Exhibit 10.2

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. EXCEPT AS CONTEMPLATED BY THE SECURITIES PURCHASE
AGREEMENT BETWEEN RENTECH, INC. AND THE ORIGINAL HOLDER OF THIS WARRANT, THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
RENTECH, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right to Purchase 1,250,000 Shares of Common Stock of

Rentech, Inc.

(subject to adjustment as provided herein)

 

COMMON STOCK PURCHASE WARRANT

 

No. One   Issue Date: September 17, 2004

 

Rentech, Inc., a corporation organized under the laws of the State of Colorado,
hereby certifies that, for value received, MITCHELL TECHNOLOGY INVESTMENTS, a
California general partnership, or assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company (as defined herein)
from and after the Issue Date of this Warrant and at any time or from time to
time before 5:00 p.m., Colorado time, through the close of business September
16, 2009, subject to extension as provided below (the “Expiration Date”), up to
1,250,000 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.01 par value per share, at the applicable Exercise Price per share
(as defined below). The number and character of such shares of Common Stock and
the applicable Exercise Price per share are subject to adjustment as provided
herein.

 

In the event (a) the Ammonia Plant is not 100% converted to using coal as a
feedstock instead of natural gas and (b) the Ammonia Plant has not commenced
commercial operations, in each case of (a) and (b), by March 31, 2008, then the
term of this Warrant shall be extended for each day until the date on which both
conditions specified in clauses (a) and (b) herein have been fulfilled.

 

As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

 

(a) The term “Company” shall include Rentech, Inc.. and any corporation which
shall succeed, or assume the obligations of, Rentech, Inc. hereunder.

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(b) The term “Common Stock” includes (i) the Company’s Common Stock, par value
$0.01 per share; and (ii) any other securities into which or for which any of
the securities described in (a) may be converted or exchanged pursuant to a plan
of recapitalization, reorganization, merger, sale of assets or otherwise.

 

(c) The term “Other Securities” refers to any stock (other than Common Stock)
and other securities of the Company or any other person (corporate or otherwise)
which the holder of the Warrant at any time shall be entitled to receive, or
shall have received, on the exercise of the Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 4 or otherwise.

 

(d) The “Exercise Price” applicable under this Warrant shall be a price of
$1.14.

 

(e) The term “Other Securities” refers to any stock (other than Common Stock)
and other securities of the Company or any other person (corporate or otherwise)
which the holder of the Warrant at any time shall be entitled to receive, or
shall have received, on the exercise of the Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 4 or otherwise.

 

(f) The “Ammonia Plant” means the ammonia plant currently owned and operated by
Royster -Clark Nitrogen, Inc., which company is proposed to be acquired by the
Company.

 

1. Exercise of Warrant.

 

1.1 Number of Shares Issuable upon Exercise. From and after the date hereof
through and including the Expiration Date, the Holder shall be entitled to
receive, upon exercise of this Warrant in whole or in part, by delivery of an
original or fax copy of an exercise notice in the form attached hereto as
Exhibit A (the “Exercise Notice”), shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

 

1.2 Fair Market Value. For purposes hereof, the “Fair Market Value” of a share
of Common Stock as of a particular date (the “Determination Date”) shall mean:

 

(a) If the Company’s Common Stock is traded on the American Stock Exchange or
another national exchange or is quoted on the National or SmallCap Market of The
Nasdaq Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.

 

(b) If the Company’s Common Stock is not traded on the American Stock Exchange
or another national exchange or on the Nasdaq but is traded on the NASD OTC
Bulletin Board, then the mean of the average of the closing bid and asked prices
reported for the last business day immediately preceding the Determination Date.

 

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(c) Except as provided in clause (d) below, if the Company’s Common Stock is not
publicly traded, then as the Holder and the Company agree or in the absence of
agreement by arbitration in accordance with the rules then in effect of the
American Arbitration Association, before a single arbitrator to be chosen from a
panel of persons qualified by education and training to pass on the matter to be
decided.

 

(d) If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company’s charter, then all amounts to be payable per share to
holders of the Common Stock pursuant to the charter in the event of such
liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming
for the purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination Date.

 

1.3 Company Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the holder hereof acknowledge in writing its
continuing obligation to afford to such holder any rights to which such holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such holder any such rights.

 

1.4 Trustee for Warrant Holders. In the event that a bank or trust company shall
have been appointed as trustee for the holders of the Warrant pursuant to
SubSection 3.2, such bank or trust company shall have all the powers and duties
of a warrant agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section 1.

 

2. Procedure for Exercise.

 

2.1 Delivery of Stock Certificates, Etc., on Exercise. The Company agrees that
the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such shares in accordance herewith. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
five (5) business days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share, together with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise.

 

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2.2 Exercise.

 

(a) Payment may be made either (i) by wire transfer of immediately available
funds, (ii) by delivery of the Warrant, or shares of Common Stock and/or Common
Stock receivable upon exercise of the Warrant in accordance with Section (b)
below, or (iii) by a combination of any of the foregoing methods, for the number
of Common Shares specified in such Exercise Notice (as such exercise number
shall be adjusted to reflect any adjustment in the total number of shares of
Common Stock issuable to the Holder per the terms of this Warrant) and the
Holder shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully-paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein.

 

(b) Notwithstanding any provisions herein to the contrary, if the Fair Market
Value of one share of Common Stock is greater than the Exercise Price (at the
date of calculation as set forth below), in lieu of exercising this Warrant for
cash, the Holder may elect to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being exercised) by surrender of
this Warrant at the principal office of the Company together with the properly
endorsed Exercise Notice in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

 

X=Y       (A-B)                 A

 

Where X =   the number of shares of Common Stock to be issued to the Holder Y =
  the number of shares of Common Stock purchasable under the Warrant or, if only
a portion of the Warrant is being exercised, the portion of the Warrant being
exercised (at the date of such calculation) A =   the Fair Market Value of one
share of the Company’s Common Stock (at the date of such calculation) B =  
Exercise Price (as adjusted to the date of such calculation)

 

3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.

 

3.1 Reorganization, Consolidation, Merger, Etc. In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the consummation
of such reorganization,

 

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consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such effective date, the
stock and other securities and property (including cash) to which such Holder
would have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such Holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as
provided in Section 4.

 

3.2 Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company,
concurrently with any distributions made to holders of its Common Stock, shall
at its expense deliver or cause to be delivered to the Holder the stock and
other securities and property (including cash, where applicable) receivable by
the Holder of the Warrant pursuant to Section 3.1, or, if the Holder shall so
instruct the Company, to a bank or trust company specified by the Holder and
having its principal office in New York, NY as trustee for the Holder of the
Warrant.

 

3.3 Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holders of the Warrant will be delivered to Holder or the Trustee as
contemplated by Section 3.2.

 

4. Extraordinary Events Regarding Common Stock.

 

4.1 Stock Dividends. In the event that the Company shall (a) issue additional
shares of the Common Stock as a dividend or other distribution on outstanding
Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c)
combine its outstanding shares of the Common Stock into a smaller number of
shares of the Common Stock, then, in each such event, the Exercise Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Exercise Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter be
the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4.

 

4.2 Share Issuances. If the Company shall at any time prior to the expiration of
this Warrant issue any shares of Common Stock or securities convertible into
Common Stock (except (a) pursuant to Section 4.1 above, (b) pursuant to options,
warrants or other obligations to issue shares outstanding on the date hereof as
disclosed to Purchaser in writing, or (c) pursuant

 

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to options that may be issued under any employee incentive stock option and/or
any qualified stock option plan adopted by the Company) for a consideration per
share (the “Offer Price”), less than the Exercise Price in effect at the time of
such issuance, then the Exercise Price shall be immediately reset to such lower
Offer Price. The Exercise Price, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive event or events described herein in
this Section 4.2.

 

4.3 Delay in Commercial Operations. In the event (a) the Ammonia Plant is not
100% converted to using coal as a feedstock instead of natural gas and (b) the
Ammonia Plant has not commenced commercial operations, in each case of (a) and
(b) by March 31, 2008 (subject to extension for each day of delay due to force
majeure (defined as acts of God, acts of war, acts of terrorism, accidental
property damage and labor strikes) provided the Company is diligently working to
meet the conditions specified in (a) and (b)), the Exercise Price existing
immediately prior to such default shall, on April 1, 2008 be reduced to 50% of
the Exercise Price in effect immediately prior thereto.

 

4.4 Number of Shares Adjusted.

 

(a) The number of shares of Common Stock that the holder of this Warrant shall
be entitled to receive upon exercise of this Warrant after the occurrence of any
issuance or event specified in Section 4.1 and Section 4.2 shall be increased to
a number determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 4.4) be issuable on such
exercise by a fraction of which (i) the numerator is the Exercise Price that
would otherwise (but for the provisions of Section 4.1 or Section 4.2 (as
applicable)) be in effect, and (ii) the denominator is the Exercise Price in
effect on the date of such exercise.

 

(b) If the Securities and Exchange Commission has not declared the Registration
Statement (as defined in the Registration Rights Agreement between Holder and
the Company to be entered into concurrently with the issuance of this Warrant)
effective in accordance with the time period set froth in Section 2(b) of the
Registration Rights Agreement, the number of shares of Common Stock that the
holder of this Warrant shall be entitled to receive upon exercise of this
Warrant shall be increased by 12,500 shares for each thirty (30) day period of
delay (prorated for partial periods) at the Exercise Price in effect immediately
prior to such increase.

 

5. Certificate as to Adjustments. In each case of any adjustment or readjustment
in the Exercise Price or shares of Common Stock (or Other Securities) issuable
on the exercise of the Warrant, the Company at its expense will promptly cause
its Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by the
Company for any additional shares of Common Stock (or Other Securities) issued
or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or

 

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readjustment and as adjusted or readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the holder of the
Warrant and any Warrant agent of the Company (appointed pursuant to Section 10
hereof).

 

6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of the Warrant, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of the Warrant.

 

7. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a “Transferor”) in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor’s
endorsement in the form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, a legal opinion from the Transferor’s counsel that
such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense but with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor. Notwithstanding the foregoing,
any transfer to a lineal descendant of Edward D. and Anna Mitchell and their
affiliates as contemplated by the Securities Purchase Agreement between the
Company and the original Holder of this Warrant shall be approved without
delivery of any legal opinion or other condition.

 

8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

 

9. Registration Rights. The Holder of this Warrant has been granted certain
registration rights by the Company. These registration rights are set forth in a
Registration Rights Agreement entered into by the Company and Purchaser dated as
of even date of this Warrant.

 

10. Warrant Agent. The Company may, by written notice to the each Holder of the
Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.

 

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11. Transfer on the Company’s Books. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

 

12. Notices, Etc. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company an
address, then to, and at the address of, the last Holder of this Warrant who has
so furnished an address to the Company.

 

13. Voluntary Adjustment by the Company. The Company may at any time during the
term of this Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the
Company.

 

14. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be governed by and construed in accordance with the
laws of State of Colorado without regard to principles of conflicts of laws. Any
action brought concerning the transactions contemplated by this Warrant shall be
brought only in the state courts of Colorado or in the federal courts located in
the State of Colorado. The individuals executing this Warrant on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision. The Company acknowledges
that legal counsel participated in the preparation of this Warrant and,
therefore, stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation
of this Warrant to favor any party against the other party.

 

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS.]

 

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

 

Rentech, Inc., a Colorado corporation By:  

/s/ Dennis L. Yakobson

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Name:   Dennis L. Yakobson Title:   President and Chief Executive Officer By:  

/s/ Ronald C. Butz

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Name:   Ronald C. Butz Title:   Secretary

 

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