation, to the
Corporation or the Transfer Agent, as the Corporation may direct. No
person shall thereafter have any rights in respect of Preferred Shares,
except the right to receive shares of Common Stock on conversion thereof
as provided in this Section 5.
5.5 Adjustment for Reclassification, Exchange or Substitution.
If the Common Stock issuable upon the conversion of Preferred Shares
shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a reorganization, merger,
consolidation or sale of assets provided for below), then and in each
such event, the holder of each Preferred Share shall have the right
thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number
of shares of Common Stock into which such Preferred Shares might have
been converted immediately prior to such reorganization, reclassification
or change, all subject to further adjustment as provided herein.
5.6 Merger or Other Transactions. In the event the
Corporation, at any time while any of the Preferred Shares are
outstanding, shall be consolidated with or merged into any other
corporation or corporations or shall sell or lease all or substantially
all of its property and business as an entirety, then lawful provisions
shall be made as part of the terms of such consolidation, merger, sale or
lease so that the holder of any Preferred Shares may thereafter receive
in lieu of such Common Stock otherwise issuable to him upon conversion of
his Preferred Shares, but at the conversion rate which would otherwise be
in effect at the time of conversion, as hereinbefore provided, the same
kind and amount of securities or assets as may be issuable, distributable
or payable upon such consolidation, merger, sale or lease with respect to
Common Stock of the Corporation.
5.7 Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon conversion of
Preferred Shares. With respect to any fraction of a share called for
upon any such conversion, the Corporation shall pay to the holder of the
converted Preferred Share an amount in cash equal to such fraction
multiplied by the current market value of such fractional share
determined by the Board of Directors in good faith, which determination
shall be conclusive and binding upon such holder.
5.8 Reservation of Common Shares. The Corporation shall at
all times reserve and keep available out of its authorized but unissued
Common Stock the number of shares of Common Stock deliverable upon
conversion of all the issued and outstanding Preferred Shares and shall
take such action to obtain such permits or orders as may be necessary to
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enable the Corporation lawfully to issue such Common Stock upon the
conversion of the Preferred Shares.
6. Rights on Liquidation. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, resulting in any distribution of its assets to its
shareholders, the holders of the Preferred Shares then issued and
outstanding shall be entitled to receive an amount equal to $10.00 per
Preferred Share plus any accumulated but unpaid dividends, and no more,
before any payment or distribution of the assets of the Corporation is
made to or set apart for the holders of Common Stock. If the assets of
the Corporation distributable to the holders of Preferred Shares are
insufficient for the payment to them of the full preferential amount
described above, such assets shall be distributed ratably among the
holders of the Preferred Shares. The holders of the Common Stock shall
be entitled to the exclusion of the holders of the Preferred Shares to
share in all remaining assets of the Corporation in accordance with their
respective interests. For purposes of this paragraph, a consolidation or
merger of the Corporation with any other corporation or corporations
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation.
7. Notice. Any notice required to be given to the holders of
Preferred Shares or any securities issued upon conversion thereof shall
be deemed to have been given upon the earlier of personal delivery or
three days after deposit in the United States mails by registered or
certified mail, return receipt requested, with postage fully prepaid, and
addressed to each holder of record at his address as it appears on the
stock transfer records of the Corporation. Any notice to the Corporation
shall be in writing and shall be deemed to have been given only upon
actual receipt thereof.
8. Legend. All certificates representing the Preferred Shares, all
shares of Common Stock issued upon conversion thereof and any and all
securities issued in replacement thereof or in exchange therefor shall
bear such legends (or not) as shall be required by law or contract.
IN WITNESS WHEREOF, RENTECH, INC. has caused its corporate seal to
be affixed hereto and this certificate to be signed by its President and
Secretary this 26th day of January, 1998.
RENTECH, INC.
[S E A L] By: (signature)
-----------------------------------
Dennis L. Yakobson, President
ATTEST:
(signature)
----------------------------
Ronald C. Butz, Secretary
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ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF
PREFERRED STOCK, SERIES 1998-B
OF
RENTECH, INC.
RENTECH, INC., a Colorado corporation (the "Corporation"), does
hereby certify that pursuant to the authority conferred upon the Board of
Directors by the Amended and Restated Articles of Incorporation, as
amended, of the Corporation and pursuant to Section 7-106-102 of the
Colorado Business Corporation Act, said Board of Directors, at a duly
convened special meeting held on January 22, 1998, duly adopted the
following resolution:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of RENTECH, INC., a Colorado corporation
(the "Corporation"), by the Amended and Restated Articles of
Incorporation, as amended, of the Corporation, the Board of Directors
hereby creates out of the authorized preferred stock, $10.00 par value
per share, of the Corporation a series of preferred stock to consist of
not more than 800,000 shares, and the Board of Directors hereby fixes the
designation and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of such series
as follows:
1. Designation. This resolution shall provide for a single series
of preferred stock, the designation of which shall be "Preferred
Stock Series 1998-B" (hereinafter the "Preferred Series 1998-B Shares" or
the "Preferred Shares") and the number of authorized shares constituting
the Preferred Series 1998-B Shares is 800,000. The number of authorized
Preferred Series 1998-B Shares may be reduced or increased by a further
resolution duly adopted by the Board of Directors of the Corporation and
by the filing of an amendment to the Corporation's Articles of
Incorporation pursuant to the provisions of the Colorado Business
Corporation Act stating that such reduction or increase has been so
authorized.
2. Voting. Except as expressly required by the laws of the State
of Colorado, the holders of the Preferred Shares shall have no voting
rights and shall not be entitled to notice of meetings of shareholders,
and the exclusive voting power shall be vested in the holders of the
shares of the Corporation's Common Stock, $.01 par value per share (the
"Common Stock"), and/or in any other series of the Corporation's
preferred stock now or at any time hereafter issued and outstanding
having voting rights. Any corporate action that may require a vote of
the holders of the Preferred Shares as a class shall be deemed to have
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been approved by that class upon the affirmative vote by the holders of a
majority of the issued and outstanding Preferred Shares unless a higher
voting requirement is imposed by the Colorado Business Corporation Act.
If any corporate action shall require a vote of the holders of the
Preferred Shares other than as a class, the Preferred Shares shall vote
as a group with the Common Stock.
3. Dividends.
3.1 Rate. Holders of Preferred Shares shall be entitled to
receive, out of any funds of the Corporation legally available for that
purpose, cumulative dividends from the date of issuance at the rate of
$.90 per year per Preferred Share, payable quarterly (pro-rated for
partial quarters) in cash, or, at the option of the Corporation, in
shares of its Free-Trading Common Stock (as defined herein), on the first
day of April, July, October and January of each year commencing April 1,
1998 (each such date being hereinafter individually referred to as the
"Dividend Payment Date" and collectively as the "Dividend Payment
Dates"). Each such dividend shall be paid to the holders of record of
the Preferred Shares as they appear on the books of the Corporation on
the record date which shall be not less than 30 days prior to the related
Dividend Payment Date. Dividends on the Preferred Shares shall be
declared and paid to the extent the Corporation is legally able to do so
and shall be cumulative to the extent not declared and paid. Holders of
Preferred Shares shall not be entitled to any dividends, whether payable
in cash, property or stock, in excess of full dividends as herein
provided on the Preferred Shares. "Free-Trading Common Stock" shall mean
shares of Common Stock that are not "restricted securities" as defined in
Rule 144 under the Securities Act of 1933 (the "Securities Act").
3.2 Dividends on Common Stock. No dividends (other than those
payable solely in Common Stock) shall be paid with respect to the Common
Stock during any fiscal year of the Corporation unless all accumulated
and unpaid dividends and the quarterly dividend on the shares of
Preferred Stock for the then current dividend period shall have been
declared and a sum sufficient for the payment thereof set apart. No
shares of Common Stock shall be purchased, redeemed or acquired by the
Corporation, and no funds shall be paid into or set aside or made
available for a sinking fund for the purchase, redemption or acquisition
thereof except (A) in transactions aggregating not more than $100,000.00
per year, (B) in transactions resulting from the legal obligation of the
Corporation to redeem, purchase or otherwise acquire its securities, or
(C) pursuant to Section 5.1 herein.
4. Redemption. Except as provided in Section 3.2 herein, the
Preferred Shares shall not be redeemable at any time prior to September
30, 1999. Thereafter, the Corporation, on the sole authority of its
Board of Directors, may, at its option and at any time prior to notice of
conversion of the Preferred Shares by the holder thereof as hereinafter
provided, redeem all or any part of the Preferred Shares at the time
issued and outstanding for an amount in cash equal to $11.50 per share
plus any accumulated and unpaid dividends. Except as provided in Section
3.2 herein, if less than all the Preferred Shares are to be redeemed,
then such redemption shall be pro rata based on the number of Preferred
Shares owned of record by each Preferred Shareholder. Written notice of
redemption stating the date and place of redemption and the amount of the
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PAGE 3
redemption price shall be mailed by the Corporation not less than 30 days
nor more than 60 days prior to the redemption date to the record holders
of the shares to be redeemed directed to their last known address as
shown by the Corporation records. If notice of redemption is given as
provided above and if on the redemption date the Corporation has set
apart in trust for the purpose sufficient funds for such redemption, then
from and after the redemption date, notwithstanding that any certificate
for such shares has not been surrendered for cancellation, the Preferred
Shares called for redemption shall no longer be deemed to be outstanding
and all rights with respect to such shares shall forthwith cease and
terminate, except only the right of the holders thereof to receive the
redemption price without interest upon surrender of certificates
representing the shares called for redemption. Any monies remaining in
trust after one year from the redemption date shall be returned to the
Corporation and thereafter holders of certificates for such shares shall
look only to the Corporation for the redemption price thereof. Upon
conversion of any Preferred Shares called for redemption into Common
Stock, then the portion of the monies held in trust for redemption of
such shares shall forthwith be returned to the Corporation.
5. Conversion.
5.1 Prohibition Against Short Sales. No holder of Preferred
Shares shall directly or indirectly effect a short sale of the
Corporation's Common Stock for the holder's own account or for the
account of a Related Person. "Short sale" shall mean any sale of a
security which the seller does not beneficially own or any sale which is
consummated by the delivery of a security borrowed by, or for the account
of, the seller, in either case whether or not the seller is the owner of
Common Stock at the time of such sale. "Related Person" shall mean (A)
any member of the holder's immediate family; (B) any entity of which the
holder is an officer, director, or holder of a position having comparable
duties or responsibilities; (C) any entity in which the holder is the
owner of an equity interest; and (D) any person which would be deemed to
be an "affiliate" of the holder as that term is defined in the Securities
Act of 1933 or the rules and regulations promulgated thereunder.
(a) In the event of any violation of this prohibition
against short sales, the Preferred Shares owned by the violating holder
shall cease to be convertible into shares of the Corporation's Common
Stock, and the Corporation shall have the assignable right, exercisable
at any time thereafter, to redeem all Preferred Shares and all shares of
Common Stock issued upon conversion of Preferred Shares beneficially
owned by the violating holder for an amount equal to 50% of the
following, whichever is applicable: (i) the par value of the Preferred
Shares, or (II) the market value of the shares of Common Stock issued,
or which would have been issuable but for such violation, upon full
conversion of such Preferred Shares. In the event a holder of Preferred
Shares effects a short sale and thereafter converts all or any portion of
such Preferred Shares and sells or otherwise disposes of the shares of
Common Stock issued upon such conversion, the Corporation shall be
entitled, at any time thereafter, to recover from such holder the profit
made or realized by such holder upon sale or other disposition of such
Common Stock.
(b) In the event of any breach of this short sale
prohibition by any holder of Preferred Shares, then such holder agrees to
<PAGE>
PAGE 4
indemnify and hold harmless the Corporation, its officers, directors,
shareholders, employees, agents, affiliates, and their respective heirs,
personal representatives, successors and assigns, from and against any
and all claims, damages, demands, judgments, liabilities costs and
expenses of any nature whatsoever relating to or arising out of such
breach and to promptly reimburse all such persons for any and all costs
and expenses incurred by them in connection with or relating to such
default, including costs of investigation and reasonable fees of its or
their lawyers, accountants and other experts.
5.2 Conversion Rate. So long as a holder of Preferred Shares
is not in breach of Section 5 herein and subject to Section 5.8 herein,
such holder shall have the right, exercisable at any time after 120 days
from the date of issuance of the Preferred Shares (the "Hold Period"),
and on or before the close of business on the second full business day
preceding the date, if any, fixed for the redemption of such shares as
provided herein, to surrender the certificate or certificates evidencing
such shares and receive in lieu and in conversion thereof, and in lieu of
accumulated and unpaid dividends thereon, that number of shares of the
Corporation's Common Stock as equals $10.00 per share of Preferred Stock
tendered for conversion, plus accumulated and unpaid dividends thereon,
divided by 82.5% of the average of the closing bid prices per share of
the Corporation's Common Stock on the NASDAQ Stock Market, any national
securities exchange, the OTC Bulletin Board or any other market on which
the Common Stock is listed for trading for the five trading days
preceding the date such conversion is deemed to have been made, as
subsequently defined herein. Notwithstanding anything herein contained
to the contrary, one share of Preferred Stock shall not be convertible
into more than ten shares of Common Stock, and if the closing bid price
per share falls below $1.00, no more than 20% of the amount of Preferred
Stock owned by any Holder at the time may be converted by that Holder
into Common Stock in any calendar month in which the closing bid price
falls below $.875.
5.3 Mechanics of Conversion.
(a) Holder's Delivery Requirements. To convert Preferred
Shares into full shares of Common Stock, the holder thereof shall (A)
deliver or transmit by facsimile, for receipt on or prior to 4:00 p.m.,
Denver time (the "Conversion Notice Deadline") on the date of conversion,
a copy of the fully executed notice of conversion ("Notice of
Conversion") to the Corporation at the office of the Corporation or its
designated transfer agent (the "Transfer Agent"), and (B) surrender to a
common carrier for delivery to the office of the Corporation or the
Transfer Agent, the original certificates representing the Preferred
Shares being converted (the "Preferred Stock Certificates"), duly
endorsed for cancellation. The holder of the Preferred Shares shall have
the right to convert fewer than the full number of Preferred Shares held
at any given time.
(b) Corporation's Response. Upon receipt by the
Corporation of a facsimile copy of such Notice of Conversion, the
Corporation shall send, via facsimile, a confirmation of receipt of such
Notice of Conversion to such holder, which shall specify that the Notice
of Conversion has been received and the name and telephone number of a
contact person at the Corporation whom the holder should contact
<PAGE>
PAGE 5
regarding information related to such conversion. Upon receipt by the
Corporation or the Transfer Agent of the Preferred Stock Certificates to
be converted pursuant to a Notice of Conversion (or an indemnification
undertaking reasonably satisfactory to the Corporation with respect to
such shares in the case of their loss, theft or destruction) together
with the originally executed Notice of Conversion, the Corporation or the
Transfer Agent (as applicable) shall, within two business days after the
date of receipt (or the next business day if received after 11:00 a.m.
local time of the Corporation or Transfer Agent, as applicable) (the
"Deadline"), issue and surrender to a common carrier for either overnight
or (if delivery is outside the United States) two (2) day delivery to the
address as specified in the Notice of Conversion, a certificate for the
number of shares of Common Stock to which the holder shall be entitled as
aforesaid. In the case of a dispute as to the calculation of the
conversion rate, the Corporation shall promptly issue to the holder the
number of shares of Common Stock that is not disputed and shall submit
the disputed calculations to its outside accountant via facsimile within
four (4) days of receipt of such holder's Notice of Conversion. The
Corporation shall cause the accountant to perform the calculations and
notify the Corporation and the holder of the results no later than
forty-eight (48) hours from the time it receives the disputed
calculations. Such accountant's calculation shall be deemed conclusive
absent manifest error. Should the Notice of Conversion specify a smaller
number of Preferred Shares to be converted than are represented by the
Preferred Stock Certificate surrendered to the Corporation, then the
Corporation shall immediately issue a new Preferred Stock Certificate
representing the number of Preferred Shares not yet converted, and
deliver the same to the holder thereof along with the Common Stock as
stated above.
(c) Date of Conversion. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date set
forth in such Notice of Conversion, provided (A) that the advance copy of
the Notice of Conversion is faxed to the Corporation before 4:00 p.m.,
Denver time, on the Date of Conversion, and (B) that the original
Preferred Stock Certificates representing the Preferred Shares to be
converted, together with the originally executed Notice of Conversion,
are surrendered by depositing such certificates and Notice with a common
carrier, as provided above, and received by the Transfer Agent or the
Corporation on or prior to the second (2nd) business day following the
Date of Conversion. In the event the Preferred Stock Certificates and
the originally executed Notice of Conversion are not received within
three (3) business days after the date of the Notice of Conversion, the
Notice of Conversion shall be deemed null and void and no conversion of
Preferred Shares shall be effected thereby. The person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated, as of three (3) business days after the Date
of Conversion, for all purposes as the record holder or holders of such
shares of Common Stock on the Date of Conversion.
(d) Notwithstanding anything contained herein to the
contrary, if any action is required herein to be taken by the Company or
the Transfer Agent on a day which is not a business day, then such action
shall be deemed to be timely if taken on the next following business day.
5.4 Optional Conversion. At the option of the Company, if any
Preferred Shares remain outstanding on December 31, 1999, then all or any
<PAGE>
PAGE 6
part of such Preferred Shares as the Company elects shall be converted in
accordance with Section 5.3 as if the holders of such Preferred Shares
had given the Notice of Conversion effective as of that date, and the
Date of Conversion had been fixed as of December 31, 1999, for all
purposes of Paragraph 5.3. All holders of Preferred Stock certificates
shall thereupon and within five (5) business days thereafter surrender
all Preferred Stock certificates, duly endorsed for cancellation, to the
Corporation or the Transfer Agent, as the Corporation may direct. No
person shall thereafter have any rights in respect of Preferred Shares,
except the right to receive shares of Common Stock on conversion thereof
as provided in this Section 5.
5.5 Adjustment for Reclassification, Exchange or Substitution.
If the Common Stock issuable upon the conversion of Preferred Shares
shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a reorganization, merger,
consolidation or sale of assets provided for below), then and in each
such event, the holder of each Preferred Share shall have the right
thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number
of shares of Common Stock into which such Preferred Shares might have
been converted immediately prior to such reorganization, reclassification
or change, all subject to further adjustment as provided herein.
5.6 Merger or Other Transactions. In the event the
Corporation, at any time while any of the Preferred Shares are
outstanding, shall be consolidated with or merged into any other
corporation or corporations or shall sell or lease all or substantially
all of its property and business as an entirety, then lawful provisions
shall be made as part of the terms of such consolidation, merger, sale or
lease so that the holder of any Preferred Shares may thereafter receive
in lieu of such Common Stock otherwise issuable to him upon conversion of
his Preferred Shares, but at the conversion rate which would otherwise be
in effect at the time of conversion, as hereinbefore provided, the same
kind and amount of securities or assets as may be issuable, distributable
or payable upon such consolidation, merger, sale or lease with respect to
Common Stock of the Corporation.
5.7 Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon conversion of
Preferred Shares. With respect to any fraction of a share called for
upon any such conversion, the Corporation shall pay to the holder of the
converted Preferred Share an amount in cash equal to such fraction
multiplied by the current market value of such fractional share
determined by the Board of Directors in good faith, which determination
shall be conclusive and binding upon such holder.
5.8 Reservation of Common Shares. The Corporation shall at
all times reserve and keep available out of its authorized but unissued
Common Stock the number of shares of Common Stock deliverable upon
conversion of all the issued and outstanding Preferred Shares and shall
take such action to obtain such permits or orders as may be necessary to
enable the Corporation lawfully to issue such Common Stock upon the
conversion of the Preferred Shares.
<PAGE>
PAGE 7
6. Rights on Liquidation. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, resulting in any distribution of its assets to its
shareholders, the holders of the Preferred Shares then issued and
outstanding shall be entitled to receive an amount equal to $10.00 per
Preferred Share plus any accumulated but unpaid dividends, and no more,
before any payment or distribution of the assets of the Corporation is
made to or set apart for the holders of Common Stock. If the assets of
the Corporation distributable to the holders of Preferred Shares are
insufficient for the payment to them of the full preferential amount
described above, such assets shall be distributed ratably among the
holders of the Preferred Shares. The holders of the Common Stock shall
be entitled to the exclusion of the holders of the Preferred Shares to
share in all remaining assets of the Corporation in accordance with their
respective interests. For purposes of this paragraph, a consolidation or
merger of the Corporation with any other corporation or corporations
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation.
7. Notice. Any notice required to be given to the holders of
Preferred Shares or any securities issued upon conversion thereof shall
be deemed to have been given upon the earlier of personal delivery or
three days after deposit in the United States mails by registered or
certified mail, return receipt requested, with postage fully prepaid, and
addressed to each holder of record at his address as it appears on the
stock transfer records of the Corporation. Any notice to the Corporation
shall be in writing and shall be deemed to have been given only upon
actual receipt thereof.
8. Legend. All certificates representing the Preferred Shares, all
shares of Common Stock issued upon conversion thereof and any and all
securities issued in replacement thereof or in exchange therefor shall
bear such legends (or not) as shall be required by law or contract.
IN WITNESS WHEREOF, RENTECH, INC. has caused its corporate seal to
be affixed hereto and this certificate to be signed by its President and
Secretary this 26th day of January, 1998.
RENTECH, INC.
[S E A L] By: (signature)
--------------------------------
Dennis L. Yakobson, President
ATTEST:
(signature)
----------------------------
Ronald C. Butz, Secretary
<PAGE>
PAGE 1
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT (COLLECTIVELY, "THE SECURITIES") HAVE BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED ("THE 1933 ACT"),
OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW.
THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSONS UNLESS SUCH SECURITIES ARE REGISTERED
UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFER,
SALE OR TRANSFER IS MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SAID LAWS.
THIS WARRANT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND THE RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED OR
DETERMINED THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
RENTECH, INC.
WARRANT TO PURCHASE COMMON STOCK
Number of Shares --------------------
Date of Issuance --------------------
Rentech, Inc., a Colorado corporation (the "Company"), hereby
certifies that, for value received, ---------------------, the holder
hereof ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time
after the date hereof but not after 5:00 p.m., Denver, Colorado Time on
the Expiration date (as defined herein) ----------------------------
(---,---) fully paid and nonassessable shares of Common Stock (as defined
herein) of the Company (the "Warrant Shares") at a purchase price of
$U.S.$.-- per share in lawful money of the United States.
Section 1.
(a) Definitions. The following words and terms used in this
Warrant shall have the following meanings:
"Common Stock") means (a) the Company's common stock and (b) any
capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.
"Expiration Date" means the date five years from the date of this
Warrant or, if such date falls on a Saturday, Sunday or other day on
<PAGE>
PAGE 2
which banks are required or authorized to be closed in the City of Denver
or the State of Colorado (a "Holiday"), the next preceding date that is
not a Holiday.
"Securities Act" means the Securities Act of 1933, as amended.
"Transfer" shall include any disposition of any Warrants or Warrant
Shares, or of any interest in either thereof which would constitute a
sale thereof within the meaning of the Securities Act of 1933, as
amended, or the securities laws of Colorado or such other state or states
as may be applicable.
"Warrant" shall mean this Warrant and all Warrants issued in
exchange, transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S.$.-- per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's
successors; and (B) to any applicable law defined or referred to herein,
shall be deemed references to such applicable law as the same may have
been or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "herein," "hereof,"
and "hereunder," and words of similar import, shall refer to this Warrant
as a whole and not to any provision of this Warrant, and the words
"Section," "Schedule," and "Exhibit" shall refer to Sections of, and
Schedules and Exhibits to this Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender
includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00
p.m., Denver, Colorado Time on the Expiration Date. The rights
represented by this Warrant may be exercised by the Holder hereof then
registered on the books of the Company, as a whole or from time to time
in part (except that this Warrant shall not be exercisable as to a
fractional share) by (i) delivery of a written notice, in the form of the
Subscription Notice attached as Exhibit I hereto, of the Holder's
election to exercise this Warrant, which notice shall specify the number
of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of
Warrant Shares as to which the Warrant is being exercised (plus any
applicable issue or transfer taxes) in immediately available funds
(either by wire transfer or a certified or cashier's check drawn on a
United States bank), for the number of Warrant Shares as to which this
Warrant shall have been exercised, and (iii) the surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at
such other agency or office of the Company as the Company may designate
by notice to the Holder hereof). In the event of any exercise of the
<PAGE>
PAGE 3
rights represented by this Warrant in compliance with this Section 2(a),
a certificate or certificates for the Warrant Shares so purchased,
registered in the name of, or directed by, the Holder thereof, shall be
delivered to, or as directed by, such Holder within a reasonable time
after such rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall issue a new
Warrant identical in all respects to the Warrant exercised except (i) it
shall represent rights to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under the Warrant
exercised, less the number of Warrant Shares with respect to which such
Warrant is exercised, and (ii) the Holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to
the close of business on the date on which the Warrant is surrendered and
payment of the amount due in respect of such exercise and any applicable
taxes is made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are properly closed,
such person shall be deemed to have become the Holder of such Warrant
Shares at the opening of business on the next succeeding date on which
the stock transfer books are open.
Section 3. Redemption. This Warrant may be redeemed by the Company
at any time after thirty (30) days from the date of its issuance and
prior to the Expiration Date upon twenty (20) days' written notice (such
notice to be referred to hereinafter as the "Notice of Redemption") to
the Holder of this Warrant for $.01 per Warrant Share if the closing high
bid quotation of the company's common stock exceeds one hundred thirty
percent (130%) of the Exercise Price for a period of twenty (20)
consecutive trading days immediately preceding the mailing by the company
of the Notice of Redemption. The Notice of Redemption shall be sent to
the last known address of the Holder of this Warrant as maintained on the
books and records of the Company. The redemption date shall be not
earlier than twenty (20) days after the date of mailing of the Notice of
Redemption. Upon receipt of a Notice of Redemption, the Holder of this
Warrant may exercise this Warrant to the extent of the number of Warrant
Shares called for redemption until two (2) business days prior to the
redemption date. A "business day" shall mean any day other than
Saturday, Sunday or other day on which banks are required or authorized
to be closed in the City of Denver or the State of Colorado. If on the
redemption date the Company shall have paid the redemption price or shall
have reserved and set apart an amount sufficient to pay the redemption
price, then this Warrant shall expire to the extent of the number of
Warrant Shares called for redemption pursuant to the Notice of
Redemption. Warrants called for redemption in whole or in part shall be
tendered to the Company on or before the redemption date. The redemption
price shall be paid to the Holder within three (3) business days after
the expiration of the twenty (20) day notice period called for above, and
shall be delivered via wire transfer according to directions given to the
Company by the Holder.
Section 4. Covenants as to Common Stock. The Company covenants and
agrees that all Warrant Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable. The Company further covenants and
agrees that during the period within which the rights represented by this
<PAGE>
PAGE 4
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock or provide for
the exercise of the rights then represented by this Warrant and that the
par value of said shares will at all times be less than or equal to the
applicable Warrant Exercise Price.
Section 5. Taxes. The Company shall not be required to pay any tax
or taxes attributable to the initial issuance of the Warrant Shares or
any permitted transfer involved in the issue or delivery of any
certificates for Warrant Shares in a name other than that of the
registered Holder hereof or upon any permitted transfer of this warrant.
Section 6. Warrant Holder Not Deemed a Stockholder. No Holder, as
such, of this Warrant shall be entitled to vote or receive dividends or
be deemed the Holder of shares of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the Holder
hereof, as such, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), prior to the issuance to
Holder of this Warrant of the Warrant Shares which he or she is then
entitled to receive upon the due exercise of this Warrant.
Notwithstanding the foregoing, the Company will provide the Holder of
this Warrant with copies of the same notices and other information given
to the stockholders of the company generally, contemporaneously with the
giving notice thereof to the stockholders.
Section 7. No Limitation on Corporate Action. No provisions of
this Warrant and no right or option granted or conferred hereunder shall
in any way limit, affect or abridge the exercise by the Company of any of
its corporate rights or powers to recapitalize, amend its Certificate of
Incorporation, reorganize, consolidate or merge with or into another
corporation, or to transfer all or any part of its property or assets, or
the exercise of any other of its corporate rights and powers.
Section 8. Representations of Holder. The Holder of this Warrant,
by the acceptance hereof, represents that it is acquiring this Warrant
and the Warrant Shares for its own account for investment and not with a
view to, or for sale in connection with, any distribution hereof or of
any of the shares of Common Stock or other securities issuable upon the
exercise thereof, and not with any present intention of distributing any
of the same. Upon exercise of this Warrant, the Holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to
the Company, that the Warrant Shares so purchased, are being acquired
solely for the Holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
If such Holder cannot make such representations because they would be
factually incorrect, it shall be a condition to such holder's exercise of
the Warrant that the Company receive such other representations as the
Company considered reasonably necessary to assure the Company that the
issuance of its securities upon exercise of the Warrant shall not violate
any United States or states securities laws.
Section 9. Transfer; Opinions of Counsel; Restrictive Legends.
(a) The Holder of this Warrant understands that (i) this Warrant
and the Warrant Shares have not been and are not being registered under
<PAGE>
PAGE 5
the Securities Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such
registration; (ii) any sale of such securities made in reliance on Rule
144 promulgated under the Securities Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable,
any resale of such securities under circumstances in which the Seller (or
the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities act or the
rules and regulations of the Securities And Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under
any obligation to register such securities under the Securities Act or
any state securities laws or to comply with the terms and conditions of
any exemption thereunder.
Section 10. Adjustments.
(a) Reclassification and Reorganization. In case of any
reclassification, capital reorganization or other change of outstanding
shares of the Common Stock, or in case of any consolidation or merger of
the Company with or into another corporation (other than a consolidation
or merger in which the Company is the continuing corporation and which
does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and number
of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other
change, consolidation or merger by a Holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Warrant
immediately prior to such reclassification, capital reorganization or
other change, consolidation or merger. Any such provision shall include
provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 10. The
foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of
outstanding shares of Common Stock and to successive consolidations or
mergers. If the consideration received by the Holders of Common Stock is
other than cash, the value shall be as determined by the Board of
Directors of the Company acting in good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall
effect a stock dividend, a stock split, a stock combination, or a reverse
stock split of the Common Stock, the number of Warrant Shares purchasable
hereunder and the Warrant Exercise Price shall be proportionately
adjusted int eh manner determined by the Company's Board of Directors
acting in good faith. The number of shares, as so adjusted, shall be
rounded down to the nearest whole number and the Warrant Exercise price
shall be rounded to the nearest cent.
Section 11. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue
a new Warrant of like denomination and tenor as the Warrant so lost,
stolen or destroyed. In the event the Holder hereof asserts such loss,
theft or destruction of this Warrant, the Company may require such Holder
<PAGE>
PAGE 6
to post a bond issued by surety reasonably satisfactory to the Company
with respect to the issuance of such new Warrant.
Section 12. Notice. Any notices required or permitted to be given
under the terms of this Warrant shall be sent by mail or delivered
personally or by courier and shall be effective five days after being
placed in the mail, if mailed, certified or registered, return receipt
required, 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 addressed for such communications shall be:
If to the Company:
Rentech, Inc.
1331 17th Street, Suite 720
Denver, Colorado USA 80202
Attn: Mr. James P. Samuels, CFO
If to Holder, to it at the address set forth below Holder's signature on
the signature page hereof. Each party shall provide notice to the other
party of any change in address.
Section 13. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in
writing signed by the party or the H older hereof against which
enforcement of such change, waiver, discharge, or termination is sought.
The headings in this Warrant are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. This Warrant
shall be governed by and interpreted under the laws of the State of
Colorado.
Section 14. Date. The date of this Warrant is April 7, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the
close of business on the Expiration Date, except notwithstanding any
other provisions hereof, the provisions of Section 9 shall continue in
full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.
RENTECH, INC.
By: (signature)
-----------------------------------
Dennis L. Yakobson, President
ACCEPTED:
------------------------------
[Holder]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
<PAGE>
PAGE 7
EXHIBIT 1 TO WARRANT
SUBSCRIPTION FORM TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS WARRANT
RENTECH, INC.
The undersigend hereby exercises the right to purchase the number of
Warrant Shares covered by this Warrant specified below according to the
conditions thereof and herewith makes payment of U.S. $ , the
aggregate Warrant Exercise Price of such Warrant in full.
Dated: 19
--------------------, ---.
------------------------------------
[Holder]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
Number of Warrant Shares Being Purchased:
--------------------
<PAGE>
PAGE 1
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into this ------ day of October,
1997, between RENTECH, INC., a Colorado corporation ("Company") and
----------------------------------------------------- ("Holder").
In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. Definitions.
(a) The term "Act" means the Securities Act of 1933, as
amended;
(b) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act and the declaration or ordering of
effectiveness of such registration statement.
(c) The term "Registrable Securities" means (i) up to
1,666,667 shares of Common Stock, par value $.01 per share, of the
Company issuable or issued to those persons who purchase the Company's
Ten Percent Convertible Subordinated Notes, together with 550,000 shares
of Common Stock (collectively the "Holders"), and (ii) any Common Stock
of the Company issued as a dividend or other distribution with respect
to, or in exchange or in replacement of, such Common Stock.
2. Request For Registration. Within 30 days after the Holder and
other Holders acquire the Company's Ten Percent Convertible Subordinated
Notes that may be converted into at least 1,666,667 shares of the
Registrable Securities, together with 550,000 shares of Common Stock, and
(i) the Common Stock of the Company shall then be registered pursuant to
Section 12(g) under the Securities Exchange Act of 1934 (the "1934 Act");
(ii) the Company is then current with all filing requirements under the
1934 Act; and (iii) if the Company shall then qualify for use of a
registration statement on Form S-3 covering all such Registrable
Securities; then the Company except as otherwise provided below, shall
use its best efforts to cause the registration under the Act of all
Registrable Securities. The Company shall be obligated to effect only
one registration pursuant to this paragraph. If the Company so elects,
any request for registration under this paragraph may be for an
underwritten public offering to be managed by an underwriter or
underwriters of recognized standing reasonably acceptable to the Company.
Whenever required to use its best efforts to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as
reasonably possible:
<PAGE>
PAGE 2
(a) Prepare and file with the Securities and Exchange
Commission a registration statement on Form S-3 with respect to such
Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective; provided, however,
that the Company shall in no event be obligated to cause any such
registration to remain effective for more than the earlier of sale of all
Registrable Securities covered thereby or one year after the date which
the registration statement was declared or ordered effective.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under the securities or
blue sky laws of such other jurisdictions as shall be reasonably
appropriate for the distribution of the securities covered by the
registration statement, 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
Agreement 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, the Holder shall pay such costs to the extent required by such
jurisdiction.
3. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action that the Holder shall
furnish to the Company such information regarding him or her, the
Registrable Securities held by him or her, and the intended method of
disposition of such securities as the Company shall reasonably request
and as shall be required in connection with the action to be taken by the
Company.
4. Expenses of Registration. All expenses incurred in connection
with a registration pursuant to paragraph 2 (excluding underwriters' or
securities broker-dealers' discounts, commissions and expenses),
including, without limitation, all registration and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel for
the Company, shall be borne by the Company.
5. Delay of Registration. Holder shall not have any right to take
any action to restrain, enjoin, or otherwise delay any registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
<PAGE>
PAGE 3
6. Indemnification. If any Registrable Securities are included in
a registration statement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Holder, any underwriter (as defined in the Act) for
the Holder, and each such person, if any, who controls such Holder or
underwriter within the meaning of the Act, against any losses, claims,
damages, or liabilities, joint or several, to which they may become
subject under the Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or
are based on any untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or
arise out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; and will reimburse the
Holder, such underwriter, or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this paragraph 6(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld)
nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with information furnished
expressly for use in connection with such registration by any such
Holder, underwriter, or controlling person.
(b) To the extent permitted by law, the Holder will indemnify
and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, and each agent
and any underwriter for the Company (within the meaning of the Act)
against any losses, claims, damages, or liabilities to which the Company
or any such director, officer, controlling person, agent, or underwriter
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extend, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished by the Holder expressly for use in
connection with such registration; and the Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, agent, or underwriter in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
<PAGE>
PAGE 4
contained in this paragraph 6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Holder (which consent
shall not be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
paragraph of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party under this paragraph, notify the indemnifying party in
writing 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 the defense thereof with counsel mutually satisfactory to the
parties. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to his ability to defend
such action, shall relieve such indemnifying party of any liability to
the indemnified party under this paragraph, but the omission to so notify
the indemnifying party will not relieve him or any liability that he may
have to any indemnified party otherwise than under this paragraph.
7. No Transfer of Registration Rights. The registration rights of
the Holder under this Agreement may not be transferred.
8. Miscellaneous.
(a) Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and
no party shall be liable or bound by any other party in any manner by any
warranties, representations, or covenants except as specifically set
forth herein or therein. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any third party any
rights, remedies obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado.
(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(d) Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.
(e) Rights of Holders. Each Holder shall have the absolute
right to exercise or refrain from exercising any right or rights that
such Holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or any obligation of the
Company under this Agreement and to enter into an agreement with the
Company for the purpose of modifying this Agreement or any agreement
effecting any such modification, and such Holder shall not incur any
liability to any other Holder or Holders with respect to exercising or
refraining from exercising any such right or rights.
<PAGE>
PAGE 5
(f) Time of Essence. Time is of the essence regarding
performance of all terms, provisions and conditions contained in this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
RENTECH, INC.
By: (signature)
--------------------------------
Dennis L. Yakobson, President
HOLDER:
--------------------------------
--------------------------------
Print Name
<PAGE>
PAGE 1
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
January 26, 1998, by and between Rentech, Inc., a corporation organized
under the laws of the State of Colorado, U.S.A., with headquarters
located at 1331 17th Street, Suite 720, Denver, Colorado 80202 (the
"Company"), and the buyer set forth on the execution page hereof (the
"Buyer").
RECITALS
A. In connection with the Securities Purchase Agreement by and
between the parties of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Buyer (i) a number of shares of the Company's Series 1998-A Convertible
Preferred Stock of Rentech, Inc. (the "Series A Shares") and (ii) a
warrant to purchase a number of shares of the Company's Series 1998-B
Convertible Preferred Stock of Rentech, Inc. (the "Series B Shares").
The Series A Shares and the Series B Shares (collectively, the "Preferred
Shares") are each convertible in accordance with the terms of the
Articles of Amendment (as defined in the Securities Purchase Agreement)
into common stock of the Company, $.01 par value per share ("Common
Stock"). The Common Stock into which the Preferred Shares are
convertible may be referred to herein as the "Conversion Shares." In
accordance with the terms of the Articles of Amendment, shares of Common
Stock may be issued in payment of dividends ("Dividend Shares").
B. The Buyer has agreed to purchase and pay for the Series A Shares
as provided in the Securities Purchase Agreement. Upon such purchase,
the Company will issue its certificate representing the Series A Shares
purchased by the Buyer.
C. Upon purchase of the Series A Shares by the Buyer, the Company
has agreed to issue its warrant authorizing the Buyer to purchase the
Series B Shares (the "Warrant for Purchase of Series 1998-B Shares") upon
the terms, conditions and provisions of the Securities Purchase Agreement
and the form of warrant attached to the Securities Purchase Agreement as
Exhibit E.
D. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "1933 Act"), and applicable state securities laws.
<PAGE>
PAGE 2
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by all parties
hereto, the Company and the Buyer hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
i. "Investor" or "Investors" means the Buyer and any permitted
transferee(s) or assignee(s) thereof to whom the Buyer assigns this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
ii. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
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 by the United States
Securities and Exchange Commission (the "SEC").
iii. "Registrable Securities" means the Conversion Shares and the
Dividend Shares (if any), underlying the certificate representing the
Series A Shares and the Warrant for Purchase of 1998-Series B Shares and
any shares of capital stock issued or issuable, from time to time (with
any adjustments) on or in exchange for or otherwise with respect to
either of the foregoing (including without limitation any shares issued
pursuant to Section 2(b) hereinafter).
iv. "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed under the 1933
Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
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 of the First Closing, 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
<PAGE>
PAGE 3
become issuable upon conversion of the Preferred Shares to prevent
dilution resulting from stock splits, stock dividends or similar
transactions.
(ii) To the extent the Indeterminate Shares for any reason can not
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 prepare, and, on or before the date
that is fifteen (15) 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.
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 Buyer,
which approval shall not be unreasonably withheld or denied) the Buyer
and its counsel prior to its filing or other submission.
b. Liquidated Damages. The Company shall use its best efforts to
obtain effectiveness of the Registration Statement as soon as
practicable. If (i) the Registration Statement(s) covering the
Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective by the SEC within one
hundred twenty (120) days after the date of the First Closing (other than
by reason of any act or failure to act in a timely manner by the Investor
or its counsel) (the "Registration Deadline") or if, after the
Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to the Registration Statement (by reason of stop
order, the Company's failure to update the Registration Statement, or any
other reason outside the control of the Investor), or (ii) the Common
Stock is not listed or included for quotation on the National Association
of Securities Dealers Automated Quotation system Small Cap Market
("NASDAQ Small Cap"), or another United States national exchange; then in
either case (in either case, a "Delay") the Company will make payments to
the Investors, as liquidated damages and in such amounts and at such
times as shall be determined pursuant to this Section 2(b) as relief and
as the sole remedy for the damages to the Investor by reason of any such
delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall be exclusive of any other remedies available at law
or in equity), an amount to be determined as follows. The Company shall
pay to the Investor an amount equal to the purchase price for the Series
A Shares purchased at the First Closing (including, without limitation,
any Preferred Shares that have been converted into Conversion Shares then
held by such Investors) (the "Aggregate Share Price") multiplied by: (i)
if the Delay is equal to or less than one calendar month after the
Registration Deadline, one hundredth (.01); (ii) if the Delay is equal to
or less than two calendar months after the Registration Deadline, for the
period after the first calendar month and up to the end of the second
calendar month, two hundredths (.02); and (iii) if the Delay is greater
than two calendar months after the Registration Deadline, for the period
after the end of the second calendar month after the Registration
Deadline until the end of the Delay, two and one-half hundredths (.025),
<PAGE>
PAGE 4
times the sum of: (i) the number of months (prorated for partial months)
beginning the day after the Registration Deadline and ending on the date
the Registration Statement is declared effective by the SEC, provided,
however, that there shall be excluded from such period any delays which
are solely attributable to changes required by the Investor in the
Registration Statement with respect to information relating to the
Investor, including, without limitation, changes to the plan of
distribution, or to the failure of the Investor to conduct its review of
the registration statement pursuant to Section 2(a) above in a reasonably
prompt manner; (ii) the number of months (prorated for partial months)
that sales cannot be made pursuant to the Registration Statement after
the Registration Statement has been declared effective; and (iii) the
number of months (prorated for partial months) that the Common Stock is
not listed or included for quotation on the NASDAQ Small Cap or another
United States national exchange after the Registration Statement has been
declared effective.
For example, if the Registration Statement becomes effective two
months after the end of the Registration Deadline, the Company would pay
US$10,000 for the first month, and $20,000 for the second month, for each
US$1,000,000 of Aggregate Share Price (and thereafter would continue to
pay US$25,000 per month for each US$1,000,000 of Aggregate Share Price
until the Registration Statement becomes effective).
Such amounts shall be paid in cash or, at the Investor's option such
amounts may be convertible into Common Stock at the "Conversion Price"
for the Series B Shares, as defined in the Series B Articles of
Amendment. Any shares of Common Stock issued upon conversion of such
amounts shall be Registrable Securities. If the Investor desires to
convert the amounts due hereunder into Registrable Securities it shall so
notify the Company in writing within two (2) business days of the date on
which such amounts are first payable in cash and such amounts shall be so
convertible (pursuant to the mechanics set forth in the Articles of
Amendment), beginning on the last day upon which the cash amount would
otherwise be due in accordance with the following sentence. Payments of
cash pursuant hereto shall be made within five (5) days after the end of
each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, interim payments
shall be made for the full amount owed up to the date of such interim
payment at the end of each thirty (30) day period.
c. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company shall 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 equity securities (other than on Form S-4 or Form S-8 or
their then equivalents relating to equity 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 send to the Investor written notice of
such determination and, if within twenty (20) days after receipt of such
notice, such Investor shall so request in writing, the Company, to the
extent permitted by law, shall include in such Registration Statement all
or any part of the Registrable Securities such Investor requests to be
registered, except that if, in connection with any underwritten public
offering for the account of the Company the managing underwriter(s)
<PAGE>
PAGE 5
thereof shall impose a limitation on the number of shares of Common Stock
which may be included in the Registration Statement because, in such
underwriter(s)' reasonable good faith judgment, marketing or other
factors dictate such limitation is necessary to facilitate public
distribution, then only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion
hereunder will be included in the Registration Statement; provided that
no portion of the equity securities which the Company is offering for its
own account shall be excluded; provided, further that the Company shall
be entitled to exclude Registrable Securities to the extent necessary to
avoid breaching obligations existing prior to the date hereof to other
stockholders of the Company.
Any exclusion of Registrable Securities shall be made pro rata among
the Investors seeking to include Registrable Securities, in proportion to
the number of Registrable Securities sought to be included by such
Investors; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to
inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made
pro rata with holders of other securities having the right to include
such securities in the Registration Statement other than holders of
securities entitled to inclusion of their securities in such Registration
Statement by reason of demand registration rights or whose registration
rights existed prior to the date hereof. No right of the Investor to
registration of Registrable Securities under this Section 2(c) shall be
construed to limit any registration required under Section 2(a) hereof.
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.
Notwithstanding anything herein to the contrary, if the Registrable
Securities are included in and registered under the Form S-3 No.
333-35571, filed with the SEC on September 12, 1997 (the "Form S-3"),
then to the extent of such inclusion and registration, no Registration
Statement need be filed with respect to such Registrable Securities
included in and registered under the Form S-3, and this Registration
Rights Agreement shall be void with respect to such Registrable
Securities included in and registered under the Form S-3. Therefore, if
all of the Registrable Securities are included in and registered under
the Form S-3, no Registration Statement need be filed hereunder.
d. Eligibility for Form S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration
of the sale by the Buyer of the Registrable Securities and the Company
shall file all reports required to be filed by the Company with the SEC
in a timely manner so as to maintain such eligibility for the use of Form
S-3. In the event that Form S-3 is not available for registration of the
Registrable Securities, the Company shall register the securities on
another appropriate form.
<PAGE>
PAGE 6
3. RELATED OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Company shall have the following obligations:
a. The Company shall use its best efforts to cause such
Registration Statement(s) relating to Registrable Securities to become
effective as soon as possible after such filing, but in no event later
than the Registration Deadline, and 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), (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, or
(iii) the date on which none of the Preferred Shares is outstanding (the
"Registration Period"), which 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 and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement
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. 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 issued or
issuable upon conversion of the Preferred Shares, 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 need therefor arises
(based on the market price of the Common Stock and other relevant factors
on which the Company reasonably elects to rely). The Company shall use
its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement(s) promptly after
the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, (i) one copy of the Registration Statement and
any amendment thereto, each preliminary prospectus and prospectus and
each amendment or supplement thereto in each case relating to such
Registration Statement (other than any portion thereof which contains
information for which the Company has sought confidential treatment) and,
in the case of the Registration Statement referred to in Section 2(a),
each letter written by or on behalf of the Company to the SEC or the
staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement;
and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other
<PAGE>
PAGE 7
documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned (or to be owned) by
such Investor.
d. The Company shall use reasonable efforts to (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 each Investor who holds (or has the
right to hold) Registrable Securities being offered 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, however, that the
Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, (c) file a
general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause more than nominal expense or burden
to the Company, or (e) make any change in its charter or bylaws, which
in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders.
e. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor 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 use its best efforts promptly to 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.
f. The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of
such order at the earliest possible moment and to notify each Investor
who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
[Intentionally omitted.]
h. At the request of the Investor, but no more than three (3) times
in any one ninety (90) day period, the Company shall furnish, on the date
of effectiveness of the Registration Statement and thereafter from time
to time on such dates as the Investor may reasonably request an opinion,
dated as of such requested 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
Company's transfer agent and/or to the Investors. Such opinion shall be
substantially as set forth in Exhibit I attached hereto.
<PAGE>
PAGE 8
i. 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 the Investors, 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, (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. The Company
shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have
entered into confidentiality agreements (in form and substance reasonably
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(i). 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.
j. 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 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 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.
k. The Company shall cooperate with the Investors who hold Registrable
Securities being offered 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, the Investors may reasonably request and registered in such
<PAGE>
PAGE 9
names as 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 (at its expense) to its
transfer agent instructions, accompanied by any 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.
l. Upon the First Closing and upon each Additional Closing, the
Company shall promptly secure the listing of the Registrable Securities
then underlying the Preferred Shares purchased by the Buyer upon each
national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice
of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of shares of Registrable
Securities from time to time issued under the terms of this Agreement and
the Registration Rights Agreement. The Company shall at all times comply
in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National Association of
Securities Dealers and the NASDAQ SmallCap Market (and such other
national exchange on which the Common Stock may be listed, as
applicable).
m. The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
n. The Company shall comply with all applicable laws relating to a
Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in
connection therewith (including without limitation the 1933 Act and the
Securities Exchange Act of 1934, as amended, and all the rules and
regulations promulgated by the SEC).
o. 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.
4. OTHER OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Investors shall have the following
obligations:
a. At least fifteen (15) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each
Investor 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. 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.
<PAGE>
PAGE 10
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.
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 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(e) or 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(e) or
3(f) and, if so directed by the Company, such Investor shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to
the Company a certificate of destruction) 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 and any expenses incurred by the Company pursuant to
Section 5 below.
5. EXPENSES OF REGISTRATION. The Company agrees to pay all
reasonable expenses, other than underwriting discounts and commissions,
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 accounting
fees, and fees and disbursements of counsel for the Company. If
Investors who hold a majority of Registrable Securities undertake to
resell the Registrable Securities in an underwritten public offering, the
Company will reasonably cooperate as is customarily required in an
underwritten public offering. The Investors who participate in such a
public offering shall pay all expenses incurred in connection with such
registration, whether incurred by them or the Company, including without
limitation, underwriting discounts and commissions, all registration,
listing and qualification fees, printing charges, and fees and
disbursements of accountants and counsel for the Company.
<PAGE>
PAGE 11
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend each Investor who holds such Registrable Securities,
the directors, officers and each person who controls any Investor within
the meaning of the 1933 Act or the Securities Exchange Act of 1934, as
amended (the "1934 Act"), if any, and any underwriter (as defined in the
1933 Act) for the Investors, and the directors and the 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 or expenses (joint or
several) (collectively, together with actions, proceedings or inquiries
by any regulatory or self regulatory organization, whether commenced or
threatened, in respect thereof, "Claims") 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 the omission or alleged omission to
state a material fact therein required to be stated or necessary to make
the statements therein 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 any legal fees or other expenses reasonably
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 or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (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 are the subject thereof (or to the benefit of any person controlling
such person) if the untrue statement or omission of the 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) hereof; (iii) shall
not be available to the extent such Claim is based on a failure of the
<PAGE>
PAGE 12
Investor to deliver or to cause to be delivered the prospectus made
available by the Company or the failure of the Investor to comply with
federal or state law relating to the offering or sale of the Registrable
Securities; 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. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act,
any underwriter and any other stockholder selling securities pursuant to
the Registration Statement or any of its directors or officers or any
person who controls such stockholder or underwriter within the meaning of
the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement or to the extent such
Claim is based upon any violation or alleged violation by the Investor of
the 1933 Act, 1934 Act or any other law; and such Investor will reimburse
any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that
the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall
not be unreasonably withheld; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of
a Claim as does not exceed the net proceeds to such Investor as a result
of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in
this Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. 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 by such persons expressly for inclusion in the
Registration Statement.
<PAGE>
PAGE 13
d. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or
Indemnified Party 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 or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party 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 or Indemnified Party and the indemnifying party
would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party 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; provided, that the
Company shall have the right to approve the selection of counsel and
legal fees and expenses of such firm shall be reasonable. 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 or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
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 such expense, loss, damage or liability is incurred and is
due and payable.
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 maker 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.
8. REPORTS UNDER THE 1934 ACT. 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;
<PAGE>
PAGE 14
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 (it being
understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) 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 Investor to sell such securities
pursuant to Rule 144 without registration.
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 transferee of all or
any portion of Registrable Securities 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
Securities Purchase Agreement, (vi) such transferee shall submit
evidence reasonably satisfactory to the Company that the Transferee is 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 required to be filed pursuant to Section 2(a), the transferee
agrees to pay all reasonable expenses of amending or supplementing such
Registration Statement to reflect such assignment. Notwithstanding
anything herein to the contrary, no assignment of the rights represented
by this Agreement shall be effective unless in compliance with any
applicable securities laws of any applicable jurisdiction.
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 a
majority of the Registrable Securities. Any amendment or waiver effected
in accordance with this Section 10 shall be binding upon each Investor
and the Company.
<PAGE>
PAGE 15
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 required or permitted to be given under the terms of
this Agreement shall be sent by registered or certified mail, return
receipt requested, or delivered personally or by courier and shall be
effective five days after being placed in the mail, if mailed, or upon
receipt, if delivered personally or by courier or facsimile, in each case
properly addressed to the party to receive such notice. 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. James P. Samuels,
Vice President & CFO
If to the Buyer, at the address on the signature page of the
Securities Purchase Agreement. Each party shall provide written notice
to the other party of any change in address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or 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 Delaware 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. The Company irrevocably consents to the jurisdiction of
the state and federal courts of the state of Delaware in any suit or
proceeding arising out of or based on this Agreement and irrevocably
agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of
inconvenient forum to the maintenance of such suit or proceeding.
Service of process in any civil action relating to or arising out of this
Agreement (including also all Exhibits or Addenda hereto) or the
transaction(s) contemplated herein may be accomplished in any manner
provided by law.
e. This Agreement, the Escrow Agreement, the Articles of Amendment
, the Warrant to Purchase Series 1998-B Shares, and the Securities
Purchase Agreement (including all exhibits and addenda thereto)
constitute the entire agreement between the parties hereto with respect
<PAGE>
PAGE 16
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 and the other agreements
previously identified supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit 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 the signature page of this Agreement bearing
the signature of the party so delivering this Agreement to the Escrow
Agent, with the original executed Agreement to be delivered to the Escrow
Agent via overnight delivery.
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.
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: (signature)
-------------------------------------
James P. Samuels, Vice President
& CFO
BUYER:
-------------------------------------
By:
-------------------------------------
(Signature of authorized
representative of Buyer)
-------------------------------------
(Print name and title)
<PAGE>
PAGE 1
EXHIBIT E
WARRANT NO.
---
WARRANT TO PURCHASE SERIES 1998-B PREFERRED SHARES
OF
RENTECH, INC.
Warrant to Purchase Up to ------ Shares
of Series 1998-B Convertible Preferred Stock
At a Purchase Price of $10 per Share
(subject to adjustment as set forth herein)
VOID AFTER 5:00 P.M., DENVER, COLORADO, TIME, July ----, 1999
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUED OR ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR REGISTERED OR QUALIFIED UNDER ANY OTHER APPLICABLE
FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR QUALIFICATION FILED IN ACCORDANCE WITH THE ACT
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT.
At any time before 5:00 p.m., Denver time, on July ---, 1999 (the
"Expiration Date") --------------------------------------, whose address
is -------------------------------------------------------------------
(the "Holder"), irrevocably (subject to the terms hereof) agrees to
purchase and Rentech, Inc., a Colorado Corporation (the "Company"),
irrevocably (subject to the terms hereof) agrees to sell, in accordance
with the terms of this Warrant, the Articles of Amendment to Articles of
Incorporation Preferences, Limitations and Relative Rights of Preferred
Stock, Series 1998-B of Rentech, Inc. (the "Series B Articles") and the
Securities Purchase Agreement between the Company and the Holder (the
"Securities Purchase Agreement"), a minimum of --------------- shares of
the Company's Series 1998-B Convertible Preferred Stock ("Preferred
Shares" or "Series B Shares"), and at the Company's option, up to a
maximum of -------- shares of the Company's Preferred Shares. The
purchases and sales shall be made pursuant to a series of exercises of
this Warrant, and for not less than -------- nor more than ----------
Preferred Shares upon each exercise of this Warrant. The purchase price
for each purchase and sale shall be $10.00 per Preferred Share (the
"Purchase Price"). The Holder shall exercise this Warrant in such amounts
and at such times as the Company shall instruct the Holder in writing, in
accordance with and subject to the terms hereof and of the Securities
Purchase Agreement.
<PAGE>
PAGE 2
No exercise of this Warrant shall be closed before the date which is
the later of: (i) thirty (30) days after the date the Securities and
Exchange Commission ("SEC") has declared effective the registration
statement contemplated by the Securities Purchase Agreement and the
Registration Rights Agreement ("Registration Rights Agreement") between
the Holder and the Company for registration of the shares of the
Company's $.01 par value Common Stock (the "Common Stock") into which the
Preferred Shares may be converted, (the "Conversion Shares") and other
shares of the Common Stock that the Company may, at its option as
described in the Series B Articles, issue in payment of dividends on the
Preferred Shares (the "Dividend Shares"); or (ii) thirty (30) days after
the end of the "Hold Period" defined in the Articles of Amendment to
Articles of Incorporation Preferences, Limitations and Relative Rights of
Preferred Stock, Series 1998-A of Rentech, Inc. (the "Series A
Articles"). After the initial exercise (the "Initial Exercise") of this
Warrant, no closing of a subsequent exercise (each a "Subsequent
Exercise") shall occur earlier than thirty (30) days after the closing of
the previous exercise of this Warrant.
The obligations of the Company to sell and the Holder to purchase
Series B Shares pursuant to each exercise (each an "Exercise") of this
Warrant shall be contingent upon satisfaction of the following
conditions:
(x) The Company shall give the Holder ten (10) days prior written
notice of its intent to sell Series B Shares;
(y) On the date of each Exercise:
(A) The registration statement required to be filed under the
Registration Rights Agreement (which effects the registra-
tion of the Conversion Shares and the Dividend Shares (if
any) into which the Series B Shares being purchased
pursuant to such Exercise are convertible), has been
declared effective by the SEC and is as of such date
still effective with respect to such Conversion Shares and
Dividend Shares (if any).
(B) Each of the representations and warranties of the Company
contained in the Securities Purchase Agreement, the
Registration Rights Agreement and the Escrow Agreement
between the Company and the Holder (the "Transaction
Documents"), shall be true and correct in all material
respects as if made on the date of such Exercise, and the
Company shall have performed all of its obligations under
the Transaction Documents required to be performed by the
Company prior to the date of such Exercise.
(C) The average daily trading volume for the Common Stock for
the previous three months must equal or exceed 300,000
shares per trading day.
(D) The average closing bid price for the Common Stock for the
ten (10) trading days prior to such Exercise, must equal
or exceed $1.00 per share.
<PAGE>
PAGE 3
(E) The number of shares issuable upon conversion of the
Series B Shares then being purchased, together with the
Shares of Common Stock issued prior thereto pursuant to
the Transaction Documents and the Series B Articles, shall
not exceed twenty percent (20%) of the outstanding shares
of the Company's Common Stock.
(F) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of 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 by
the Transaction Documents or the Series B Articles.
The number and character of the securities purchasable upon exercise
of the Warrant and the Purchase Price are subject to adjustment as
provided below. The term "Warrant" as used herein shall include this
Warrant and any Warrants issued in substitution for or replacement of
this Warrant, or any Warrants into which this Warrant may be divided or
exchanged. As used herein, "Holder" shall mean the person named above as
holder and any valid transferee thereof. As used herein, "Effective
Date" shall mean January -----, 1998.
This Warrant may be assigned, transferred, sold, offered for sale,
or exercised by the Holder upon compliance with all the pertinent
provisions hereof.
1. Exercise of Warrant.
(a) Subject to and in accordance with the other terms and
conditions of this Warrant and the terms and conditions of the Securities
Purchase Agreement, the purchase rights evidenced by this Warrant shall
be exercised in a series of Exercises, the timing of which, and each
Exercise for such number of Preferred Shares, as shall be determined by
the Company in accordance with the terms hereof and of the Securities
Purchase Agreement. All such Exercises shall be effected on or but
before 5:00 p.m., Denver time, on the Expiration Date. The Company shall
provide written notice to the Holder (a "Notice") to effect each Exercise
in accordance with the terms hereof and of the Securities Purchase
Agreement. Each Exercise shall be effected by the Holder's presentation
and surrender of this Warrant to the Escrow Agent (as defined in the
Securities Purchase Agreement) on behalf of the Company at the address of
the Escrow Agent provided in the Escrow Agreement (as defined in the
Securities Purchase Agreement). The Warrant shall be accompanied by a
duly executed Notice of Exercise in the form attached hereto, completed
in accordance with the Notice, and by payment of the aggregate Purchase
Price for the number of Preferred Shares specified in the Notice by wire
transfer of immediately available funds in United States Dollars,
deposited with the Escrow Agent in accordance with the terms of the
Escrow Agreement, against delivery of the Preferred Shares being
purchased. In the event this Warrant is exercised in part only, as soon
as is practicable after the presentation and surrender of this Warrant to
the Company for exercise, the Company shall execute and deliver to the
Escrow Agent on behalf of the Holder (or at the Holder's option, directly
<PAGE>
PAGE 4
to the Holder) a new Warrant, containing the same terms and conditions as
this Warrant, evidencing the right and obligation of the Holder to
purchase the number of Preferred Shares as to which this Warrant has not
been exercised.
(b) Upon receipt of this Warrant and the Notice of Exercise by
the Escrow Agent on behalf of the Company as described in subsection (a)
above, the Holder shall be deemed to be the holder of record of the
Preferred Shares issuable upon such Exercise, notwithstanding that the
transfer books of the Company may then be closed or that certificates
representing such Preferred Shares may not have been prepared or actually
delivered to the Holder. Upon receipt of the Purchase Price by the
Escrow Agent, the Company shall, unless otherwise instructed by the
Holder, within three (3) business days after each Exercise, deliver a
certificate for the Preferred Shares purchased to the Escrow Agent for
the benefit of the Holder (or at the Holder's option, directly to the
Holder). Each such certificate shall be duly issued and executed by the
officers on behalf of the Company.
2. Exchange, Assignment or Loss of Warrant.
(a) Subject to the provisions of Section 7 hereof, this
Warrant is assignable and exchangeable, without expense, at the option of
the Holder, upon presentation and surrender hereof to the Company for
other Warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Preferred Shares
purchasable hereunder. Any such assignment shall be made by surrender of
this Warrant to the Company, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax; whereupon the
Company shall, without charge, execute and deliver a new Warrant in the
name of the assignee named in such instrument of assignment and this
Warrant promptly shall be canceled.
(b) This Warrant, alone or with other Warrants containing
substantially the same terms and conditions and owned by the same Holder,
is exchangeable at the option of the Holder but at the Company's sole
expense, at any time prior to its expiration either by its terms or by
its exercise in full upon presentation and surrender to the Company at
its principal office for another Warrant or other Warrants, of different
denominations but containing the same terms and conditions as this
Warrant, entitling the Holder to purchase the same aggregate number of
Preferred Shares that were purchasable pursuant to the Warrant or
Warrants presented and surrendered. At the time of presentation and
surrender by the Holder to the Company, the Holder also shall deliver to
the Company a written notice, signed by the Holder, specifying the
denominations in which new Warrants are to be issued to the Holder.
(c) The Company will execute and deliver to the Holder a new
Warrant containing the same terms and conditions as this Warrant upon
receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction, or mutilation of this Warrant, provided that
(i) in the case of loss, theft, or destruction, the Company receives from
the Holder a reasonably satisfactory indemnification, and (ii) in the
case of mutilation, the Holder presents and surrenders this Warrant to
the Company for cancellation. Any new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
<PAGE>
PAGE 5
Company and Holder regardless of whether the Warrant that was lost,
stolen, destroyed or mutilated shall be enforceable by anyone at any
time.
3. Adjustments; Stock Dividends, Reclassification, Reorganization,
Merger and Anti-Dilution Provisions.
(a) If the Company increases or decreases the number of its
issued and outstanding Preferred Shares or changes in any way the rights
and privileges of such Preferred Shares by means of (i) the payment of a
dividend or the making of any other distribution on such Preferred
Shares, (ii) a forward or reverse split or other subdivision of
Preferred Shares, (iii) a consolidation or combination involving its
Preferred Shares, or (iv) a reclassification or recapitalization
involving its Preferred Shares, then the Purchase Price in effect at the
time of such action and the number of Preferred Shares purchasable
pursuant to this Warrant at that time shall be proportionately adjusted
so that the numbers, rights and privileges relating to the Preferred
Shares then purchasable pursuant to this Warrant shall be increased,
decreased or changed in like manner, for the same aggregate purchase
price as set forth in this Warrant, as if the Preferred Shares
purchasable pursuant to this Warrant immediately prior to the event at
issue had been issued, outstanding, fully paid and nonassessable at the
time of that event.
(b) If the Company pays or makes any distribution upon its
Preferred Shares payable in securities or other property, excluding money
but including (without limitation) shares of any class of the Company's
stock or stock or other securities convertible into or exchangeable for
shares of the Company's Common Stock or any other class of the Company's
stock or other interests in the Company or its assets ("Convertible
Securities"), a proportionate part of those securities or that other
property shall be set aside by the Company and delivered to the Holder in
the event that the Holder exercises this Warrant. The securities and
other property then deliverable to the Holder upon exercise of this
Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Preferred Shares with respect
to which the Warrant is then exercised is to the total Preferred Shares
purchasable pursuant to this Warrant at the time the securities or
property were set aside for the Holder.
(c) If at any time the Company grants to its shareholders
rights to subscribe pro rata for additional securities of the Company,
whether Common Stock, Convertible Securities, debentures, or other
classifications, or for any other securities, property or interests that
the Holder would have been entitled to subscribe for if, immediately
prior to such grant, the Holder had exercised this Warrant, then the
Company shall also grant to the Holder the same subscription rights that
the Holder would be entitled to if the Holder had exercised this Warrant
in full immediately prior to such grant.
(d) The Company shall cause effective provision to be made so
that the Holder shall have the right after any event described below, by
the exercise of this Warrant, to purchase for the aggregate Purchase
Price described in this Warrant the kind and amount of shares of
securities, and property and interests, as would be issued or payable
<PAGE>
PAGE 6
with respect to or in exchange for the number of Preferred Shares of the
Company that are then purchasable pursuant to this Warrant as if such
Preferred Shares had been issued to the Holder immediately before the
occurrence of any of the following events: (i) the reclassification,
capital reorganization, or other similar change of outstanding securities
of the Company, other than as described and provided for in subsection
(a) above; (ii) the merger or consolidation of the Company with one or
more other corporations or other entities, other than a merger with a
subsidiary or affiliate pursuant to which the Company is the continuing
entity and the outstanding shares of Common Stock, including the
Preferred Shares purchasable pursuant to this Warrant, are not converted
or exchanged; or (iii) the spin-off of assets to a subsidiary or an
affiliated entity, or the sale, lease, or exchange of a signification
portion of the Company's assets, in a transaction pursuant to which the
Company's shareholders of record are to receive securities or other
interests in another entity. Any such provision made by the Company for
adjustments with respect to this Warrant shall be as nearly equivalent to
the adjustments otherwise provided for in this Warrant as is reasonably
practicable. The foregoing provisions of this subsection (d) shall
similarly apply to successive reclassifications, capital reorganizations
and similar changes of securities and to successive consolidations,
mergers, spin-offs, sales, leases or exchanges.
4. Officers' Certificate. Whenever the Purchase Price or the
aggregate number of Preferred Shares purchasable pursuant to this Warrant
shall be adjusted as required by the provisions of Section 3 above, the
Company shall promptly file with its Secretary or an Assistant Secretary
at its principal office, an officers' certificate executed by the
Company's President and Secretary or Assistant Secretary, describing the
adjustment and setting forth, in reasonable detail, the facts requiring
such adjustment and the basis for and calculation of such adjustment in
accordance with the provisions of this Warrant. Each such officers'
certificate shall be made available to the Holder or Holders of this
Warrant for inspection at all reasonable times, and the Company, after
each such adjustment, shall promptly deliver a copy of the officers'
certificate relating to that adjustment to the Holder or Holders of this
Warrant.
5. 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 all of the
Conversion Shares and the Dividend Shares (if any). Prior to complete
conversion of the Preferred Shares, the Company shall not reduce the
number of shares reserved for issuance hereunder without the written
consent of the Holder except for a reduction proportionate to a reverse
stock split effected for a business purpose other than affecting the
requirements of this Section, which reverse stock split affects all
shares of Common Stock equally.
6. Registration Rights Agreement. The shares of Preferred Shares
issuable upon exercise of this Warrant and the shares of Common Stock
issuable upon conversion thereof are subject to the Registration Rights
Agreement between the Company and the Holder dated the same date as this
Warrant.
<PAGE>
PAGE 7
7. Transfer to Comply With the Securities Act of 1933.
(a) This Warrant, the Preferred Shares, all securities
underlying the Preferred Shares, and all other securities issued or
issuable upon exercise of this Warrant, may not be offered, sold or
transferred, in whole or in part, except in compliance with the Act, and
except in compliance with all applicable state securities laws.
(b) The Company may cause substantially the following legend,
or its equivalent, to be set forth on each certificate representing the
Preferred Shares, securities underlying the Preferred Shares, or any
other security issued or issuable upon exercise of this Warrant unless,
in the opinion of legal counsel for the Company, such legend is not
required:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE ACT') AND ARE RESTRICTED
SECURITIES' AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF
THE COMPANY."
8. Fractional Securities. No fractional securities or scrip
representing fractional shares shall be issued upon the exercise of all
or any part of this Warrant. With respect to any fraction of a security
called for upon any exercise of this Warrant, the Company shall pay to
the Holder an amount in money equal to that fraction multiplied by the
current market value of that security. The current market value shall be
determined as follows:
(i) if the security at issue is listed on a national
securities exchange or admitted to unlisted trading privileges
on such an exchange or quoted on the National Market System of
the National Association of Securities Dealers Automated
Quotation System, Inc. ("Nasdaq") quotation service, the
current value shall be the last reported sale price of that
security on such exchange or system on the last business day
prior to the date of the applicable exercise of this Warrant
or, if no such sale is made on such day, the average of the
highest closing bid and lowest asked price for such day on such
exchange or system; or
(ii) if the security at issue is not so listed or quoted or
admitted to unlisted trading privileges, the current market
value shall be the average of the last reported highest bid and
lowest asked prices quoted on Nasdaq or, if not so quoted, then
by the National Quotation Bureau, Inc. on the last business day
prior to the date of the applicable exercise of this Warrant;
or
(iii) if the security at issue is not so listed or quoted or
admitted to unlisted trading privileges and bid and asked
<PAGE>
PAGE 8
prices are not reported, the current market value shall be
determined in such reasonable manner as may be prescribed from
time to time by the Board of Directors of the Company.
9. Rights of the Holder. The Holder shall not be entitled to any
rights as a shareholder in the Company by reason of this Warrant, either
at law or in equity, except as specifically provided for herein. The
Company covenants, however, that for so long as this Warrant is at least
partially unexercised, it will furnish any Holder of this Warrant with
copies of all reports and communications furnished to the shareholders of
the Company.
10. Charges Due Upon Exercise. The Holder shall pay any and all
issue or transfer taxes, including, but not limited to, all federal or
state taxes, that may be payable with respect to the transfer of this
Warrant or the issue or delivery of Preferred Shares upon the exercise of
this Warrant.
11. Warrant Securities to be Fully Paid. The Company covenants
that all Preferred Shares that may be issued and delivered to a Holder of
this Warrant upon the exercise of this Warrant and payment of the
Purchase Price will be, upon such delivery, validly and duly issued,
fully paid and nonassessable.
12. Conditions to the Company's Obligation to Sell Preferred
Shares.
The obligation of the Company hereunder to sell Preferred Shares at
the applicable Exercise is subject to the satisfaction, on or before the
date of the applicable Exercise, 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 the Securities Purchase
Agreement, the Registration Rights Agreement and the Escrow Agreement
between the Company and the Holder with the Escrow Agent to act for the
parties, and the parties shall have delivered the respective documents or
signature pages thereof (via facsimile or otherwise as permitted in the
Escrow Agreement) to the Escrow Agent.
(b) The Holder shall have delivered to the Escrow Agent on behalf
of the Company the Purchase Price for the Series B Shares being purchased
pursuant to such Exercise, as applicable, by wire transfer of immediately
available funds pursuant to the wiring instructions provided by the
Escrow Agent.
(c) The representations and warranties of the Holder shall be true
and correct in all material respects as of the date made and as of the
date of the applicable Exercise as though made at that time (except for
representations and warranties that speak as of a specific date), and the
Holder shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Securities Purchase Agreement to be performed, satisfied or complied with
by the Holder at or prior to the date of the applicable Exercise.
(d) With respect to each Subsequent Exercise, the number of shares
of Common Stock issued upon conversion of the Series B Shares then being
<PAGE>
PAGE 9
purchased, together with the shares of Common Stock issued prior thereto
pursuant to the Transaction Documents and the Series B Articles, shall
not exceed twenty percent (20%) of the outstanding shares of the
Company's Common Stock.
(e) 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.
13. Conditions to the Holder's Obligation to Exercise the Warrant.
The obligation of the Holder to purchase Preferred Shares is subject
to the satisfaction, on or before the date of the applicable Exercise, of
each of the following conditions, provided that these conditions are for
the sole benefit of the Holder and may be waived by the Holder at any
time in its sole discretion:
(a) The Series B Articles shall have been filed with the Secretary
of State of the state in which the Company is incorporated; the parties
shall have executed the Securities Purchase Agreement, the Registration
Rights Agreement and the Escrow Agreement, and the parties shall have
delivered the respective documents or signature pages thereof (via
facsimile or otherwise as permitted in the Escrow Agreement), to the
Escrow Agent on behalf of each other.
(b) 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 applicable Exercise as though made at that time (except for
representations and warranties that speak as of 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 applicable Exercise. The Holder may require
a certificate, executed by the Chief Executive Officer of the Company,
dated as of the date of such Exercise, to the foregoing effect and as to
such other matters as may be reasonably requested by the Holder.
(c) With respect to each Exercise called for herein, the Company
shall have issued and have duly executed by the authorized officers of
the Company, and delivered to the Escrow Agent on behalf of the Holder,
certificates evidencing the Preferred Shares being sold pursuant to such
Exercise (via facsimile or otherwise as permitted in the Escrow
Agreement, provided that a facsimile of such documents shall be followed
with physical delivery to the Escrow Agent of the original instrument or
security within one (1) business day after facsimile of same to the
Escrow Agent).
(d) The Common Stock shall be authorized for quotation on the
NASDAQ SmallCap Market and trading in the Common Stock on such market
shall not have been suspended by the SEC or other relevant regulatory
agency.
(e) The Company shall not have received, as of the date of the
applicable Exercise, from NASDAQ or the National Association of
<PAGE>
PAGE 10
Securities Dealers, any written or oral communication as to its actual or
potential ineligibility for continued listing of the Common Stock on the
NASDAQ SmallCap Market.
(f) With respect to each Subsequent Exercise, the conditions for
closing listed in Section 4(1) of the Securities Purchase Agreement shall
have been met by the Company.
(g) 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.
14. Conversion of Preferred Shares. The Holder shall have the
right to convert the Preferred Shares sold hereunder in accordance with
the provisions of the Series B Articles.
15. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware 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 Delaware 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) or the transaction(s) 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.
16. Miscellaneous Provisions.
(a) Subject to the terms and conditions contained herein, this
Warrant shall be binding on the Company and its successors and assigns
and shall inure to the benefit of the original Holder, its successors and
assigns and all holders of Preferred Shares. The exercise of this
Warrant in full shall not terminate the provisions of this Warrant as it
relates to holders of Preferred Shares.
(b) If the Company fails to perform any of its obligations under
this Warrant, it shall be liable to the Holder for all damages, costs and
expenses resulting from the failure, including, but not limited to, all
reasonable attorney's fees and disbursements.
(c) This Warrant cannot be changed or terminated or any performance
or condition waived in whole or in part except by an agreement in writing
signed by the party against whom enforcement of the change, termination
or waiver is sought.
(d) If any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, such provision shall be severed, enforced to
the extent possible, or modified in such a way as to make it enforceable,
and the invalidity, illegality or unenforceability shall not affect the
remainder of this Warrant.
<PAGE>
PAGE 11
(e) The Company and the Holder each agrees to execute such further
agreements, conveyances, certificates and other documents as may be
reasonably requested by the other to effectuate the intent and provisions
of this Warrant as described herein and in the Securities Purchase
Agreement.
(f) Paragraph headings used in this Warrant are for convenience
only and shall not be taken or construed to define or limit any of the
terms or provisions of this Warrant. Unless otherwise provided, or
unless the context shall otherwise require, the use of the singular shall
include the plural and the use of any gender shall include all genders.
(g) 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. James P. Samuels, Vice President & CFO
If to the Holder, at the address for the Holder on the first page of this
Warrant, or at such other address for the Holder as may be provided in
writing to the Company. Each party shall provide written notice to the
other party of any change in address.
Executed by the undersigned as of , 19 .
-------------------- ----
RENTECH, INC.
ATTEST:
-------------------------- By: --------------------------------
Ronald C. Butz, Secretary Dennis L. Yakobson, President
HOLDER:
ATTEST:
------------------------- By: --------------------------------
--------------------------------
--------------------------------
(address)
<PAGE>
PAGE 12
NOTICE OF EXERCISE
to RENTECH, INC.
(to be executed by a Holder desiring to
exercise the right pursuant to a Warrant issued
by Rentech, Inc.,
to purchase Shares of its Series 1998-B Preferred Shares
The undersigned Holder of a Warrant hereby:
(a) irrevocably elects to exercise the attached Warrant to the
extent of purchasing --------------- shares of the Series 1998-B
Preferred Shares of Rentech, Inc.;
(b) makes payment in full of the aggregate Purchase Price for those
Preferred Shares in the amount of $------------ by wire transfer of
immediately available funds in United States Dollars to the Escrow Agent
(as defined in the Securities Purchase Agreement);
(c) requests that certificates evidencing the Preferred Shares be
issued in the name of the undersigned or, if the name and address of some
other person is specified below, in the name of such other person:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
(Name and address of person other than the undersigned
in whose name Preferred Shares are to be registered)
(d) requests, if the number of Preferred Shares purchased are not
all the Preferred Shares purchasable to the unexercised portion of the
Warrant, that a new Warrant of like tenor for the remaining Preferred
Shares purchasable pursuant to the Warrant be issued and delivered to the
undersigned at the address stated below.
Dated: ----------------------------------
-------------------- Signature
(This signature must conform in all
respects to the name of the Holder as
specified on the face of the Warrant)
-----------------------------------
Printed Name
Address:
-------------------------
-------------------------
<PAGE>
PAGE 13
ASSIGNMENT FORM
(of Warrant issued by Rentech, Inc.
to purchase Shares of its Series 1998-B Preferred Shares)
FOR VALUE RECEIVED, the undersigned, -------------------------------,
hereby sells, assigns and transfers unto:
Name: --------------------------------------------------------------
(Please type or print in block letters)
Address: ------------------------------------------------------------
------------------------------------------------------------
the right to purchase --------------- shares of the Series 1998-B
Preferred Shares of Rentech, Inc. (the "Company") pursuant to the terms
and conditions of the Warrant held by the undersigned. The undersigned
hereby authorizes and directs the Company (i) to issue and deliver to
the above-named assignee at the above address a new Warrant pursuant to
which the rights to purchase being assigned may be exercised, and (ii)
if there are rights to purchase Preferred Shares remaining pursuant to
the undersigned's Warrant after the assignment contemplated herein, to
issue and deliver to the undersigned at the address stated below a new
Warrant evidencing the right to purchase the number of Preferred Shares
remaining after issuance and delivery of the Warrant to the above-named
assignee. Except for the number of Preferred Shares purchasable, the new
Warrants to be issued and delivered by the Company are to contain the
same terms and conditions as the undersigned's Warrant. To complete the
assignment contemplated by this Assignment Form, the undersigned hereby
irrevocably constitutes and appoints ------------------------ as the
undersigned's attorney-in-fact to transfer the Warrants and the rights
thereunder on the books of the Company with full power of substitution
for these purposes.
Dated: ----------------------------------
-------------------- Signature
(This signature must conform in all
respects to the name of the Holder as
specified on the face of the original
Warrant)
-----------------------------------
Printed Name
Address:
-------------------------
-------------------------
