EX-10.1 LETTER OF INTENT
Exhibit 10.1
August 5, 2004
Xxxxxxx-Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Letter of Intent
Ladies and Gentlemen:
This letter of intent, effective when executed by all of the parties
hereto, will evidence the current mutual intent, as set forth in
Article 1 below, of Xxxxxxx-Xxxxx, Inc., a Delaware corporation
("Xxxxxxx"), to sell, and Rentech Development Corporation, a Colorado
corporation and its affiliates ("Rentech") to acquire (the
"Acquisition") or all of the issued and outstanding capital stock (the
"Stock") of Xxxxxxx Xxxxx Xxxxxxxx, Inc. (the "Company") which owns a
nitrogen facility located in East Dubuque, Illinois and related assets
(the "Assets"). Each of the Rentech and Xxxxxxx are sometimes referred
to individually as "Party" and collectively as the "Parties."
This letter is intended to set forth certain basic terms of the
understanding reached to date and to serve as a basis for further
discussions and negotiations between the Parties with respect to the
Acquisition. The matters set forth in Article 1 are not intended to
and do not constitute a binding agreement of the Parties with respect
to the Acquisition. Any such binding agreement will arise only upon
the completion of Rentech's legal due diligence investigation of the
Company and its Assets, negotiation, execution and delivery of mutually
satisfactory definitive agreements and the satisfaction of the
conditions set forth therein, including the approval of such agreements
and the Acquisition by the respective board of directors of each Party.
Notwithstanding the foregoing, the matters set forth in Article 2 shall
constitute binding agreements of the Parties. In consideration of the
rights and obligations of the Parties hereunder, and other good and
valuable consideration, the receipt and sufficiency of which being
hereby acknowledged by the Parties, the Parties hereby agree as
follows:
ARTICLE 1
THE ACQUISITION
1.1 Acquisition. Rentech has completed to its satisfaction, the
technical and business due diligence on the potential conversion of the
Assets to utilize alternative feedstock and co-produce synthetic fuels
with ammonia. Rentech will complete its legal due diligence and the
Parties will negotiate definitive agreements (the "Definitive
Agreements") for the Acquisition of the Stock of Xxxxxxx Xxxxx
Nitrogen, Inc. ("RCN") based upon the Summary of Certain Key Terms
contained in Attachment 1. To the extent that RCN has assets, other
than the defined term "Assets", the Parties shall structure the
transaction so that RCN can retain possession of those assets.
1.2 Other Agreements. In addition, the Parties may mutually agree to
other agreements as necessary or desirable for the Acquisition
ARTICLE 2
BINDING AGREEMENTS
2.1 Expenses. Each Party shall bear its own costs associated with
negotiating and performing under this letter, except that if the
Acquisition does not close by October 15, 2004, then Rentech shall
reimburse Xxxxxxx for cost of the ongoing audit of the financial
statements of RCN.
..
2.2 Due Diligence and Related Materials; Approval. Rentech shall not
be bound to execute any Definitive Agreement relating to the
Acquisition until such time as Rentech shall have completed its legal
due diligence review of the Company and its Assets, and shall be
satisfied with the results of such review. Neither party shall be
obligated to negotiate any Definitive Agreement. No Party shall be
bound to execute any Definitive Agreement relating to the Acquisition
until such Party's board of directors shall have approved the
Acquisition and Definitive Agreements.
2.3 Entire Agreement. Except for (i) the Confidentiality Agreement
discussed in Section 2.10 below and (ii) the Option to Purchase Shares
of Common Stock dated the date hereof between Rentech and Xxxxxxx, this
letter constitutes the entire agreement of the Parties relating to the
subject matter hereof and supersedes all prior discussions, agreements
or understandings, whether oral or written, relating to such subject
matter, including without limitation that certain Memorandum of
Understanding (MOU) between Rentech and Xxxxxxx, dated as of January
20, 2004 (the "Superceded MOU"). Any amendment of this letter must be
written and signed by the Parties.
2.4 Governing Law; Consent to Jurisdiction. THIS LETTER SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES
2.5 Non-Inclusive; Non-Binding. This letter does not contain all
matters upon which agreement must be reached in order for the
Acquisition to be completed. This letter does not create and is not
intended to create a binding and enforceable contract between the
Parties with respect to the provision of Article 1 and the subject
matter of the Acquisition, and may not be relied upon by a Party as the
basis for a contract by estoppel or otherwise. A binding commitment
with respect to the Acquisition can only result from the execution and
delivery of the Definitive Agreements.
2.6 Relationship of Parties. The Parties shall not be deemed in a
relationship of partners or joint venturers by virtue of this letter,
nor shall any Party be an agent, representative, trustee or fiduciary
of the other. No Party shall have any authority to bind the other to
any agreement.
2.7 Attorneys' Fees. In the event it becomes necessary for any Party
to file a suit to enforce the binding provisions of this letter, the
prevailing Party shall be entitled to recover, in addition to all other
remedies or damages, reasonable attorneys' fees and costs incurred
2.8 Exclusivity. Each of the Parties agrees, for the period commencing
as of the date this letter is executed by all of the Parties and
terminating November 5, 2004, Rentech shall have the exclusive right to
negotiate a Purchase Agreement for the Acquisition.
2.9 Termination. This letter of intent may be terminated by Xxxxxxx,
on the one hand, or Rentech, on the other hand, if the Parties
fail to enter into the Definitive Agreements by November 5, 2004.
Additionally, Xxxxxxx can terminate this letter of intent if Rentech
has not provided commitments for financing by November 5, 2004.
2.10 Confidentiality. The terms and conditions of the Acquisition,
including the existence of this letter of intent, or any conversations
or negotiations relating hereto or thereto, shall be confidential
information and shall be subject to the Confidentiality Agreement
executed by the parties on January 20, 2004 (the "Confidentiality
Agreement"). All documents, studies, opinions, report and financial
projections whether in written, electronic or any other form (whether
existing now or in the future) relating to the Acquisition, this letter
of intent, or any matter relating hereto or thereto shall be subject to
the Confidentiality Agreement. As this is a material issue with
respect to Rentech a Press release will be issued after review and
approval by Xxxxxxx indicating that an LOI has been executed and Due
Diligence under way for the potential acquisition or JV with RCN.
If the provisions of Article 1 correctly set forth our current
understanding and the provisions of Article 2 set forth our binding
agreement, please execute all originals of this letter in the space
provided below, retain one fully-executed original for each of your
files, and return the remaining original to us. This letter may be
executed, via facsimile or otherwise, in counterparts, and all such
counterparts together shall constitute but one agreement
Very truly yours,
RENTECH DEVELOPMENT CORPORATION
/s/ Xxxxxxx X. Xxxxxxxx
By: _____________________________
Xxxxxxx Xxxxxxxx, President
August 6, 2004
Date: _____________________________
Acknowledged, Agreed to and Accepted:
XXXXXXX-XXXXX, INC.
/s/ X. Xxxxxxx Xxxxxxxx
By: _____________________________
X. Xxxxxxx Xxxxxxxx
August 6, 2004
Date: _____________________________
Attachment 1
(Summary of Certain Key Terms)
Purchase Price: Subject to the terms and conditions of
the Definitive Agreements, Rentech shall
pay Sellers a purchase price of $63
million for the Stock, assuming $13
million of net working capital at the
time of closing (the "Purchase Price"),
which Purchase Price will be adjusted
accordingly based on the actual level of
net working capital at the closing.
Representations and The purchase of the Stock shall be made
Warranties, Conditions to pursuant to a Purchase Agreement
Closing and Other Customary reasonably acceptable to Xxxxxxx and
Terms: Rentech, which agreement shall contain,
among other things, representations and
warranties, and covenants reflecting the
provisions set forth herein, and
appropriate conditions to the Closing,
including without limitation:
- An opinion of counsel for the Sellers
- Execution and delivery of a
distribution agreement with Xxxxxxx
providing for a best efforts
commitment to distribute the products
of the plant(1)
- Securing and funding of financing for
the Acquisition
- Execution and delivery of employment
agreements between key employees and
Rentech
- Securing of contracts relating to
feed stock for the Project
satisfactory to Rentech
- Satisfaction of the requirements, if
any, under the Xxxx-Xxxxx-Xxxxxx Act
- Securing title insurance for the
plant and property.
(1) The plant may not be in compliance with PSM requirements. However,
due diligence will identify what needs to be done, if anything, to
bring the plant back into compliance.
Assignment: The Definitive Agreements shall not be
Assignable by any Party without the
Remaining Parties' prior written
consent, which shall not be unreasonably
withheld, conditioned or delayed.
Notwithstanding the foregoing, Rentech
may assign the attached letter of intent
or all or any portion of the Definitive
Agreements to an affiliate, providing
that the assignment shall not relieve
Rentech of its obligations under the
letter of intent or Definitive
Agreements. In addition, either Part
may make appropriate collateral
assignments to sources of financing.
Governing Law: New York
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