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8-K - FORM 8-K - RENTECH, INC. | c18405e8vk.htm |
EX-99.1 - EXHIBIT 99.1 - RENTECH, INC. | c18405exv99w1.htm |
Exhibit 99.2
KATHLEEN A. HERKENHOFF (Cal. Bar No. 168562)
THE WEISER LAW FIRM, P.C.
12707 High Bluff Drive, Suite 200
San Diego, CA 92130
Telephone: (858) 794-1441
Facsimile: (858) 794-1450
kah@weiserlawfirm.com
THE WEISER LAW FIRM, P.C.
12707 High Bluff Drive, Suite 200
San Diego, CA 92130
Telephone: (858) 794-1441
Facsimile: (858) 794-1450
kah@weiserlawfirm.com
ROBERT B. WEISER
BRETT D. STECKER
JEFFREY J. CIARLANTO
THE WEISER LAW FIRM, P.C.
121 North Wayne Avenue, Suite 100
Wayne, PA 19087
Telephone: (610) 225-2677
Facsimile: (610) 225-2678
BRETT D. STECKER
JEFFREY J. CIARLANTO
THE WEISER LAW FIRM, P.C.
121 North Wayne Avenue, Suite 100
Wayne, PA 19087
Telephone: (610) 225-2677
Facsimile: (610) 225-2678
Co-Lead Counsel for Plaintiffs
[Additional counsel appear on signature page]
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
In re RENTECH, INC. DERIVATIVE
|
) | Lead Case No. BC 430553 | |
LITIGATION
|
) | ||
) | (Consolidated with Case Nos. | ||
) | BC 430757 and BC 431278) | ||
This Document Relates To: |
) | ||
) | AMENDED STIPULATION OF SETTLEMENT | ||
ALL ACTIONS |
) | ||
) | JUDGE: Emilie H. Elias | ||
) | DEPT.: 324 | ||
TRIAL DATE: None Set |
AMENDED STIPULATION OF SETTLEMENT
This Amended Stipulation of Settlement (the Amended Stipulation) is dated as of May 19,
2011, and is entered into by and between the following parties to the above-captioned shareholder
derivative action (the State Action): (a) Andrew L. Tarr, Sergiu S. Strumingher and Gerald Smith
(the State Plaintiffs) in their capacity as shareholders of nominal defendant Rentech, Inc.
(Rentech or the Company); (b) Dennis L. Yakobson, Michael S. Burke, D. Hunt Ramsbottom, Michael
F. Ray, Ronald M. Sega, Edward M. Stern, Halbert S. Washburn, John A. Williams, Dan J. Cohrs,
Douglas M. Miller, I. Merrick Kerr and Erich W. Tiepel (collectively, the Defendants); and (c)
Rentech, on the terms and conditions herein. This Amended Stipulation is also entered by and
between the following parties to the related shareholder derivative action pending in the United
States District Court for the Central District of California, entitled In re Rentech, Inc. Deriv.
Litig., Lead Case No. 10-0485-GHK (PJWx) (the Federal Action). The Federal Action parties to
this Amended Stipulation are: (a) John Cobb and Virginia Harpster (the Federal Plaintiffs) in
their capacity as Rentech shareholders; (b) the above-listed Defendants; and (c)
Rentech.1
I. FACTUAL BACKGROUND AND OVERVIEW OF THE ACTIONS
Rentech, a Colorado corporation headquartered in Los Angeles, provides clean energy solutions
to produce ultra-clean synthetic fuels and chemicals. In the Actions, Plaintiffs have alleged that
during the period from at least February 8, 2008 through approximately December 2009 (the Relevant
Period), the Defendants breached their fiduciary duties by, inter alia, causing Rentech to
improperly classify cash deposits required by forward gas purchase contracts as inventory, as
opposed to classifying deposits on gas purchase contracts within current assets on Rentechs
balance sheet. As a result, Plaintiffs allege that the Defendants knowingly or recklessly caused
Rentech to incorrectly record millions of dollars as inventory. In addition, Plaintiffs allege
that the Defendants caused Rentech to incorrectly report its deferred revenues and accounts
receivable in offsetting amounts.
1 | The State Plaintiffs, the Federal Plaintiffs, the
Defendants, and Rentech are collectively referred to herein as the Settling
Parties. The State Action and Federal Action are collectively referred to
herein as the Actions. The State Plaintiffs and Federal Plaintiffs are
collectively referred to herein as the Plaintiffs. |
AMENDED STIPULATION OF SETTLEMENT
- 1 -
The Actions allege a series of purportedly false and misleading statements that Defendants
caused Rentech to issue during the Relevant Period in light of the above-referenced conduct. Those
false statements include allegedly material misrepresentations regarding the Companys financial
results and business prospects in the following public filings with the Securities and Exchange
Commission (SEC): (1) Rentechs First Quarter 2008 results, filed with the SEC on February 8,
2008; (2) Rentechs Second Quarter 2008 results, filed with the SEC on May 9, 2008; (3) Rentechs
Third Quarter 2008 results, filed with the SEC on August 11, 2008; (4) Rentechs Fourth Quarter
2008 results and Annual Report for fiscal year 2008, both filed with the SEC on December 15, 2008;
(5) Rentechs First Quarter 2009 results, filed with the SEC on February 9, 2009; (6) Rentechs
Second Quarter 2009 results, filed with the SEC on May 11, 2009; and (7) Rentechs Third Quarter
2009 results, filed with the SEC on August 10, 2009. Plaintiffs allege that each of these SEC
filings contained materially false and misleading information with respect to Rentechs financial
status, including inventories, accumulated deficit, total cost of sales, gross profit (loss), loss
from continuing operations before taxes, net loss and EPS. Plaintiffs alleged that Rentech was
damaged as a result thereof.
On December 14, 2009, Rentech announced that it would restate its financial statements for the
last three fiscal quarters of 2008, its annual report for fiscal 2008, and the first three fiscal
quarters of 2009. On the trading day following the December 14, 2009 announcement, Rentechs stock
fell approximately 11% from its December 14, 2009, closing price of $1.64 per share, to close on
December 16, 2009, at $1.47 per share.
Beginning on December 29, 2009, multiple securities fraud class actions were filed in the
Federal Court, in which Rentech and several of the Defendants were named as defendants. These
actions were subsequently consolidated into one action, captioned In re Rentech, Inc. Sec. Litig.
2:09-cv-09495-GHK (PJWx) (the Securities Action). On or about April 5, 2010, the Federal Court
appointed a Lead Plaintiff and Lead Counsel for the Securities Action. On May 20,
2010, the Lead Plaintiff filed his Consolidated Complaint for Violation of the Federal
Securities Laws (the Securities Action Complaint). The parties to the Securities Action
conducted a mediation on October 5, 2010, and the defendants in that action filed a motion to
dismiss on October 15, 2010.
AMENDED STIPULATION OF SETTLEMENT
- 2 -
Shortly after the initial complaints were filed in the Securities Action, shareholder
derivative complaints on behalf of Rentech were filed in this Court and in the Federal Court.
Specifically, on January 26, 2010, January 27, 2010 and February 4, 2010, respectively, plaintiffs
Andrew Tarr (Tarr), Sergiu S. Strumingher (Strumingher), and Gerald Smith (Smith) filed
shareholder derivative complaints against the Defendants on behalf of Rentech in this Court. On
April 5, 2010, the Court consolidated the Tarr, Strumingher, and Smith actions under the caption In
re Rentech, Inc. Derivative Litigation, Lead Case No. BC430553, thus forming the State Action. On
January 22, 2010, and February 10, 2010, respectively, plaintiffs John Cobb (Cobb) and Virginia
Harpster (Harpster) initiated shareholder derivative actions on behalf of Rentech in the Federal
Court. On February 26, 2010, the Federal Court consolidated the Cobb and Harpster actions under
the caption In re Rentech, Inc. Shareholder Derivative Litigation, Lead Case No. CV10-0485-GHK-PJW,
thus forming the Federal Action.
On October 5, 2010, the Settling Parties participated in a formal joint mediation (the
Mediation) before JAMS mediator the Hon. (Ret.) Dickran Tevrizian (Judge Tevrizian) in Los
Angeles, California. Although the Settling Parties made some progress at the Mediation, the
Actions did not settle at that time. The Mediation, however, served as the springboard for
continued settlement discussions which occurred throughout the fall and winter of 2010. With the
substantial assistance of Judge Tevrizian, the Settling Parties were able to reach an
agreement-in-principle on the settlement terms herein, which ultimately culminated in the proposed
settlement (the Settlement) reflected in this Amended Stipulation.
II. INVESTIGATION AND RESEARCH CONDUCTED BY PLAINTIFFS COUNSEL
Plaintiffs Counsel (as that term is defined in §V hereof) believe that they have conducted an
extensive investigation during the development and prosecution of the Actions. This investigation
has included, inter alia, (i) inspecting, reviewing and analyzing the Companys public
filings; (ii) researching the applicable law with respect to the claims asserted in the Actions and
the potential defenses thereto (iii) researching corporate governance issues; (iv) preparing a
detailed mediation brief, and (vii) attending the formal Mediation and participating in numerous
telephonic meetings with Defense Counsel and Judge Tevrizian.
AMENDED STIPULATION OF SETTLEMENT
- 3 -
III. NO ACKNOWLEDGMENT OF WRONGDOING OR LIABILITY
Each Defendant has denied and continues to deny each and all of the claims and allegations of
wrongdoing made in the Actions and maintains furthermore that they have meritorious defenses. Each
Defendant has expressly denied and continues to deny all charges of wrongdoing or liability arising
out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged,
in the Actions, and Defendants contend that many of the factual allegations in the Complaint are
materially inaccurate. Defendants also have denied and continue to deny, inter alia, the
allegations that any Defendant breached any fiduciary duty or caused any damage to Plaintiffs or
Rentech. Defendants have further asserted and continue to assert that at all relevant times, they
acted in good faith and in a manner they reasonably believed to be in the best interests of the
Company and Current Rentech Stockholders (as that term is defined in Section V below). Pursuant to
the terms set forth below, this Amended Stipulation shall in no event be construed as or deemed to
be evidence of an admission or concession by Defendants with respect to any claim of any fault,
liability, wrongdoing, or damage whatsoever.
Solely in order to avoid the potentially protracted time, expense, and uncertainty associated
with continued litigation, Defendants have concluded that it is desirable that the Actions be fully
and finally settled in the manner and upon the terms and conditions set forth in this Amended
Stipulation. Defendants have denied and continue to deny each and all of the claims and
contentions alleged by the Plaintiffs in the Actions. Defendants have denied and continue to deny
all charges of wrongdoing or liability against them arising out of any of the conduct, statements,
acts or omissions alleged, or that could have been alleged, in the Actions. Each of the Defendants
denies and continues to deny the allegations concerning any alleged breach of fiduciary duty.
AMENDED STIPULATION OF SETTLEMENT
- 4 -
IV. CLAIMS OF THE PLAINTIFFS AND BENEFITS OF SETTLEMENT
Plaintiffs Counsel believe that the claims asserted in the Actions have merit and that their
investigation supports the claims asserted. Without conceding the merit of any of Defendants
defenses or the lack of merit of any of their allegations, and solely in order to avoid the
potentially protracted time, expense, and uncertainty associated with continued litigation,
including potential trial and appeals, Plaintiffs have concluded that it is desirable that the
Actions be fully and finally settled in the manner and upon the terms and conditions set forth in
this Amended Stipulation. Based on these considerations, among others, Plaintiffs Counsel believe
that the Settlement set forth in this Amended Stipulation confers substantial benefits upon Rentech
and Current Rentech Stockholders.
V. TERMS OF AMENDED STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among Plaintiffs (on behalf of
themselves and derivatively on behalf of Rentech), Rentech, and Defendants, by and through their
respective counsel, that, subject to the approval of the Court, the Actions and the Released Claims
shall be finally and fully compromised, settled and released, and the Actions shall be dismissed
with prejudice, as to Defendants, upon and subject to the terms and conditions of the Amended
Stipulation, as follows:
1. Definitions
As used herein, the following terms have the meanings specified below:
1.1 Actions means the State Action and Federal Action, as those terms are defined herein.
1.2 Court means the Superior Court of the State of California, County of Los Angeles.
1.3 Current Rentech Stockholder(s) means any record or beneficial holder of Rentech common
stock as of May 19, 2011, and their successors in interest.
AMENDED STIPULATION OF SETTLEMENT
- 5 -
1.4 Defendants means Dennis L. Yakobson, Michael S. Burke, D. Hunt Ramsbottom, Michael F.
Ray, Ronald M. Sega, Edward M. Stern, Halbert S. Washburn, John A. Williams, Dan J. Cohrs, Douglas
M. Miller, I. Merrick Kerr and Erich W. Tiepel.
1.5 Defense Counsel means Latham & Watkins LLP.
1.6 Effective Date means the date that the Final Judgment and Order approving the Settlement
in accordance with this Amended Stipulation becomes Final within the meaning of §1.10 hereof.
1.7 Federal Action means the consolidated shareholder derivative action pending in the
Federal Court entitled, In re Rentech, Inc. Deriv. Litig., Lead Case No. 10-0485-GHK (PJWx), and
all actions consolidated therewith.
1.8 Federal Court means the United States District Court for the Central District of
California.
1.9 Federal Plaintiffs means John Cobb and Virginia Harpster, together with any of their
agents, heirs, assigns, predecessors and/or successors.
1.10 Final means that with respect to any court order, including but not limited to the
Final Judgment and Order, that such order represents a final and binding determination of all
issues within its scope and is not subject to further review on appeal or otherwise. Without
limitation, an order (including the Final Judgment and Order) becomes Final when: (a) the date
as of which the time to appeal the Courts order has expired without any appeal having been sought
or taken or (b) if an appeal is filed, sought or taken, the date as of which such appeal shall have
been finally determined in such a manner as to affirm the Courts original order without any
material change thereto and the time, if any, for commencing any further appeal has expired. For
purposes of this definition, an appeal includes appeals as of right, discretionary appeals,
interlocutory appeals, proceedings involving writs of certiorari, mandamus, or prohibition, and any
other proceedings of like kind. Any appeal or other proceeding pertaining to any order issued in
respect of any application by Plaintiffs Counsel for attorneys fees and/or expenses, shall not in
any way delay or preclude the Final Judgment and Order from becoming Final.
AMENDED STIPULATION OF SETTLEMENT
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1.11 Final Judgment and Order means the Final Judgment and Order of Dismissal to be rendered
by the Court, substantially in the form attached hereto as Exhibit B.
1.12 Notice means that notice of the settlement to be provided to Current Rentech
Stockholders, in a form and manner referenced in ¶3.1 hereof, approved by this Court, and which is
consistent with the requirements of Federal Rule of Civil Procedure 23.1 and due process.
1.13 Person means an individual, corporation, limited liability company, professional
corporation, joint venture, limited liability partnership, partnership, limited partnership,
association, joint stock company, estate, legal representative, trust, unincorporated association,
government or any political subdivision or agency thereof, and any business or legal entity and
their spouses, heirs, predecessors, successors, representatives, or assignees.
1.14 Plaintiffs Counsel means counsel who have appeared on behalf of any of the Plaintiffs
in the Actions.
1.15 Related Parties means each of a Defendants and Rentechs past or present directors,
families, officers, managers, employees, partners, members, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, spouses, heirs, executors, administrators,
related or affiliated entities, any entity in which a Defendant or Rentech has a controlling
interest, any members of their immediate families, or any trust of which any Defendant or Rentech
is the settlor or which is for the benefit of any Defendant and/or member(s) of his or her family.
1.16 Released Claims shall collectively mean any and all claims (including Unknown Claims
as defined in ¶1.22 hereof), debts, demands, rights, liabilities, damages, actions, losses,
obligations, judgments, suits, fees, expenses, costs, any other relief of any nature whatsoever,
matters, issues and causes of action of any and every kind, nature or description whatsoever,
whether known or unknown, under state, federal, local, common, foreign or statutory law or any
other law, rule or regulation, contingent or absolute, disclosed or undisclosed, concealed or
hidden, direct or derivative that were asserted in the Actions or in the future could be asserted
in any court, tribunal or proceeding by Plaintiffs, Rentech or by any Current Rentech Stockholder
(claiming, derivatively in the right
AMENDED STIPULATION OF SETTLEMENT
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of, or on behalf of, the Company), against any of the Released
Persons, which have arisen, arise now or hereafter arise out of, are based upon or relate in any manner
to the allegations, matters, acts, facts, circumstances, transactions, events, occurrences,
disclosures, statements, representations, misrepresentations, omissions, acts or failures to act
giving rise to the allegations in the Actions, including, without limitation, claims for
negligence, gross negligence, breach of fiduciary duty, including without limitation the duties of
care and/or loyalty, fraud, constructive fraud, self-dealing, misrepresentation (whether
intentional, negligent or innocent), omission (whether intentional, negligent or innocent),
concealment (whether intentional, negligent or innocent), mismanagement, gross mismanagement, abuse
of control, waste, money damages, unjust enrichment, breach of contract, or violations of any
federal, state, local or foreign law, or any other rule, law, or regulation, or any other source of
legal or equitable obligation of any kind or description in whatever forum or allegations that
could have been made in the Actions. This agreement does not affect the claims asserted in the
securities class action entitled In re Rentech, Inc. Sec. Litig., No. 2:09-cv-0945-GHK-PJW.
1.17 Released Persons means each and all of the Defendants and their respective Related
Parties.
1.18 Settlement means the proposed settlement and compromise of the Actions as provided for
herein.
1.19 Settling Parties means, collectively, each of the Defendants and the Plaintiffs on
behalf of themselves and derivatively on behalf of Rentech, and Rentech.
1.20 State Action means the above-captioned consolidated shareholder derivative action.
1.21 State Plaintiffs means Andrew L. Tarr, Sergiu Strumingher and Gerald Smith, together
with any of their agents, heirs, assigns, predecessors and/or successors.
AMENDED STIPULATION OF SETTLEMENT
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1.22 Unknown Claims means any Released Claims which Plaintiffs, Rentech, or any Current
Rentech Stockholder does not know or suspect to exist in his, her or its favor at the time of the
release of the Released Persons which, if known by him, her or it, might have affected his, her or
its settlement with and release of the Released Persons, or might have affected his, her or its
decision not to object to this Settlement. Plaintiffs, Rentech, or Current Rentech
Stockholders may hereafter discover facts in addition to or different from those which he, she or
it now knows or believes to be true with respect to the subject matter of the Released Claims, but
Plaintiffs, Rentech, or Current Rentech Stockholders shall expressly, upon the Effective Date, be
deemed to have, and by operation of the Judgment shall have, fully, finally, and forever settled
and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or
non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed
upon any theory of law or equity now existing or coming into existence in the future, including,
but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of
any duty, law or rule, without regard to the subsequent discovery or existence of such different or
additional facts. Plaintiffs and Rentech acknowledge, and Current Rentech Stockholders shall be
deemed by operation of the Final Judgment and Order to have acknowledged, that the foregoing waiver
was separately bargained for and a key element of the Settlement of which this release is a
material and essential part and expressly waive (i) the benefits of the provisions of §1542 of the
California Civil Code, which provides that
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR;
and (ii) the benefits of any comparable law, statute, regulation or legal principle of any other
jurisdiction.
2. The Settlement
As a result of the filing, prosecution and Settlement of the Actions, Defendants have agreed
that the Company and/or its Board of Directors (the Board) will adopt the corporate governance
enhancements (the Corporate Governance Relief), described below. The Corporate Governance Relief
constitutes the consideration for this Amended Stipulation, and Rentech and the Defendants
acknowledge that the pendency and prosecution of the Actions were a substantial cause in the
Boards decision to implement and/or maintain the Corporate Governance Relief, and that the
Corporate Governance Relief will materially benefit Rentech and Current Rentech Stockholders.
AMENDED STIPULATION OF SETTLEMENT
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Unless a different period is specified herein, within 30 business days of the Court entering
the Final Judgment and Order, the following agreed-upon Corporate Governance Relief shall be
implemented by the Company, and shall remain in place for a period of at least three years from the
date of entry of the Final Judgment and Order. However, if any of the Corporate Governance Relief
should conflict with any applicable law(s) or any applicable rule(s) of any national securities
exchange or interdealer quotation system, the Company will comply with such applicable law(s) or
rule(s) notwithstanding the provisions of the Settlement or any orders implementing the Settlement.
(a) Changes to Board Practices
(i) Rentech has added one independent director to its Board pursuant to Rentechs existing
procedures for the nomination of independent directors.
(ii) Rentech will implement a policy providing that its Chief Executive Officer (CEO) may
not serve on more than one public company board, excluding Rentechs Board.
(iii) Rentech will implement a policy that directors who are employees of Rentech (other than
Rentechs CEO) may not serve on more than two public company boards, excluding Rentechs Board.
(iv) Rentech will implement a policy that the Board will hold an executive session outside the
presence of any employee directors at least once per fiscal quarter.
(v) Rentech will implement a policy that no Board member may serve as the chair of more than
one standing committee of the Board.
(vi) Rentech will implement a policy limiting the term of any non-executive chairman of the
Board to six consecutive years.
(vii) Rentech will implement a policy requiring each member of the Board to attend each annual
shareholder meeting in person, absent good cause. At each annual
shareholder meeting, shareholders shall have the opportunity to ask questions of the CEO and
Board, both orally and in writing, and receive answers and discussion where appropriate.
AMENDED STIPULATION OF SETTLEMENT
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(b) Changes to Internal Controls Over Financial Reporting
(i) Within 60 days of the entry of the Final Judgment and Order, Rentech will update and post
the charter of its Disclosure Committee on the Companys external website.
(ii) For at least the next three fiscal years (i.e., 2011-2013), management shall annually
assess the adequacy of the Companys internal controls and will discuss in the Annual Report on
Form 10-K any identified material weakness with respect to each of the following:
(a) Staff in finance and accounting with adequate knowledge regarding accounting for
gas contracts, deposits, deferred revenue and inventory valuations in accordance
with generally accepted accounting principles;
(b) The internal communication process associated with accounting for gas contracts,
deposits, deferred revenue and inventory valuation; and
(c) The communication process associated with external auditors.
VI. SETTLEMENT PROCEDURE
3.1 Within ten (10) business days of the execution of this Amended Stipulation, the Settling
Parties shall jointly submit this Amended Stipulation together with its Exhibits to the Court and
shall apply for entry of an order (the Preliminary Approval Order), substantially in the form of
Exhibit A attached hereto, providing for the scheduling of a hearing on the Settlement set forth in
this Amended Stipulation (the Settlement Hearing), and approval for the publication of a Notice
of Settlement of the Actions (the Notice), substantially in the form of Exhibit A-1 attached
hereto.
3.2 Within ten (10) business days of the entry of the Preliminary Approval Order, Rentech
shall cause the Notice (in the form approved by the Court) and Amended Stipulation to be (a) filed
with the SEC on a Current Report on Form 8-K, and (b) posted to the Investor Relations section of
Rentechs website (which posting shall be maintained through the date of the Settlement Hearing).
In addition, within ten (10) business days of the entry of the Preliminary Approval Order, Rentech
shall cause the Notice to be published one time in Investors Business Daily.
AMENDED STIPULATION OF SETTLEMENT
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3.3 Rentech shall pay for the costs associated with publishing, filing and posting the Notice,
and for filing and posting the Amended Stipulation, as set forth in §3.2 above. At least five (5)
court days prior to the Settlement Hearing, Rentechs Counsel shall file with the Court and serve
on all parties proof, by affidavit or declaration, of such filing, publishing, and posting of the
Notice and the filing and the posting of the Amended Stipulation in accordance with §3.2 above.
3.4 Pending the Effective Date, the Plaintiffs and Plaintiffs Counsel shall not commence or
participate in any other actions or proceedings asserting any of the Released Claims, against any
of the Released Persons, that are encompassed by the Settlement.
3.5 Within five (5) business days of the full execution of this Amended Stipulation, the
parties to the Federal Action shall jointly (i) notify the Federal Court of the Amended Stipulation
and the Settlement, and (ii) request that the Federal Court maintain the present stay of all
proceedings in the Federal Action pending final approval of the Settlement. Within five (5)
business days of the entry of the Final Judgment and Order in the State Action, the Federal
Plaintiffs shall request that the Federal Court dismiss with prejudice the Federal Action. The
Settling Parties shall cooperate with each other and use all reasonable best efforts to effectuate
promptly such dismissal with prejudice.
VII. RELEASES
4.1. Upon the Effective Date, as defined in §V, Plaintiffs and Plaintiffs Counsel, on their
own behalf and derivatively on behalf of Rentech (as nominal defendant), and Current Rentech
Stockholders shall be deemed to have, and by operation of the Final Judgment and Order shall have
fully, finally, and forever released, relinquished, extinguished, and discharged all Released
Claims (including Unknown Claims as defined in §V) against each and all of the Released Persons and
shall be permanently barred and enjoined from instituting, commencing, or prosecuting or asserting
any Released Claim against any of the Released Persons. This Amended Stipulation shall not affect
any claims against persons other than the Released Persons as defined herein.
AMENDED STIPULATION OF SETTLEMENT
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4.2. Upon the Effective Date, as defined in §V, Rentech and each of the Released Persons shall
be deemed to have, and by operation of the Final Judgment and Order shall have, fully, finally,
and forever released, relinquished, extinguished, and discharged Plaintiff and Plaintiffs
Counsel from all claims (including Unknown Claims as defined in §V), arising out of, relating to,
or in connection with the institution, prosecution, assertion, Settlement or resolution of the
Actions or the Released Claims.
VIII. PLAINTIFFS COUNSELS FEES AND EXPENSES
5.1 As a unitary part of the Settlement terms set forth herein and in recognition of the
substantial benefits provided to Rentech and Current Rentech Stockholders as a result of the
initiation, prosecution, and settlement of the Actions, Rentech, on behalf of all Defendants, has
agreed, subject to approval by the Court, to pay a total sum of $300,000 to Plaintiffs Counsel for
costs, fees and expenses in the Actions (the Fee Award). The Parties mutually agree that this
Fee Award is fair and reasonable in light of the material benefits bestowed upon Rentech and
Current Rentech Stockholders by the Settlement.
5.2 The Fee Award shall be transferred to The Weiser Law Firm, P.C., as receiving agents for
Plaintiffs Counsel, within ten (10) business days after the Court has both entered the Final Order
and Judgment and approved the Fee Award. The Weiser Law Firm, P.C. shall hold said funds in its
client trust account pending agreement among Plaintiffs Counsel as to the allocation of the Fee
Award.
5.3 In the event that any Order concerning the Fee Award is reversed or modified, and in the
event that the Fee Award has been paid to any extent, then Plaintiffs Counsel shall within five
(5) business days from the reversal or modification refund the Fee Award (or such portion as the
modification may require). Plaintiffs Counsel, as a condition of receiving the Fee Award, on
behalf of themselves and each partner and/or shareholder of their respective law firms, agree that
each of their respective law firms and its partners and/or shareholders are subject to the
jurisdiction of the Court for the purpose of enforcing the provisions of this paragraph.
5.4 Approval of the request for the Fee Award shall not be a condition of the Settlement. Any
order or proceedings relating to the request by Plaintiffs Counsel for the Fee Award or any appeal
from any order relating thereto or modification thereof shall not operate to terminate or
cancel this Amended Stipulation, and shall not affect the Final Judgment and Order approving
this Amended Stipulation or prevent the Settlement from becoming Final.
AMENDED STIPULATION OF SETTLEMENT
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IX. CONDITIONS OF SETTLEMENT, EFFECT OF NON-APPROVAL, CANCELLATION OR TERMINATION
6.1. The Effective Date shall be conditioned on the occurrence of all of the following events:
(a) the Court has entered the Preliminary Approval Order, as provided in ¶3.1 herein;
(b) the Court has finally approved the Settlement as described herein, following notice to
Current Rentech Stockholders as provided in ¶¶3.1-3.2 herein;
(c) the Court has entered the Final Judgment and Order (Judgment) dismissing the State
Action with prejudice and the Judgment has become Final; and
(d) the Federal Court has dismissed the Federal Action with prejudice.
6.2. If all of the conditions specified in ¶6.1 are not met, then the Amended Stipulation
shall be canceled and terminated, unless Plaintiffs, Defendants, and Rentech mutually agree in
writing to proceed with the Amended Stipulation.
6.3. If the Effective Date does not occur, or if the Amended Stipulation is not approved by
the Court or the Settlement set forth in the Amended Stipulation is terminated or fails to become
effective in accordance with its terms, the Settling Parties shall be restored to their respective
positions in the Actions as of the date of execution of this Amended Stipulation. In such event,
the terms and provisions of the Amended Stipulation, shall have no further force and effect with
respect to the Settling Parties and shall not be used in the Actions or in any other proceeding for
any purpose, and any Judgment or order entered by the Court in accordance with the terms of the
Amended Stipulation shall be treated as vacated, nunc pro tunc.
X. MISCELLANEOUS PROVISIONS
7.1. The Settling Parties (a) acknowledge that it is their intent to consummate the agreements
embodied in this Amended Stipulation; and (b) agree to cooperate to the extent reasonably necessary
to effectuate and implement all terms and conditions of the Amended
Stipulation and to exercise their good faith best efforts to accomplish the foregoing terms
and conditions of the Amended Stipulation.
AMENDED STIPULATION OF SETTLEMENT
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7.2. The Settling Parties intend this Settlement to be a final and complete resolution of all
disputes between them with respect to the Actions and their subject matter. The Settling Parties
agree that the Settlement was negotiated in good-faith by the Settling Parties and reflects a
Settlement that was reached voluntarily after consultation with experienced counsel.
7.3. While Rentech and the Defendants deny that the claims advanced in the Actions are
meritorious, Rentech and Defendants agree that the Actions were filed in accordance with the
applicable federal and California rules, including, without limitation, Federal Rule of Civil
Procedure 11 and California Code of Civil Procedure §128.7, and were not filed in bad faith. The
Settling Parties will jointly request that the Judgment contain a finding that during the course of
the Actions, the parties and their respective counsel at all times complied with the requirements
of Federal Rule of Civil Procedure 11, California Code of Civil Procedure §128.7, and all other
similar laws.
7.4 Pending Court approval of the Amended Stipulation and the Settlement, (i) Plaintiffs agree
not to initiate any proceedings other than those proceedings incidental to the Settlement itself;
and (ii) Defendants may seek to prevent or stay any other action or claims brought seeking to
assert any Released Claim. If any action that would be barred by the releases contemplated by this
Amended Stipulation is commenced against any of the Released Persons prior to the entry of Final
Judgment, and such action is not dismissed prior to the Settlement Hearing contemplated by this
Amended Stipulation, any Defendant may, at his, her or its sole option, withdraw from the
Settlement prior to the Settlement Hearing. The Settlement shall remain binding as to the
remaining parties thereto, if any.
AMENDED STIPULATION OF SETTLEMENT
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7.5. Neither the Amended Stipulation nor the Settlement, nor any act performed or document
executed pursuant to or in furtherance of the Amended Stipulation or the Settlement: (a) is or may
be deemed to be or may be used as an admission of, or evidence of, the validity or invalidity of
any Released Claim, or of any wrongdoing or liability or lack thereof of the
Defendants and Released Persons; or (b) is or may be deemed to be or may be used as an
admission of, or evidence of, any fault or omission or lack thereof of any of the Defendants and
Released Persons in any civil, criminal or administrative proceeding in any court, administrative
agency or other tribunal. Defendants and Released Persons may file the Amended Stipulation and/or
the Judgment in any action that may be brought against them in order to support a defense or
counterclaim based on principles of res judicata, collateral estoppel, release, good faith
settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion
or similar defense or counterclaim. Defendants have denied and continue to deny each and all of
the claims alleged in the Actions. Plaintiffs, Rentech or any Current Rentech Stockholder, may
file the Amended Stipulation in any proceeding brought to enforce any of its terms or provisions.
The Settling Parties and their counsel, and each of them, agree, to the extent permitted by law,
that all agreements made and orders entered during the course of the Actions relating to the
confidentiality of information shall survive this Amended Stipulation.
7.6. Plaintiffs agree not to institute, join in, or cooperate in any way in any threatened,
pending, or future litigation, lawsuit, claim or action against the Released Persons, or any of
them, alleging, prosecuting, regarding, concerning, relating to, referring to or arising out of in
any way the Released Claims.
7.7. Plaintiffs warrant and represent that they have not assigned or transferred or attempted
to assign or transfer to any person or entity any Released Claim or any portion thereof or interest
therein.
7.8. Plaintiffs hereby represent and warrant that they have adequate information regarding the
terms of this Settlement, the scope and effect of the releases set forth herein, and all other
matters encompassed by this Amended Stipulation to make an informed and knowledgeable decision with
regard to entering into this Amended Stipulation, and that they have independently, and without
reliance upon Rentech or Defendants, made their own analysis and decision to enter into this
Amended Stipulation.
AMENDED STIPULATION OF SETTLEMENT
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7.9. Rentech and Defendants hereby represent and warrant that they have adequate information
regarding the terms of this Settlement, the scope and effect of the releases set forth herein, and
all other matters encompassed by this Amended Stipulation to make an informed and knowledgeable
decision with regard to entering into this Amended Stipulation, and that they have independently
and without reliance upon the Plaintiffs made their own analysis and decision to enter into this
Amended Stipulation. Rentech and Defendants acknowledge and hereby verify that the Plaintiffs have
not made any representation or warranty and has no duty or obligation to them, whether express or
implied, of any kind or character, except as expressly set forth herein.
7.10. This Amended Stipulation has been jointly drafted by the parties at arms length. No
provision or ambiguity in this Amended Stipulation shall be construed or interpreted against any
party by virtue of its participation in the drafting of this Amended Stipulation. The Amended
Stipulation shall in all cases be construed as a whole, according to its fair meaning and not
strictly for or against any of the parties.
7.11. The covenants contained in this Amended Stipulation provide good and sufficient
consideration for every promise, duty, release, obligation, agreement and right contained in this
Amended Stipulation.
7.12. Any failure by any party to insist upon the strict performance by any other party of any
of the provisions of the Amended Stipulation shall not be deemed a waiver of any of the provisions,
and such party, notwithstanding such failure, shall have the right thereafter to insist upon the
strict performance of any and all of the provisions of the Amended Stipulation to be performed by
such other party.
7.13. All of the Exhibits to the Amended Stipulation are material and integral parts hereof
and are fully incorporated herein by reference.
7.14. The Amended Stipulation may be amended or modified only by a written instrument signed
by or on behalf of all Settling Parties or their respective successors-in-interest.
AMENDED STIPULATION OF SETTLEMENT
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7.15. The Amended Stipulation and the Exhibits attached hereto constitute the entire agreement
between Plaintiffs, Rentech and Defendants and no representations, warranties or
inducements have been made to any party concerning the Amended Stipulation or its Exhibits
other than the representations, warranties and covenants contained and memorialized in such
documents. Except as otherwise provided herein, each of the Settling Parties shall bear their own
costs.
7.16. Each counsel or other Person executing the Amended Stipulation or any of its Exhibits on
behalf of any party hereto hereby warrants that such Person has the full authority to do so.
7.17. The Amended Stipulation may be executed in one or more counterparts. All executed
counterparts and each of them shall be deemed to be one and the same instrument. A complete set of
original executed counterparts shall be filed with the Court.
7.18. The Amended Stipulation shall be binding upon, and inure to the benefit of, the
successors and assigns of the parties hereto.
7.19. The Court shall retain jurisdiction with respect to implementation and enforcement of
the terms of the Amended Stipulation, and all parties hereto submit to the jurisdiction of the
Court for purposes of implementing and enforcing the Settlement embodied in the Amended Stipulation
and for any matters arising out of, concerning, or relating thereto.
7.20. The Amended Stipulation and the Exhibits hereto shall be considered to have been
negotiated, executed and delivered, and to be wholly performed, in the State of California, and the
rights and obligations of the parties to the Amended Stipulation shall be construed and enforced in
accordance with, and governed by, the internal, substantive laws of the State of California without
giving effect to that States choice of law principles.
AMENDED STIPULATION OF SETTLEMENT
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IN WITNESS WHEREOF, the parties hereto have caused the Amended Stipulation to be executed, by
their duly authorized attorneys.
IT IS SO STIPULATED.
DATED: May 19, 2011
|
THE WEISER LAW FIRM, P.C. | |||
KATHLEEN A HERKENHOFF (168562) | ||||
/s/ KATHLEEN A HERKENHOFF
|
||||
12707 High Bluff Drive, Suite 200 | ||||
San Diego, CA 92130 | ||||
Telephone: (858) 794-1441 | ||||
Facsimile: (858) 794-1450 | ||||
THE WEISER LAW FIRM, P.C. | ||||
ROBERT B. WEISER | ||||
BRETT D. STECKER | ||||
JEFFREY J. CIARLANTO | ||||
121 North Wayne Avenue, Suite 100 | ||||
Wayne, PA 19087 | ||||
Telephone: (610) 225-2677 | ||||
Facsimile: (610) 225-2678 | ||||
Co-Lead Counsel for Plaintiffs | ||||
DATED: May 19, 2011
|
THE SHUMAN LAW FIRM | |||
KIP B. SHUMAN | ||||
RUSTY E. GLENN | ||||
/s/ KIP B. SHUMAN
|
||||
885 Arapahoe Ave. | ||||
Boulder, CO 80302 | ||||
Telephone: (866) 974-8626 | ||||
Facsimile: (303) 484-4886 | ||||
Co-Lead Counsel and Counsel for Plaintiffs | ||||
Tarr and Strumingher | ||||
DATED: May 19, 2011
|
JOHNSON & WEAVER, LLP | |||
FRANK J. JOHNSON | ||||
KEITH M. COCHRAN | ||||
/s/ FRANK J. JOHNSON
|
||||
501 West Broadway, Ste. 1720 | ||||
San Diego, CA 92101 | ||||
Telephone: (619) 230-0063 | ||||
Facsimile: (619) 238-0622 | ||||
Counsel for Plaintiff Virginia Harpster |
AMENDED STIPULATION OF SETTLEMENT
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DATED: May 19, 2011
|
ROBBINS UMEDA LLP | |||
BRIAN ROBBINS | ||||
KEVIN A. SEELY | ||||
ARSHAN AMIRI | ||||
/s/ BRIAN ROBBINS
|
||||
600 B Street, Suite 1900 | ||||
San Diego, CA 92101 | ||||
Telephone: (619) 525-3990 | ||||
Facsimile: (619) 525-3991 | ||||
Counsel for Plaintiff John Cobb | ||||
DATED: May 19, 2011
|
THE WARNER LAW FIRM | |||
PAUL T. WARNER | ||||
/s/ PAUL T. WARNER
|
||||
11123 McCracken Lane, Suite A | ||||
Cypress, TX 77429 | ||||
Telephone: 281/664-7777 | ||||
Facsimile: 281/664-7774 | ||||
Law Offices of David M. Goldstein | ||||
David M. Goldstein | ||||
10535 Foothill Blvd., Suite 300 | ||||
Rancho Cucamonga, CA 91730 | ||||
Telephone: 909/466-4757 | ||||
Facsimile: 909/980-5525 | ||||
Counsel for Plaintiff Gerald Smith |
AMENDED STIPULATION OF SETTLEMENT
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DATED: May 19, 2011
|
LATHAM & WATKINS LLP | |||
PATRICK E. GIBBS | ||||
MELANIE M. BLUNSCHI | ||||
/s/ MELANIE M. BLUNSCHI
|
||||
355 South Grand Avenue | ||||
Los Angeles, CA 90071-1560 | ||||
Telephone: 213/485-1234 | ||||
Facsimile: 213/891-8763 | ||||
Attorneys for Nominal Defendant Rentech and | ||||
Defendants Dennis L. Yakobson, Michael S. | ||||
Burke, D. Hunt Ramsbottom, Michael F. Ray, | ||||
Ronald M. Sega, Edward M. Stern, Halbert S. | ||||
Washburn, John A. Williams, Dan J. Cohrs, | ||||
Douglas M. Miller, I. Merrick Kerr and | ||||
Erich W. Tiepel |
AMENDED STIPULATION OF SETTLEMENT
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