Exhibit 10.2

“[*]” = confidential portions of this document that have been omitted and have
been separately

filed with the Securities and Exchange Commission pursuant to an application for
confidential

treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.

(Pages 7, 8, 11, 16, 18, 19, 27, 32, 33, 34, 35 and 38)

License Agreement

granted by

Rentech, Inc.

for the use of the

Rentech Technology

--------------------------------------------------------------------------------

TABLE OF CONTENTS

SECTION 1 – Definitions  

 

3

 

 

 

SECTION 2 – Grant of Licenses; Improvements; Reservations of Rights  

 

5

 

 

 

SECTION 3 – Ownership

 

8

 

 

 

SECTION 4 – Technical Services Agreement

 

9

 

 

 

SECTION 5 – Rentech Plants and Rentech Modules  

10

 

 

 

SECTION 6 – Undertakings By Licensee

 

10

 

 

 

SECTION 7 – Export Restrictions  

 

11

 

 

 

SECTION 8 – License Fee and Payment

 

12

 

 

 

SECTION 9 – Reports and Records  

 

12

 

 

 

SECTION 10 – Confidentiality  

 

13

 

 

 

SECTION 11 – Protection of Licensed Technology

 

13

 

 

 

SECTION 12 – Limited Warranty  

 

14

 

 

 

SECTION 13 – Indemnification

 

15

 

 

 

SECTION 14 – Limitation of Liability  

 

16

 

 

 

SECTION 15 – Insurance  

 

17

 

 

 

SECTION 16 – Term and Termination  

 

17

 

 

 

SECTION 17 – Arbitration and Injunctive Relief  

 

20

 

 

 

SECTION 18 – Miscellaneous  

 

21

 

 

 

EXHIBITS

 

 

 

 

 

EXHIBIT A – Rentech Patents  

 

25

 

 

 

EXHIBIT B – Schedule of Fees  

 

27

 

 

 

EXHIBIT C – PDU Test Procedures and Process Stream Characteristics  

 

29

 

 

 

EXHIBIT D – FT Section  

 

36

 

 

 

EXHIBIT E – Catalyst Term Sheet

 

38

Page 2

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LICENSE AGREEMENT

THIS LICENSE AGREEMENT (“Agreement”) is made and entered into as of January 12,
2006 (the “Effective Date”) by and between Rentech, Inc., a corporation
incorporated in the USA under provisions of the laws of the state of Colorado,
USA (“Rentech”), and Medicine Bow Fuel & Power LLC, a limited liability
corporation organized under provisions of the laws of the state of Delaware
(“Licensee”), in consideration of the following circumstances.  Rentech and
Licensee are sometimes referred to in this Agreement individually as a “Party”
and collectively as “Parties.” 

A.       Rentech has developed and owns, directly or in conjunction with its
agents and licensors, a proprietary application of the Fischer-Tropsch process
which utilizes a slurry reaction bed and an iron-based catalyst to convert
various types of synthesis gas into various liquid hydrocarbons.

B.       Licensee wishes to license such process on a non-exclusive basis for
use at a plant to be constructed by Licensee, as further defined herein, and,
subject to the terms of this Agreement, Rentech wishes to grant such license. 

C.       This Agreement is being entered into for the purpose of the initial
phase of the project as described below in the definition of “Licensed Plant”
with a target of converting Synthesis Gas Precursors into Intermediate
Hydrocarbon Products. 

NOW, THEREFORE, in consideration of these circumstances and the following mutual
covenants, premises and agreements, the parties hereto agree as follows:

1.        Definitions.  The following terms will have the meanings set forth in
this Section.

1.1      “Affiliate” shall have the meaning given in Section 11.3.

1.2      “Catalyst Purchase Agreement” shall have the meaning given in Section
2.3.

1.3      “Catalyst Term Sheet” shall have the meaning given in Section 2.3.

1.4      “Claim” shall mean any allegations, demands, disputes, suits,
arbitrations, investigations, causes of action, proceedings or other claims.

1.5      “Commercial Operation” shall mean that the Licensed Plant has completed
the performance tests and reliability tests required to be passed by the
Licensed Plant’s contractor to prove commercial acceptance, as set forth in the
engineering, procurement and construction contract relating thereto.

1.6      “Competitor” shall mean, (i) with respect to Licensee, any entity which
is engaged in the business of developing or operating coal gasification or coal
to liquids facilities in Wyoming, (ii) with respect to Rentech, any entity
licensing or operating Fischer Tropsch technology or any other coal to liquid
technology or gas to liquid technology, or (iii) any Affiliate of such entities.

1.7      “Confidential Information” shall have the meaning given in the
Confidentiality Agreement.

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1.8      “Confidentiality Agreement” shall mean the Confidentiality Agreement
between Rentech and DKRW Energy LLC dated as of May 28, 2004.

1.9      “Control” shall have the meaning given in Section 11.3.

1.10    “Equipment” means any synthetic gas reactor modules, any primary
separation modules, or any other equipment which in any way employs the Rentech
Technology.

1.11    “Field of Use” shall mean the field of converting Synthesis Gas
Precursors into Intermediate Hydrocarbon Products.

1.12    “Financial Close” shall mean the date on which Licensee has received a
full funding commitment for developing and building the Licensed Plant,
including with necessary debt and equity funding entities.

1.13    “FT Section” shall mean the section of the Licensed Plant identified in
green in the diagram in Exhibit D.

1.14    “Know-How” shall mean either Party’s know-how and knowledge base related
to the use of the Rentech Patents, together with any and all proprietary
information, trade secrets, technical data, operating information and other
technology and information, or aspects thereof, necessary to design, install,
replace, test, maintain and operate the FT Section of the Licensed Plant as
contemplated by this Agreement. 

1.15    “Improvements” shall have the meaning given in Section 3.2.

1.16    “Indemnified Party” shall have the meaning given in Section 13.4.

1.17    “Indemnifying Party” shall have the meaning given in Section 13.4.

1.18    “Intermediate Hydrocarbon Products” shall mean the raw products being
produced in the synthesis gas reactor modules and collected, indicated in
Exhibit D as FT1, FT2, and FT3, including but not limited to, raw wax, raw
diesel and raw naphtha.

1.19    “Laws” shall have the meaning given in Section 13.1.

1.20    “Licensed Plant” shall mean a plant to be constructed by Licensee at or
near Medicine Bow, Carbon County, Wyoming, for the purpose of converting
Synthesis Gas Precursors into Liquid Hydrocarbon Products, which has a capacity
of no less than 10,000 barrels per day and no more than 50,000 barrels per day.

1.21    “Licensee Personnel” means Licensee’s employees, agents and contractors.

1.22    “Liquid Hydrocarbon Products” shall mean various liquid hydrocarbons,
including synthetic diesel fuel, jet fuel, naphtha, wax, and other high value
fuels and chemicals.

1.23    “Losses” shall have the meaning given in Section 13.1.

1.24    “Master License Agreement” shall mean the agreement so named, dated as
of the date hereof, between the parties hereto.

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1.25    “Mechanical Completion” shall mean that the Licensed Plant has achieved
mechanical completion pursuant to the engineering, procurement and construction
contract relating thereto.

1.26    “Rentech Catalyst” shall mean the Rentech proprietary catalyst
identified in the Rentech Patents for use with the Rentech Technology. 

1.27    “Rentech Improvements” shall mean any and all improvements developed by
Rentech or any licensee of Rentech, including Licensee, which are applicable to
the Rentech Patents. 

1.28    “Rentech Patents” shall mean the patent application(s) and patents(s)
listed in Exhibit A, together with any continuations, divisionals, and
continuations-in-part, to the extent the claims of any such patent or patent
application are directed to subject matter specifically described in the patent
application(s) and patent(s) listed on Exhibit A; and any reissues or
re-examinations thereof.  For the avoidance of doubt, the Rentech Patents
include any Rentech Improvements owned by Rentech. 

1.29    “Rentech Technology” shall mean the Rentech Patents and Rentech
Know-How.

1.30    “Synthesis Gas Precursors” shall mean synthesis gas derived from
carbon-bearing materials such as coal, or other solid or liquid carbon-bearing
materials, and natural gas and industrial off-gas.

1.31    “Taxes” shall have the meaning given in Section 8.3.

1.32    “Technical Services Agreement” shall have the meaning given in Section
4.

2.        Grant of Licenses; Improvements; Reservations of Rights.  Subject to
all terms and conditions set forth in this Agreement and related agreements:

2.1      Grant of License.  Effective as of the Financial Close, Rentech hereby
grants to Licensee a limited, non-transferable, non-exclusive, non-sublicensable
license, under the Rentech Technology, to practice the Rentech Technology,
solely using the Rentech Catalyst, solely at the Licensed Plant, and solely for
use in the Field of Use. 

2.2      Restrictions.  Licensee shall not, and shall cause Licensee Personnel
not to:  (i) use any aspect of the Rentech Technology or the Equipment in any
facility other than the Licensed Plant, other than pursuant to other license
agreements entered into under the Master License Agreement; (ii)  make, have
made or sell the Rentech Catalyst or use the Rentech Catalyst for any purpose
other than with the Rentech Technology at the Licensed Plant, other than
pursuant to other license agreements entered into under the Master License
Agreement; (iii) except as contemplated by Section 2.3, use any other catalyst
for use with the Rentech Technology at the Licensed Plant; (iv) use any other
application of the Fischer-Tropsch process at the Licensed Plant or any other
process for converting Synthesis Gas Precursors  into Intermediate Hydrocarbon
Products at the Licensed Plant; (v) distribute the Rentech Know-How or allow
third parties to access the Rentech Know-How, other than, subject to Section 10,
third party contractors, operators and consultants providing services to
Licensee in connection with and which are consistent with Licensee’s licensed
rights hereunder; (vi) use the FT Section of the Licensed Plant for any purpose
other than converting Synthesis Gas Precursors into Intermediate Hydrocarbon
Products using the Rentech Technology; (vii) except in connection with the
construction, testing, operation and maintenance of the Licensed Plant, sample
or have or allow to be sampled, analyze or have or allow to be analyzed, the
Rentech Catalyst; or (viii) attempt to reverse engineer the Rentech Catalyst,
Synthesis Gas Reactor Module or Primary Separation Module. 

Page 5

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2.3      Rentech Catalyst.  Licensee shall have the right to purchase Rentech
Catalyst from Rentech or its designated supplier.  Rentech will identify at
least two (2) qualified catalyst manufacturers from which the parties will
obtain bids for the manufacture and supply of Rentech Catalyst.  The Parties
will negotiate in good faith on or before June 30, 2007 an agreement pursuant to
which Rentech or its designated supplier will supply Rentech Catalyst to
Licensee (the “Catalyst Purchase Agreement”) in accordance with the terms and
conditions set forth in the term sheet agreed by the parties and attached hereto
as Exhibit E (the “Catalyst Term Sheet”).  Nothing herein shall be construed as
a grant of any rights whatsoever, either expressed or implied, under any Rentech
Patents or trade secrets relating to any compositions of or method of making the
Rentech Catalyst, other than the right to use the Rentech Catalyst as provided
for herein. Furthermore, nothing herein will prevent Licensee from proposing a
third catalyst supplier or alternative catalyst  for consideration by Rentech,
provided that  such supplier or alternative catalyst can meet all of the quality
and price standards set by Rentech and adequately protect all intellectual
property rights. Further rights and obligations with respect to the catalyst to
be used in the Licensed Plant shall be set forth in the Catalyst Purchase
Agreement.

2.4      Synthesis Gas Reactor Modules and Primary Separation Modules.  Licensee
acknowledges that the Rentech Technology requires the development and
construction of one or more synthesis gas/FT reactor modules (“Synthesis Gas
Reactor Modules”) and one or more primary catalyst separation modules (“Primary
Separation Modules”).  Licensee acknowledges that it is Licensee’s
responsibility to design and construct these modules at its own cost and to
Rentech’s guidelines and specifications.  Rentech will have the right to approve
the contractors, designs and processes, used by Licensee to design and construct
these modules as well as any other aspect of the FT Section of the Licensed
Plant, and to approve and participate in the quality assurance programs used by
such contractors for the construction of the FT Section and such modules. 
Without limiting the generality of the foregoing, Rentech shall have the right
to have a dedicated person, reasonably acceptable to Licensee, involved in all
of the foregoing aspects under the terms of the Technical Services Agreement. 
Notwithstanding the foregoing, the foregoing will not be deemed to impose on
Rentech any liability or responsibility for the performance or failure to
perform of such modules.  Licensee shall use the module or modules only for the
purpose of exercising the rights licensed to Licensee hereunder.  Without
limiting the generality of the foregoing:  (a) Licensee shall have no right to
sell any such modules separately from the Licensed Plant; and (b) Licensee
agrees not to use any such modules with any Fischer-Tropsch technology other
than the Rentech Technology licensed from Rentech.

2.5      Reserved. 

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2.6      Third Party Technology. It is recognized by both parties that the
design, development, construction and operation of the Licensed Plant (excluding
the FT Section) will require intellectual property owned by parties other than
Rentech and Licensee acknowledges that it is solely responsible for securing the
right to use any such intellectual property rights.  Without limiting the
generality of the foregoing, the parties recognize and agree that the Rentech
Technology is applicable to the conversion of Synthesis Gas Precursors to
Intermediate Hydrocarbon Products, and that conversion of the Intermediate
Hydrocarbon Products into Liquid Hydrocarbon Products requires additional
technologies and potentially additional licenses from vendors other than Rentech
in addition to the Rentech Technology provided by Rentech hereunder as part of
the license.

2.7      Testing of Rentech Technology. 

 

(a)

Rentech will test the Rentech Catalyst using an actual stream of synthesis gas
derived from coal either provided by DKRW or from a mutually agreed source.  The
test will be deemed successful if:  (a) the “Conversion Rate” (which equals the
number of pounds of Intermediate Hydrocarbon Products collected at points FT1,
FT2 and FT3 in the diagram in Exhibit D per pound-mole of carbon monoxide
consumed) is equal to or greater than [*] (the “Minimum Conversion Rate”); and
(b) the “Catalyst Consumption Rate” (which equals the amount of catalyst make-up
required to maintain the Minimum Conversion Rate and is measured in pounds of
catalyst per 1000 pounds of Intermediate Hydrocarbon Products collected) is less
than or equal to [*] (the “Maximum Catalyst Consumption Rate”).  See Exhibit C
for further details on about these measures and Process Stream Characteristics.

 

 

 

 

(b)

Rentech shall follow the test procedures attached hereto as Exhibit C and shall
provide a final summary report to Licensee on the results of the testing program
within thirty (30) days of test completion.  The test shall be conducted on or
before June 30, 2007.  DKRW will be responsible for providing the coal (similar
in quality to the Medicine Bow production, unless otherwise agreed) required for
the test.  Rentech will provide a final summary report of the results of this
testing program to Licensee, which report will include the Conversion Rate
achieved during the test (“Test Conversion Rate”) and the Catalyst Consumption
Rate achieved during the test (the “Test Catalyst Consumption Rate”). Subject to
the applicable minimum and maximum in Section 2.7(a), Rentech will identify for
Licensee the Conversion Rate and Catalyst Consumption Rate (taking into
consideration the Test Conversion Rate and the Test Catalyst Consumption Rate)
which Licensee will use as the basis for the design of the FT Section (the
“Design Conversion Rate” and the “Design Catalyst Consumption Rate”).  Licensee
is authorized to provide its investors information regarding the viability of
the Licensed Plant using the Rentech Technology.  Information regarding specific
test runs will be kept confidential and remain the joint property of Rentech and
Licensee.  In the event that Rentech is unable to complete the above test
successfully, by achieving the Minimum Conversion Rate and the Maximum Catalyst
Consumption Rate in the same test by June 30, 2007, Licensee may declare a
default under this Agreement in accordance with Section 16.3(b), provided
Licensee exercises such right within 120 days thereafter, and provided that such
remedy will be Licensee’s sole and exclusive remedy for the failure of the
foregoing tests and in no event will Rentech be liable for any damages as a
result of failing to meet the test requirements herein.

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(c)

Licensee shall have the right to purchase any Liquid Hydrocarbon Products
generated in connection with the testing in this Section 2.7 for the price of
$[*] per barrel.

 

 

 

 

(d)

The parties shall develop a procedure for executing the tests set forth in this
Section 2.7 no later than thirty (30) days prior to the commencement of such
tests.

2.8      Change of Location; Delay.  If the coal assessment study currently
being conducted by Licensee to evaluate coal reserves and coal quality at
Medicine Bow, Carbon County, Wyoming is unsatisfactory to Licensee, Rentech will
grant Licensee the option of changing the location of the Licensed Plant,
without the payment of additional fees, to a new location to be named within 360
days following receipt of such unfavorable coal assessment report. 

3.        Ownership.  Subject to the license rights granted pursuant to this
Agreement, as between the Parties, Rentech retains all right, title and interest
in the Rentech Technology. 

3.1      Without limiting the generality of the foregoing, as between the
Parties, Rentech retains all right, title and interest in: 

 

(a)

All computer software programs and source codes, cost estimates, marketing
studies, composition and methods of manufacture and induction of catalyst, and
other know-how, technology, trade secret, proprietary information or other
information used by Rentech internally to develop the Rentech Technology or
otherwise provide services under the Technical Services Agreement;

 

 

 

 

(b)

All trade names and trademarks used by Rentech or its other licensees, including
those used in connection with the Rentech Technology or Liquid Hydrocarbon
Products;

 

 

 

 

(c)

Rentech’s proprietary information, know-how, trade secrets, patents and patent
applications, or aspects thereof, whether or not directly related to the Rentech
Technology, whether now in existence or developed after this date;

 

 

 

 

(d)

the proprietary rights of Rentech in its designs, processes, technology,
know-how, trade secrets, patent rights and other proprietary rights used with or
incorporated in the synthesis gas reactor modules and in the Licensed Plant; and

 

 

 

 

(e)

all other rights held by Rentech and not specifically granted to Licensee in
this Agreement.

3.2      Improvements.  Licensee agrees that Rentech will own any and all
Rentech Improvements, whether made separately or jointly by Rentech or Licensee
or Licensee Personnel.  Licensee hereby agrees, on behalf of itself and Licensee
Personnel, to take any actions necessary to effect such ownership to the extent
of Licensee’s ownership and rights therein, including assigning all of
Licensee’s and Licensee Personnel’s right, title and interest in Improvements to
Rentech.  Each party to this Agreement agrees to promptly advise the other of
Rentech Improvements made or acquired by it.  For the avoidance of doubt, only
Rentech is entitled to apply, on its behalf and at its own expense, for patents
covering Rentech Improvements.

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3.3      Reservation of Rights By Rentech.  Notwithstanding anything herein to
the contrary, Rentech hereby reserves to itself and its successors and assigns,
subject only to the grant of the license described in this Agreement, all rights
to exploit in any manner the Rentech Technology.  Without limiting the
generality of the foregoing, the rights reserved include but are not limited
to:  (i) the right, by Rentech or with others, to develop, design, construct and
operate process plants and use the Rentech Technology therein for the production
of Intermediate Hydrocarbon Products and/or Liquid Hydrocarbon Products anywhere
in the world;  (ii) the right to license, sublicense, use, produce, patent,
protect and sell any or all components of the Rentech Technology, to anyone
anywhere in the world;  (iii) the right to sell Intermediate Hydrocarbon
Products and/or Liquid Hydrocarbon Products worldwide other than Liquid
Hydrocarbon Products produced by Licensee at the Licensed Plant; (iv) the right,
by itself or with others, to design, construct, license and sell or lease all
synthesis gas reactors, and reactor designs and specifications used with the
Rentech Technology; (v) the right to grant non-exclusive licenses to any third
parties to any Rentech Improvements, whether made by Rentech or Licensee; (vi)
ownership of so much of the Rentech Technology as appears in any process plans
and flow diagrams, heat and mass balance diagrams, engineering designs, and
instrumentation drawings; and (vii) the exclusive right to use and license all
trade names and trademarks owned by Rentech or its other licensees in connection
with the Rentech Technology, Rentech Catalyst or Liquid Hydrocarbon Products.

4.        Technical Services Agreement.  Licensee and Rentech (and/or one or
more Affiliates of Rentech) shall enter into a separate agreement which will
define the services and/or training to be provided by Rentech, the applicable
fees, and any other terms and conditions related thereto (a “Technical Services
Agreement”), on the same date as this agreement.  Rentech will provide Licensee
with Rentech Know-How under the Technical Services Agreement, and Rentech hereby
grants to Licensee a limited, non-transferable, non-exclusive license to use any
Rentech Know-How disclosed pursuant to the Technical Services Agreement, solely
to use in connection with the exercise of Licensee’s license rights under
Section 2.1.  Licensee agrees Rentech shall not be obligated under this License
Agreement to furnish or make available to Licensee any Rentech Know-How,
including any information on catalyst compositions and methods of catalyst
manufacture, nor shall Rentech be obligated to provide detailed engineering,
construction or operating services in connection with the Licensed Plant. 
Licensee shall be solely responsible for the detailed engineering, other
engineering, construction and operation of the Licensed Plant.  Licensee hereby
grants to Rentech a non-exclusive, non-transferable (other than in connection
with an assignment of this Agreement) license to use any Licensee Know-How, to
the extent of Licensee’s ownership and rights therein, and to sublicense the
right to use such Licensee Know-How to Rentech’s other licensees, solely for use
in connection with the Rentech Technology.  Rentech will have the right to bill
Licensee on a time and materials basis at the rates in the Technical Services
Agreement for the following activities of Rentech under this Agreement:  (a)
approving contractors, designs and processes under Section 2.4; (b) approving
and participating in quality assurance programs as provided for in Section 2.4;
(c) the activities required by Section 6.2(b); and (d) any other engineering or
other professional services under this Agreement, excluding any such services
which Rentech performs pursuant to Section 13.3.

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5.        Rentech Plants and Rentech Modules. 

5.1      Design and Construction.  Licensee shall be solely responsible for
financing, designing, engineering, constructing, testing and operating the
Licensed Plant; acquiring synthesis gas feedstock; and all other aspects of the
Licensed Plant, including paying for and operating the required synthesis gas
reactor modules and primary separation modules, and complying with all
applicable environmental laws and regulations. 

5.2      Identification.  On each synthesis gas reactor module and primary
separation module, there shall be affixed and Licensee shall maintain a metal
identification plate that indicates (i) any relevant Rentech Patents with serial
number or numbers, (ii) the place of manufacture, and (iii) the following
statement: “Under License from Rentech, Inc.”

6.        Undertakings By Licensee. 

6.1      Financial Close; Commercial Operation.  As a material inducement for
Rentech to enter into this Agreement, Licensee covenants and represents that it
will use reasonable commercial efforts, diligently and in good faith and at its
expense, to achieve Financial Close, Mechanical Completion and Commercial
Operation, in each case using the Rentech Technology, as soon as practical
following the Effective Date, but in no event later than:  (a) for Financial
Close, three (3) years from the Effective Date; and (b) for Commercial
Operation, no later than December 31, 2015.

6.2      Design, Construction, and Operating Standards. 

 

(a)

Subject to Sections 2.4 and 6.2(b), Licensee will develop, design, construct and
operate the Licensed Plant in a good, safe and workmanlike manner and shall use
reasonable commercial efforts to incorporate  any preliminary engineering design
provided by Rentech and/or its consultants, and any operating procedures, safety
standards, and other information about the Rentech Technology made available by
Rentech, it being understood that Licensee shall ultimately be entitled (giving
due regard to the foregoing standards and input by Rentech) to develop, design,
construct and operate the Licensed Plant in accordance with its own
requirements. Subject to Sections 2.4 and 6.2(b), and notwithstanding use of
information provided by Rentech, all development, design, construction,
production, operations and all other activities of Licensee shall be Licensee’s
sole responsibility, and at its sole expense and risk and subject to its sole
control.

 

 

 

 

(b)

Notwithstanding subsection (a), Rentech will provide Licensee with a preliminary
process design package (“PPDP”) for the FT Section (the “Rentech PPDP”). 
Licensee will be responsible for developing a front-end engineering and design
(“FEED”) package to integrate the Rentech PPDP into any other required PPDPs.
Upon Licensee’s request, Rentech will certify (1) that the Rentech PPDP will be
sufficient for the FT Section to meet the standards required by Section 2.7(a),
and (2) whether Licensee has correctly integrated the Rentech PPDP into
Licensee’s FEED.  For the avoidance, of doubt, the foregoing will not obligate
Rentech to certify the construction of the FT Section, provided, however, that
if Rentech does learn of any non-conformity with respect to such units, Rentech
shall so notify Licensee.

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(c)

If within 180 days following Mechanical Completion of the Licensed Plant,
Licensee can demonstrate that (a) the actual Conversion Rate for the plant
(“Plant Conversion Rate”) and the actual Catalyst Consumption Rate for the plant
(the “Plant Catalyst Consumption Rate”) on an ongoing basis is less than [*]% of
the Design Conversion Rate and more than [*]% of the Design Catalyst Consumption
Rate, the parties shall investigate the cause of such deficiency.  To the extent
the deficiency is caused by a design or process approved by Rentech under
Section 2.4, Rentech agrees to pay for the costs reasonably necessary to correct
such deficiency, subject to Section 14.

6.3      Access.  Licensee will permit Rentech to have access to the Licensed
Plant during construction and thereafter  (i) at all reasonable times upon prior
notice for the purpose of determining whether all of Licensee’s undertakings
pursuant to this section and elsewhere in this Agreement are being met and
maintained and for the purpose of collecting samples of the Intermediate
Hydrocarbon Products and Liquid Hydrocarbon Products; and  (ii) upon at least
thirty days prior notice, for the purpose of showing the Licensed Plant during
normal business hours, whether or not under construction or in operation, to
Rentech’s prospective licensees, joint venturers, purchasers, construction
contractors, consultants, lenders and others whose tour and inspection of such a
plant might enhance the business of Rentech or its other licensees; provided,
however, Licensee may reject any visitor who is a Competitor of Licensee or
which in Licensee’s judgment poses a risk of unauthorized dissemination of
Licensee Confidential Information.  Each visitor shall sign appropriate
liability waivers and confidentiality agreements as Licensee shall require,
which waivers and agreements are consistent with those Licensee imposes on its
own licensees, joint venturers, purchasers, construction contractors,
consultants, lenders, etc.

6.4      Disclosures.  Licensee agrees that Rentech shall be authorized to
disclose to the public, including trade journals, that Licensee is planning to
use or is using the Rentech Technology at the Licensed Plant, provided that any
such disclosure shall be subject to Licensee’s prior approval, not to be
unreasonably withheld, within one week of receiving a copy of the proposed
disclosure, it being understood that failure of Licensee to respond shall be
deemed an approval to disclose.

6.5      Responsibility For Standards.  Neither access to nor inspection of the
Licensed Plant nor any preliminary engineering design provided in the form of
FEED or otherwise, or other information provided by Rentech shall impose any
duty upon Rentech to warn of, or make Rentech responsible or liable in any way,
for errors, omissions or inadequate standards of Licensee or the consequences
thereof.  Licensee agrees that it is solely responsible for such matters and
further agrees to indemnify and hold Rentech and its agents harmless from all
such claims, expenses and damages.

7.        Export Restrictions.  Licensee shall not export any aspect of the
Rentech Technology.

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8.        License Fee and Payment.

8.1      License Fee.  In consideration of the licenses granted hereunder,
Licensee agrees to pay Rentech the fully paid up license fees stipulated in
Exhibit B.  The license fees do not include consideration for any services
provided pursuant to the Technical Services Agreement, or the supply of the
Rentech Catalyst.

8.2      Payments.  All payments by Licensee to Rentech hereunder shall be
payable in U.S. Dollars by wire transfer to Rentech at the bank account it
designates.  Whenever any payment or calculation of payment due hereunder shall
be stated to be due or made on a day that is not a business day, the payment or
calculation shall be made on the immediately succeeding business day.  Payments
shall not be considered to be made until the day they are received at Rentech’s
final bank account that it designates for this purpose.  In the event any
payment of any type by Licensee to Rentech shall at any time be overdue,
Licensee shall pay interest to Rentech on any and all such late payments at the
rate of four percent (4%) per annum above the prime rate of interest listed in
the Wall Street Journal, Western Edition.  Interest shall be calculated on each
late payment from the date it became due to the date of actual payment based on
the prime rate as of the date the payment became due.  Payment of such interest
shall be in addition to any of Rentech’s other rights under this Agreement
resulting from Licensee’s default in making timely payments.  Interest shall
accrue on late payments from the due date regardless of whether Rentech has
given Licensee written notice of the default. 

8.3      Taxes.  Licensee shall be responsible for and shall pay all sales, use,
excise, value added or other such taxes or similar charges or levies (“Taxes”)
that arise as a result of this Agreement, excluding any taxes based on Rentech’s
income.

9.        Reports and Records.

9.1      Mechanical Completion, Commercial Operation.  Licensee shall, within
five days after Mechanical Completion, Commercial Operation, and Financial Close
of the Licensed Plant, notify Rentech in writing of the date that each such
event occurred. 

9.2      Records and Books of Account.  Licensee shall make and keep complete
and accurate records and books of account describing all activities by it under
this Agreement in sufficient detail to enable license fees payable to be
determined.  The records shall be kept on a calendar semi-annual basis and on an
annual basis.  These records shall include, without limitation, separate
accounts or records on the production of the Licensed Plant, the quantities and
composition of solid, liquid and gaseous hydrocarbons used or recycled into the
operation process, and records showing the separate types, compositions and
quantities of all Intermediate Hydrocarbon Products and Liquid Hydrocarbon
Products produced. 

9.3      Semi-Annual Production Report.  Licensee shall deliver to Rentech
within twenty (20) days after June 30 and December 31 of each calendar year
after Mechanical Completion, a written report for the Licensed Plant
(“Production Report”), certified as being true and correct by the plant manager
for the Licensed Plant and the financial officer of Licensee responsible for the
Licensed Plant, describing for the applicable semi-annual period, the type,
composition and quantities of all Intermediate Hydrocarbon Products and Liquid
Hydrocarbon Products produced during such period, during each month during such
period, and cumulatively for the calendar year to date, together with all other
data necessary for the calculation of license fees.

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9.4      Invoices For License Fees.  Rentech will invoice Licensee for the
license fees due to Rentech pursuant to Exhibit B.  Licensee shall pay the full
amount of each invoice to Rentech within thirty (30) days after the date of the
invoice.

9.5      Verification and Right to Audit Reports.  Licensee shall deliver to
Rentech such written evidence as Rentech may reasonably request to verify the
accuracy of the Production Reports.  Rentech shall have the right, after twenty
(20) days prior written notice and during normal business hours and at its
expense, to, either itself or through a third party auditor designated by
Rentech:  (i) visit the Licensed Plant,  (ii) confer with knowledgeable
employees of Licensee to verify the reports and payments required by this
Agreement; and  (iii) inspect, audit and copy Licensee’s records as may be
reasonably necessary for Rentech to verify the accuracy of the Production
Reports and the license fees payable hereunder.  If an audit reveals that
Licensee owes additional license fees, the provisions of Exhibit B shall apply,
subject to interest at the rate set forth in Section 8.2.  All information
disclosed by Licensee as a result of an audit shall be subject to the
Confidentiality Agreement.  This right to audit may be exercised at any time
during the term of this Agreement (but no more often than semi-annually) and for
a period of two (2) years after its expiration or termination.  Licensee shall
retain its original books and records pertaining to the Licensed Plant for at
least two (2) years after the entries were prepared.

10.      Confidentiality.  The Confidentiality Agreement shall be binding on
Rentech and Licensee with respect to all matters relating to this Agreement, the
Catalyst Purchase Agreement, and the Technical Services Agreement, except that
the permitted use defined in Section 4 thereof will be deemed to include the
performance of each party’s obligations under such Agreements.  Licensee agrees
to be bound by the terms of the Confidentiality Agreement as if it were a party
to it.  Any contractor or other party obtaining access to Confidential
Information (including Rentech Know-How) shall deliver to Rentech a
confidentiality agreement substantially in the form of the Confidentiality
Agreement, or in another form reasonably satisfactory to Rentech.

11.      Protection of Licensed Technology. 

11.1    Representations and Warranties.  Rentech represents and warrants that: 

 

(a)

The Rentech Patents listed on Exhibit A constitute all patents owned by Rentech
as of the Effective Date, except for those listed in Exhibit A as excluded from
the definition of Rentech Patents.

 

 

 

 

(b)

Rentech has not received notice of, nor has it been served, been impleaded or
otherwise been a party to or subject to, any written Claim challenging Rentech’s
ownership of the Rentech Technology or Rentech’s right to license the Rentech
Technology as contemplated by this Agreement, and to its knowledge no such Claim
is pending or threatened, and Rentech has not served any written Claim to any
third party for the purpose of verifying Rentech’s ownership of the Rentech
Technology.

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(c)

Rentech owns the Rentech Technology free of any liens, encumbrances or Claims,
and  Rentech is not aware of any patents owned by third parties which are
necessary to practice the claims in the Rentech Patents.

11.2    Defense of Licensed Patents.  As between Rentech and Licensee, Rentech
shall have the sole right to defend at its sole expense all legal actions
asserting the invalidity of any of the Rentech Patents, or to bring actions
against third parties for the use or infringement of the Rentech Patents. 
Subject to Section 13.3, the conduct of such actions shall be solely governed by
Rentech, and Licensee agrees to fully cooperate and not to interfere with
Rentech’s prosecution or defense of such actions.

11.3    Notification of Suit.  Licensee shall immediately notify Rentech of any
suit or action wherein Licensee or any Affiliate of Licensee is named as a
party, and which directly or indirectly relates to the use of the Rentech
Technology.  As used in this Agreement, “Affiliate” means any corporation,
person or entity that Controls, is Controlled by, or is under common Control
with, a party to this Agreement, whether by ownership or otherwise. For purposes
of this Agreement, “Control” and its derivatives means the ability to control
the management of any entity through the ownership of more than 50% of the
voting interests in such entity.

11.4    Licensee to Notify of Infringement.  Licensee agrees to notify Rentech
of any actual or suspected unauthorized use or infringement of the Rentech
Technology promptly upon becoming aware thereof.

11.5    Apportionment of Recoveries.  Any recoveries or settlement fees received
from suits or settlements involving alleged or actual infringement of the
Rentech Technology or any part of it shall be paid entirely to Rentech.

11.6    Patent Applications.  No entity other than Rentech or its designees
shall file any patent application in any jurisdiction with respect to the
Rentech Patents, including the Rentech Improvements, or any other aspect of the
Rentech Technology.  Licensee shall, at the request of Rentech, execute such
documents as may be appropriate for filing or recording in any jurisdiction to
evidence Rentech’s rights in patents subject to this Agreement that Rentech may
own, or to evidence Licensee’s status as licensed user.  Rentech may take action
to register any patent with the appropriate governmental authorities in any
jurisdiction, but shall not be obligated to do so.  Rentech’s inability or
failure to obtain such a registration shall not be a breach of this Agreement.

11.7    Cooperation. Licensee will provide all reasonable assistance requested
by Rentech in protecting Rentech’s rights in Rentech Technology, including by: 
(a) providing such assistance, on behalf of itself and Licensee Personnel, as
may be necessary to enable Rentech to secure any patents or Improvements with
respect to the Rentech Technology; (b) executing such documents as may be
necessary to secure Rentech’s rights in the Rentech Technology; and (c) becoming
a party to any litigation action if such is required for the action to proceed. 

12.      Limited Warranty.  EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT,
LICENSEE ACKNOWLEDGES THAT THE LICENSES GRANTED HEREUNDER AND SERVICES  PROVIDED
ARE GRANTED ON AN “AS IS” BASIS, AND RENTECH MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 

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13.      Indemnification.

13.1    Licensee Indemnity.  Licensee will defend Rentech and its Affiliates and
its and their employees, directors, officers and agents, against any third party
allegations, demands, disputes, suits, arbitrations, investigations, causes of
action, proceedings or other claims (including individuals or persons previously
affiliated with the indemnifying party, “Third Party Claims”) which are based
on, and indemnify and hold harmless such persons and entities from all damages,
liabilities, judgments, costs and expenses (including opposing party attorneys’
fees and court costs) and other such losses (“Losses”) finally awarded in
connection with any such Third Party Claim to the extent caused by, any of the
following:  (a) the design, construction or operation of the Licensed Plant,
except to the extent Rentech is obligated to indemnify Licensee pursuant to
Section 13.3(a); (b) any personal injury or property damage caused by Licensee
or any of its Personnel, including in connection with the construction and/or
operation of the Licensed Plant; (c) a failure of Licensee to comply with any
laws, rules, regulations or other legal requirements (“Laws”) applicable to
Licensee, including, without limitation, Laws applicable to the design,
construction or operation of the Licensed Plant; or (d) the sale or use of
Intermediate Hydrocarbon Products or Liquid Hydrocarbon Products.

13.2    Rentech Indemnity.  Rentech will defend Licensee and its Affiliates and
its and their employees, directors, officers and agents, against any Third Party
Claims which are based on, and indemnify and hold harmless such persons and
entities from all Losses finally awarded in connection with any such Third Party
Claim to the extent caused by, any of the following:  (a) any personal injury or
property damage caused by Rentech or any of its Personnel; or (b) a failure of
Rentech to comply with any Laws applicable to Rentech.

13.3    Infringement Indemnity. 

 

(a)

Rentech will defend Licensee and its Affiliates and its and their employees,
directors, officers and agents, against any Third Party Claims which are based
on, and indemnify and hold harmless such persons and entities from all Losses
finally awarded in connection with any such Third Party Claim to the extent
caused by, the infringement or misappropriation, as applicable, of any third
party intellectual property rights (including patents, trademarks, know-how,
copyrights, and trade secrets) by or as a result of (i) the use of the
inventions claimed in the Rentech Patents or (ii) the use of any Rentech
Know-How.  In the event of any claim or threatened claim of infringement or
misappropriation for which Rentech would be obligated to indemnify Licensee
pursuant to this Section 13.3(a), then Rentech may, at its discretion, (i)
obtain for Licensee, at no additional cost to Licensee, the right to use the
applicable third party intellectual property, or (ii) modify Rentech Technology
and/or modify or replace the applicable Rentech Know-How at no additional cost
to Licensee to make it non-infringing; provided, however, any such modification
shall provide functionality and performance of the FT Section at a level of
functionality and performance at least as great as the previous technology.  In
the event Rentech’s costs incurred in complying with Section 13.3(a) exceed the
amounts set forth in Section 14.1(a), Rentech agrees to continue to cooperate
with Licensee to defend Third Party Claims or provide non-infringing
alternatives, provided that Licensee reimburses Rentech for any excess costs
incurred.  If Rentech fails to protect Licensee as set forth above (i.e., defend
and indemnify Licensee or exercise the rights in subsection (i) or (ii)), then
Licensee may as an exclusive remedy terminate this Agreement on ninety (90) days
notice, whereupon Rentech shall refund to Licensee Rentech’s remaining liability
under Section 14.1(a), if any, less any costs or expenses incurred by Rentech
pursuant to this Section 13.3(a).  The foregoing indemnity shall not apply to
the extent a Third Party Claim results from the failure of Licensee to deploy
and use the Rentech Technology in accordance with the written instructions of
Rentech supplied to and agreed by Licensee on or before the completion of the
test set forth in Section 2.7.

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(b)

Licensee will defend Rentech and its Affiliates and its and their employees,
directors, officers and agents, against any Third Party Claims which are based
on, and indemnify and hold harmless such persons and entities from all Losses
finally awarded in connection with any such Third Party Claim to the extent
caused by, the infringement or misappropriation, as applicable, of any third
party intellectual property rights (including patents, trademarks, copyrights,
and trade secrets) by Licensee in connection with the design, construction or
operation of the Licensed Plant, except to the extent Rentech is obligated to
indemnify Licensee pursuant to Section 13.3(a) above.

13.4    Procedure.  The party entitled to indemnification (the “Indemnified
Party”) will provide the party obligated to provide indemnification (the
“Indemnifying Party”) with prompt notice of any Claim for which its seeks
indemnification, provided that the failure to do so will not excuse the
Indemnifying Party of its indemnification obligations except to the extent
prejudiced by such failure or delay.  The Indemnifying Party will defend any
such Claim and have the sole right to control the defense and settlement of such
Claim, provided that the Indemnifying Party may not, without the Indemnified
Party’s consent, enter into any settlement which admits guilt, liability or
culpability on the part of the Indemnified Party.  The Indemnified Party will
provide reasonable cooperation to the Indemnifying Party in defending any
Claim.  The Indemnified Party may, at its sole expense, obtain counsel of its
own choosing to monitor any Claim. 

14.      Limitation of Liability. 

14.1    NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, RENTECH SHALL NOT BE
LIABLE TO LICENSEE OR ITS AGENTS FOR:

 

(a)

CUMULATIVE LIABILITY FOR ANY AND ALL CLAIMS, LIABILITIES, DAMAGES, JUDGMENTS,
COSTS AND PAYMENTS ARISING UNDER THIS AGREEMENT OR RELATED TO THE LICENSED PLANT
IN EXCESS OF AN AMOUNT EQUAL TO [*] PERCENT ([*]%) OF THE TOTAL LICENSE FEES
PAID UNDER THIS AGREEMENT; OR

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(b)

INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF
ANY KIND WHATSOEVER INCLUDING LOST PROFITS OR SAVINGS, ARISING OUT OF OR
CONNECTED WITH THIS AGREEMENT OR THE LICENSED PLANT.

14.2    THE LIMITATIONS IN SECTION 14.1 WILL APPLY WHETHER OR NOT RENTECH HAS
BEEN ADVISED OF OR SHOULD BE AWARE OF THE POSSIBILITY OF SUCH DAMAGES.

14.3    THE LIMITATIONS SET FORTH IN SECTION 14.1 SHALL NOT APPLY TO:  (A)
VIOLATIONS OF CONFIDENTIALITY OBLIGATIONS HEREUNDER; (B) RENTECH’S OBLIGATIONS
UNDER SECTIONS 13.2; OR (C) LIABILITY ARISING AS A RESULT OF DEATH, PERSONAL
INJURY OR THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF RENTECH.

14.4    RENTECH SHALL HAVE NO LIABILITY FOR GUARANTEES OF PERFORMANCE THAT MAY
BE ISSUED BY AN ENGINEERING COMPANY THAT PROVIDES ENGINEERING SERVICES FOR THE
LICENSED PLANT UNDER ANY CONTRACT WITH LICENSEE OR ITS AGENTS OR CONTRACTORS. 

15.      Insurance.  Licensee shall purchase and maintain in effect a policy of
commercial, general liability insurance to protect Rentech with respect to the
events related to this Agreement.  Such insurance shall: (i) list Rentech, its
officers, directors, employees and agents, as additional insureds under the
policy; (ii) provide that such policy is primary and not excess or contributory
with regard to other insurance Rentech may have; (iii) be endorsed to include
contractual liability coverage for Licensee’s indemnification under Section 13;
and (iv) not be construed to create a limit of Licensee’s liability related to
this Agreement to the amount of insurance coverage obtained.

16.      Term and Termination.

16.1    Term.  This Agreement shall commence on the date of this Agreement and
shall continue so long as the Licensed Plant is operational, unless terminated
earlier pursuant to this Section 16. 

16.2    Defaults in Payment by Licensee.  If Licensee fails to pay any license
fee to Rentech when it is due under this Agreement, or any other amount when due
under this Agreement, then following such default, should Licensee fail to pay
that amount in full within thirty (30) days after receiving written notice from
Rentech of such default and Rentech’s intention to terminate the Agreement,
default interest shall be payable, as previously provided in this Agreement,
and, subject to resolution of any disputes pursuant to Section 17.4, this
Agreement shall terminate on the date given in the written notice of default. 

16.3    Defaults Other Than Payment. 

 

(a)

Except as set forth in Section 16.3(b) below, if either Licensee or Rentech is
in material breach as to any obligation hereunder that does not involve payment
of a license fee or other amount of money due to Rentech, and should the
breaching party fail to put into action, within forty-five (45) days after
receiving written notice of the breach from the other party, and thereafter
diligently pursue, a reasonable remedy designed to cure the material breach,
then the non-defaulting party shall have any right or remedy available at law or
in equity, including termination or cancellation of this Agreement (subject to
Section 16.3(c) below), including without limitation, the right to maintain an
arbitration proceeding against a breaching party for money damages or other
relief, for any prior breach of the Agreement, or for breach of the whole
Agreement or any unperformed balance thereof.

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(b)

In the event (i) Rentech fails to complete the test described in Section 2.7
successfully, in accordance with the criteria prescribed therein and before the
final date set forth therein, Licensee may within one hundred twenty (120) days
after such date terminate this Agreement, such termination to be effective upon
the date of Licensee’s notice; or (ii) Licensee is entitled to terminate the
Agreement pursuant to 13.3, then the termination provisions set forth therein
shall apply; or (iii) the Licensed Plant fails to perform as required in Section
6.2(c), then the termination provisions set forth therein shall apply.  Upon any
termination pursuant to this Section 16.3(b), Licensee shall be free to pursue
other technology at the Licensed Plant notwithstanding any other provision of
this Agreement to the contrary.

 

 

 

 

(c)

Rentech shall have the right to terminate this Agreement pursuant to Section
16.3 only upon:

 

 

 

(i)

any knowing breach of Section 2.2.; or

 

 

 

 

 

 

 

 

(ii)

a default under Section 11.6, first sentence.

16.4    Failure to Enter Catalyst Purchase Agreement.  In the event that the
parties fail to enter into any of the Catalyst Purchase Agreement by the dates
provided herein, either party may terminate this Agreement by providing fifteen
(15) days notice to the other party, provided that such right must be exercised
within ninety (90) days after such failure.

16.5    Licensee Special Termination Rights.  After 5 years subsequent to the
commencement of Commercial Operation of the Licensed Plant, Licensee may, at its
sole option, terminate this Agreement if each of (a) and (b) occurs:

(a)   Licensee can demonstrate reasonably that the FT Section of the Rentech
Technology is not as cost effective (i.e. catalyst cost, catalyst stability, the
conversion rate of Synthesis Gas Precursors required per Intermediate
Hydrocarbon Products produced) by [*]% or more compared to another bona fide
technology that produces Intermediate Hydrocarbon Products from Synthesis Gas
Precursors (“Alternative Technology”);

(b)   Licensee provides written notice to Rentech and Rentech fails to propose
within 180 days a reasonable modification to the Rentech Technology to improve
its cost effectiveness such that it is within [*]% of the Alternative
Technology.

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If (a) and (b) occur and Licensee terminates this Agreement, then Licensee will
compensate Rentech by payment of a fee (“Cancellation Fee”) equal to [*]% of the
Licensor Markup (as defined in the Catalyst Term Sheet) for the remaining term
of the Licensed Plant, assuming a [*]-year life after Commercial Operation and
assuming continued operation at the then current level of output, and then
applying a [*]% discount rate per annum to determine the total dollar value of
the Cancellation Fee as of the date of termination.  Such Cancellation Fee shall
be payable by Licensee to Rentech within 30 days after written notification to
Rentech of termination of the Agreement.  Following termination, Licensee shall
be free to install any Fischer Tropsch technology or other technology in the
Licensed Plant, notwithstanding any provision of the Site License to the
contrary provided such technology does not infringe upon or rely upon the
Rentech Technology, and, without limiting the generality of the foregoing,
Licensee may no longer use the Synthesis Gas Reactor Modules, Primary Separation
Modules, Rentech Catalyst or any other aspect of the Rentech Technology.

16.6    Failure to Reach Financial Close.  If upon the third anniversary of the
Effective Date of this Agreement, Licensee has failed to achieve Financial
Close, Rentech will have the right to terminate this Agreement.  Notwithstanding
the foregoing, if Licensee exercises its right in Section 2.8 to change the
location of the Licensed Plant, the deadline set forth in the preceding sentence
will be extended by twelve (12) months. 

16.7    Winding Down.  On the effective date of termination of this Agreement,
the right and license granted herein to Licensee shall terminate.  Licensee
shall promptly return to Rentech or its designated assignee, at the place
specified by Rentech or its designated assignee, all Rentech Catalyst in
inventory, and all Rentech Confidential Information.  Rentech will purchase the
Rentech Catalyst to be returned at a price equal to the payment made by Licensee
for the catalyst.  Unless the Agreement is terminated for default by Rentech,
Licensee will arrange and pay for shipping and insuring the return of the
Rentech Catalyst to Rentech or its designated assignee. 

16.8    Continuing Obligations.  It is understood and agreed that termination of
this Agreement shall not relieve either party of any obligation arising under
this Agreement prior to termination, including but not limited to the payment of
license fees and other sums of money that have accrued prior to the termination,
or which accrue thereafter pursuant to the terms of this Agreement. After
termination of this Agreement, Rentech shall have no obligation to refund any
money paid to it under this Agreement.  In addition, the following provisions
will survive any termination of this Agreement:  Sections 1 (Definitions), 2.2
(Restrictions) (other than Sections  2.2(iii), 2.2(iv) and 2.2(vi) if this
Agreement is terminated by Licensee pursuant to Section 16.3(a) or (b)), 3
(Ownership), 4 (Technical Services Agreement) (but solely with respect to the
license of Licensee Know How to Rentech), 5.1 (Rentech Plants and Rentech
Modules-Design and Construction), 8 (License Fees and Payment, but only with
respect to amounts due as of the effective date of termination), 10
(Confidentiality), 11.2, 11.3, 11.5 and 11.6 (Notification of Suit and Patent
Applications), 12 (Limited Warranty), 13 (Indemnification), 14 (Limitation of
Liability), 16.7 (Winding Down), 16.8 (Continuing Obligations), 17 (Arbitration
and Injunctive Relief), and 18 (Miscellaneous).  Neither party shall be liable
for damages of any kind as a result of properly exercising its respective right
to terminate this Agreement according to the terms and conditions of this
Agreement.  In addition, if this Agreement is terminated, Licensee shall be
liable for no further license fees under this Agreement other than those which
have accrued as of the effective date of termination.

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17.      Arbitration and Injunctive Relief.

17.1    Procedure for Arbitration and Judgment.  Any dispute or claim arising
out of or relating to this Agreement or a breach of it, including its
interpretation, performance or termination, that the parties are unable to
resolve within sixty days after written notice describing the dispute or claim
given by one party to the other, shall be finally resolved by arbitration. 
After the sixty-day period, either party may submit the dispute or claim to
arbitration by giving the other party written notice that it is submitting the
issue to arbitration.

17.2    Conduct of Arbitration.  The arbitration shall be conducted in the
English language in accordance with the Commercial Rules of the American
Arbitration Association, which shall administer the arbitration and act as
appointing authority.  In the event of any conflict between the rules and this
section, the provisions of this section shall govern.  The arbitration,
including the rendering of the award, shall take place in New York, New York,
USA, which shall be the exclusive forum for resolving the dispute or claim.  The
parties shall allow and participate in discovery in accordance with the United
States Federal Rules of Civil Procedure.  The arbitration shall be conducted
promptly after submission of arbitration and even if one party fails or refuses
to participate.  Unresolved discovery disputes and other motions may be
submitted to the chair of the arbitration panel and may be finally disposed of
by the chair of the panel.  An arbitration award shall be in writing and specify
the factual and legal basis for the award, and shall be accompanied by a
reasoned opinion.  The decision of the arbitrator or arbitrators shall be final
and binding upon the parties to this Agreement, and the expense of the
arbitration (including without limitation the award of attorneys’ fees to the
prevailing party) shall be paid as the arbitrator or arbitrators determine.

17.3    Claims for Less Than $100,000 U.S. or for $100,000 U.S. or More.  In the
event any such dispute or claim involves a claim of damages for less than One
Hundred Thousand Dollars ($100,000 U.S.), the arbitration shall be conducted by
one arbitrator appointed from among no more than four nominees, two of whom may
be nominated by each party.  The nominees shall either be gas process engineers
knowledgeable in Fischer-Tropsch process technology who are licensed to practice
engineering in at least one of the states of the United States or attorneys who
are licensed members of the U.S. Patent Bar.  In the event any dispute or claim
involves a claim of damages for One Hundred Thousand Dollars ($100,000 U.S.) or
more, the arbitration shall be conducted by three arbitrators, one to be
appointed by Rentech, one to be appointed by Licensee and a third to be selected
by the two arbitrators so appointed or, if they cannot agree on a third
arbitrator within forty-five days after the first has nominated an arbitrator,
by the administrator of the New York, New York American Arbitration Association
district; provided, however, at least one of the arbitrators shall be an
attorney who is a licensed member of the U.S. Patent Bar.  In the event that
either party does not appoint its arbitrator within one month of notice to it of
the submission to arbitration by the other party, such arbitrator shall be
appointed by the administrator of the New York, New York American Arbitration
Association district.  Decisions of the single arbitrator, if there is only one,
or of any two of the three arbitrators, shall be deemed the decisions of the
arbitrators.  If there are three arbitrators, the last one selected shall be the
chair of the arbitration panel.  A single arbitrator shall have the authority of
the chair of the panel.

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17.4    Determination of Payments Due.  A good faith dispute concerning the
determination or calculation of payments due to Rentech shall not cause
termination of this Agreement if Licensee submits to binding arbitration in
accordance with this Agreement, and continues to perform all other obligations
and pay all other sums to Rentech when and as required under this Agreement. 
The fact that the deposit was made shall not prejudice the arbitrator’s decision
regarding the dispute in payments.  If the arbitrators award all or any part of
the disputed payments to Rentech, those payments, plus interest on them from the
date they were originally due, at the maximum legal rate in New York, must be
paid to Rentech within thirty (30) days from the date of the arbitration award
or this Agreement shall terminate at the end of the thirty (30) day period. 

17.5    Entry of Judgment.  Each party hereby submits itself to the jurisdiction
of the courts of the place where arbitration is held.  Judgment upon the award
of the arbitration may be entered in any court where the arbitration takes place
or in any court having jurisdiction thereof, and application may be made to any
court for a judicial acceptance of the award and order of enforcement.  If the
Licensee is not a citizen of the United States, the parties acknowledge that
this Agreement and any award rendered pursuant to it shall be governed by the
1958 United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, or its replacement.

17.6    Judicial Action For Specific Performance or Injunction.  Notwithstanding
anything contained in this Agreement to the contrary, each party shall have the
right to institute judicial proceedings against the other party or anyone acting
by, through or under such other party, in order to enforce the instituting
party’s rights under this Agreement through rectification of contract, order
compelling an audit, specific performance, injunction or other equitable
relief.  An order issued by a court to bar a breach of the provisions of
confidentiality shall not preclude an award of money damages for the breach. 
The parties irrevocably submit to the jurisdiction of the state or federal
courts of New York, New York for these purposes; provided, however, that nothing
herein shall preclude either party from instituting proceedings for these types
of relief against the other party or anyone acting by, through or under the
other party in any country or place that has jurisdiction for the purpose of
protecting and enforcing the instituting party’s rights under this Agreement. 
Nothing shall limit the right of either party to serve process in any manner
permitted by law.  Each party hereby irrevocably waives any objection that it
may now or hereafter have to the laying of venue in the state or federal courts
of New York, New York and further irrevocably waives any claim that New York,
New York is not a convenient forum for any such suit, action or proceeding.

18.      Miscellaneous.

18.1    Assignment. 

 

(a)

Any assignment of this Agreement shall be subject to the prior written consent
of the other party, not to be unreasonably withheld or delayed; provided,
however: (1) this Agreement shall be assigned to any direct purchaser of the
Licensed Plant other than one that is a Competitor of Rentech; (2) consent will
not be required for an assignment to a successor by merger or to the acquirer of
all or substantially all of the assets or stock (or other equity) of a party,
provided in each case the assignee is not a Competitor of the other party.

Page 21

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(b)

The assigning party shall continue to be liable for all duties, obligations and
liabilities under this Agreement to the extent not performed by the assignee;
and any direct or indirect assignee of this Agreement shall at the request of
the non-assigning party affirm in writing that this Agreement is in full force
and effect and binding on the assignee as written.

 

 

 

 

(c)

Rentech in no case shall assign this Agreement to an entity to which all of
Rentech’s right, title and interest in and to the Rentech Technology has not
also been concurrently assigned, and neither party shall assign this Agreement
to a Competitor of the other party.

18.2    Collateral Assignment by Licensee; Other Matters. 

 

(a)

Licensee may pledge its rights under this Agreement as collateral in connection
with any financing of the Licensed Plant, and Rentech hereby agrees to enter
into customary direct agreement with the financing parties.

 

 

 

 

(b)

This Agreement does not include the right, by implication, estoppel or
otherwise, to sublicense the Rentech Technology applications to a third party.

18.3    Third Parties.  The parties intend to confer no benefit or right on any
person not a party to this Agreement.  No third party shall have the right to
claim the benefit of any provision hereof as a third party beneficiary of any
such provision.

18.4    No Other Relationship.  Nothing in this Agreement shall be deemed to
create an agency, joint venture, partnership, franchise or similar relationship
between the parties hereto.  Each party shall conduct all business in its own
name as an independent contractor.  Neither party shall be liable for the
representations, acts, or omission of the other party contrary to the terms of
this Agreement.  Neither party has the right or power to act for or on behalf of
the other or to bind the other in any respect whatsoever, other than as
expressly provided for herein.

18.5    Dollar Transaction.  All payments shall be made in U.S. Dollars, and
payment obligations shall not be discharged by an amount paid in another
currency, whether pursuant to a judgment or otherwise.

18.6    Finder’s Fees.  Rentech and Licensee represent that there are no
broker’s commissions, finder’s fees or other like amounts payable with regard to
this transaction for which the other party is responsible.  Rentech and Licensee
agree to indemnify and hold the other harmless from and against all liability,
claims, damages and costs of any kind arising from or connected with any
broker’s commissions or finder’s fee or charge claimed to be due any person
arising from the indemnitor’s conduct with respect to this Agreement.

18.7    Costs.  Each party shall bear its own costs and expenses related to the
preparation and negotiation of this Agreement.

18.8    Rights, Powers, Remedies Cumulative; Waiver; Time.  Each and every
right, power and remedy specified in this Agreement shall be cumulative and in
addition to every other right, power and remedy existing now or hereafter at
law, in equity, or by statute.  Each and every right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by a party.  The exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy.  It is
expressly understood and agreed that time is of the essence of this Agreement,
and that no delay or omission by a party in the exercise of any right or power,
or in the pursuit of any remedy, shall impair any right, power or remedy, or be
construed to be a waiver thereof, nor shall the acceptance by a party of any
payment required under this Agreement be deemed a waiver of any right, power or
remedy in the future.

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18.9    Notices.  Any notice, payment, request, demand or other communication
hereunder shall be in writing and, except as provided for service of process in
this Agreement, shall be deemed to have been duly given when  (i) delivered
personally to the party to be notified; or (ii) when sent if sent by facsimile
transmission with confirmation that the facsimile message was received by the
facsimile machine of the party to be notified, (iii) one business day after
sending if sent by a nationally recognized overnight carrier; (iv) three
business days after sent by ordinary mail, postage paid, to the party to be
notified,  or (v) five business days after sent by registered or certified mail,
postage paid, to the party to be notified, at the address set forth below. 
Either Rentech or Licensee may change its address, facsimile number or
representative upon written notice to the other party.  A letter duplicating a
facsimile transmission previously marked as received by the facsimile machine of
the other party shall not extend the time by which the notice was given.

Rentech:

 

Licensee:

Chief Executive Officer

 

Medicine Bow Fuel & Power LLC

1331 17th Street, Suite 720

 

2 Riverway, Suite 1760

Denver, Colorado 80202-1557

 

Houston, Texas  77056

Facsimile:  (303) 298-8010

 

Attn:  Bob Kelly

 

 

Facsimile:  713-355-3201

With copy to:

 

General Counsel

1331 17th Street, Suite 720

Denver, Colorado 80202-1557

Facsimile:  (303) 298-8010

18.10    Governing Law.  The provisions of this Agreement and all rights and
obligations hereunder shall be governed in all respects by the law of the state
of New York, USA, without regard to principles of conflicts of laws. 

18.11    Table of Contents and Headings.  Any table of contents accompanying
this Agreement and any headings contained herein are for convenience of
reference only, do not constitute a part of this Agreement, and shall not be
employed in interpreting this Agreement.

18.12    Integration.  This Agreement represents the entire agreement of the
parties with respect to the subject matter described in it and supersedes all
prior correspondence, conversations, negotiations and understandings with
respect to those subjects, except as to agreements for confidentiality or other
written agreements referred to in this Agreement.

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18.13    Construction.  This Agreement has been prepared, examined, negotiated
and revised by each party and their respective attorneys, and no implication
shall be drawn and no provision shall be construed against any party to this
Agreement by virtue of the purported identity of the drafter of this Agreement,
or any portion of it.

18.14    Invalidity of Provision.  If any of the provision of this agreement
shall be held by an arbitrator or a court or administrative agency of competent
jurisdiction to contravene the laws of any country, it is agreed that such
invalidity or illegality should not invalidate the whole Agreement, but this
Agreement shall be construed as if it did not contain the provision or
provisions held to be invalid or illegal in the particular jurisdiction
concerned, and insofar as the construction does not affect the substance of this
Agreement and the rights and obligations of the parties to it, it shall be
construed and enforced accordingly.  In the event, however, that the invalidity
or illegality substantially alters the relationship between the parties and
adversely affects the interest of either party, the parties shall negotiate a
mutually acceptable alternative provision not conflicting with such laws.

18.15    Further Assurances.  Each party shall execute and deliver all further
documents and instruments and take all such further actions as may be reasonably
required or appropriate to carry out the intent and purposes of this Agreement.

18.16    Counterparts.  This Agreement may be executed in several counterparts,
and all copies so executed shall constitute but one and the same agreement,
which shall be binding on all the parties hereto notwithstanding that less than
all of the parties may have signed the original or the same counterpart.

IN WITNESS WHEREOF, the parties have executed duplicate originals of this
Agreement by their duly authorized representatives or officers as of the date
given in the introductory paragraph.

RENTECH, INC.

 

MEDICINE BOW FUEL AND POWER LLC

 

 

 

 

 

 

/s/ Claude C. Corkadel III

 

 

/s/ Jon C. Doyle

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

Name:

Claude C. Corkadel III

 

Name:

Jon C. Doyle

Title:

Vice-President, Strategic Programs

 

Title:

Executive Officer

Page 24

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EXHIBIT A – PATENTS

U.S. Patent No.

 

Date of Issue

 

Title

 

Summary

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

5,324,335

 

06/28/94

 

Process for the Production of Hydrocarbons

 

Oxygenated diesel additive with <2% oxygen

 

 

 

 

 

 

 

5,500,449

 

03/19/96

 

Process for the Production of Hydrocarbons

 

Thermal cracking of wax

 

 

 

 

 

 

 

5,504,118

 

04/02/96

 

Process for the Production of Hydrocarbons

 

Catalyst manufacturing and activation

 

 

 

 

 

 

 

5,506,272

 

04/09/96

 

Process for the Production of Hydrocarbons

 

Oxygenated diesel product with >2% oxygen

 

 

 

 

 

 

 

5,543,437

 

08/06/96

 

Process for the Production of Hydrocarbons

 

CO2 recycle and variable syngas

 

 

 

 

 

 

 

5,620,670

 

04/15/97

 

Process for the Production of Hydrocarbons

 

CO2 recycle apparatus

 

 

 

 

 

 

 

5,621,155

 

04/15/97

 

Process for the Production of Hydrocarbons

 

CO2 recycle method

 

 

 

 

 

 

 

5,645,613

 

07/08/97

 

Process for the Production of Hydrocarbons

 

Oxygenated diesel additive with 2% oxygen

 

 

 

 

 

 

 

5,763,716

 

06/09/98

 

Process for the Production of Hydrocarbons

 

FT reactors in series

 

 

 

 

 

 

 

6,068,760

 

05/30/00

 

Catalyst/Wax Separation Device For Slurry Fischer-Tropsch Reactor

 

Dynamic settler for wax/catalyst separation

 

 

 

 

 

 

 

6,306,917

 

10/23/01

 

Process for the Production of Hydrocarbons, Power, and Carbon Dioxide from
Carbon-Containing Materials

 

Hydrocarbons, power, and CO2

 

 

 

 

 

 

 

6,380,268

 

04/30/02

 

Plasma Reforming/Fischer-Tropsch Synthesis

 

Plasma syngas generator

 

 

 

 

 

 

 

6,534,552

 

03/18/03

 

Producing Liquid Hydrocarbons from Natural Gas

 

Hydrogen recycle

 

 

 

 

 

 

 

6,627,666

 

09/30/03

 

Fischer-Tropsch Synthesis Using Industrial Off Gas Feedstreams

 

Industrial off-gas

Page 25

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U.S. Patent No.

 

Date of Issue

 

Title

 

Summary

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

6,632,846

 

10/14/03

 

Integrated Urea Manufacturing Plants and Processes

 

Urea production (1)

 

 

 

 

 

 

 

6,712,982

 

03/30/04

 

Method of Removing Catalyst Particles from Wax

 

Dynamic settler improvement, method

 

 

 

 

 

 

 

6,730,221

 

05/04/04

 

Dynamic Settler

 

Dynamic settlement improvement, apparatus

 

 

 

 

 

 

 

6,809,123

 

10/26/04

 

Production of Hydrogen and Higher Hydrocarbons

 

Method to improve production with Kolbel-Engelhardt reaction

 

 

 

 

 

 

 

6,838,487

 

01/04/05

 

Method and apparatus for regenerating an Iron-Based FT Catalyst

 

Catalyst regeneration

 

 

 

 

 

 

 

6,976,362

 

12/20/05

 

Integrated Fischer-Tropsch and Power Production Plant with Low CO2 Emissions

 

A plant for producing Fischer-Tropsch liquids and electrical power with greatly
reduced emissions of carbon dioxide to the atmosphere.

 

 

 

 

 

 

 

Misc

 

 

 

Other Applications Pending

 

 

--------------------------------------------------------------------------------

(1) This patent is not included in the Rentech Patents and not subject to the
licenses granted hereunder.

Page 26

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EXHIBIT B - SCHEDULE OF FEES

1.        Initial License Fee.

1.1      Amount.  Licensee will pay an initial license fee based on the greater
of [*], or [*] barrels per day.  The initial license fee will be based on the
following table.  For the avoidance of doubt, if the capacity is [*] barrels per
day, the initial license fee will equal $[*] ($[*] x [*] barrels + $[*] x [*]
barrels).  The references to barrels in the following table are barrels of
Intermediate Hydrocarbon Products.

Production Capacity

 

Price Per Barrel of Capacity

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Production capacity up to 10,000  bpd

 

$[*] U.S. per bbl in this range

 

 

 

Production capacity between 10,001 and 20,000 bpd

 

$[*] U.S. per bbl in this range

 

 

 

Production capacity between 20,001 and 30,000 bpd

 

$[*] U.S. per bbl in this range

 

 

 

Production capacity between 30,001 and 50,000 bpd

 

$[*] U.S. per bbl in this range

1.2      Timing.  The initial license fee shall be payable according to the
following schedule:

Event

 

Percent of Initial License  Fee Due

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Financial Close, currently scheduled for the second quarter of 2006

 

[*]%

 

 

 

Delivery of the first Fischer-Tropsch (“FT”) reactor module to Licensee (if such
module is built off site) or the delivery of the external wall parts for the
first FT reactor module to Licensee (if such module is to be built on site)

 

[*]%

 

 

 

Mechanical Completion of the Licensed Plant

 

[*]%

 

 

 

90 days following Commercial Operation of the Licensed Plant at full capacity

 

[*]%

2.        Subsequent License Fees.

2.1      Increases in Existing Capacity.  As of Commercial Operation, if during
any semi-annual period ending on June 30 or December 31 of any calendar year,
the actual production, as defined by averaging the [*] ([*]) consecutive days
during that period with the greatest daily production, increases by more than
[*] percent ([*]%) above the then current capacity licensed and for which
license fees have been paid, Licensee will (a) be subject to additional license
fees to cover this increased capacity, and, concurrent with the semi-annual
records required to be maintained by Licensee pursuant to Section 9.2 of the
Agreement, (b) notify Rentech of this capacity increase.  Rentech will provide
an invoice to Licensee covering the incremental license fees due, as calculated
using the table in Section 1.1 of this Exhibit, and subject to any adjustments
referenced in Section 3 of this Exhibit.

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2.2      Design Increase in Production Capacity (Expansion).  If the Licensee
approves the expansion of the production capacity through the addition of new
Fischer Tropsch reactors in the Licensed Plant beyond the then current amount
licensed, Licensee shall notify Rentech of such event within thirty (30) days of
approval. At that time, Licensee shall include with such notification the
estimated dates for similar events as listed in the table in Section 1.2 of this
Exhibit corresponding with the approved expansion. Rentech shall provide an
accounting of the total incremental license fees due, as calculated using the
table in Section 1.1 of this Exhibit, and subject to any adjustments referenced
in Section 3 of this Exhibit. Payment of additional license fees will be
invoiced and paid consistent with the terms of this Agreement and using a
schedule similar to that cited in Section 1.2 of this Exhibit for the initial
license fees paid.

3.        License Fee Adjustments.  License fees set forth in this Exhibit, as
applicable to any expansion pursuant to Sections 2.1 or 2.2 (it being understood
that the license fees for the initial designed capacity of the Licensed Plant
shall not be escalated), will be adjusted in accordance with this Section 3 as
of the date that they become due, based on the change in the All Commodities
Producer Price Index published by the U.S. Department of Labor, Bureau of Labor
Statistics (the “PPI”) as of two (2) months previous to the date such amount is
due, versus the PPI as of the Effective Date.  The following formula shall
apply: 

A = B x [C / D], where:

3.1      A = the new license fee;

3.2      B = the fee stated in this Exhibit;

3.3      C = the PPI for the most current month available as of the date of
notice for the additional capacity; and

3.4      D = the PPI as of Effective Date.

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EXHIBIT C:  PDU TEST PROCEDURES AND STREAM CHARACTERISTICS

Product Development Unit (“PDU”) Description

Facility Location

The planned location for the PDU is Rentech’s Sand Creek site, located in
Commerce City - a northern suburb of Denver adjacent to Suncor’s existing
refinery. Originally used as a 250 ton per day methanol production facility
which operated during the 1990s. The blue outline (right) shows the location of
the current methanol equipment.

 

Message [image001.gif]

 

 

 

 

PDU Description

The PDU is a stand-alone, integrated plant capable of producing 10-15 barrels
per day (bpd) of Fischer-Tropsch (FT) liquids including naphtha, ultra-clean
burning diesel and aviation fuels. The process plant includes coal gasification
and gas clean-up, synthesis gas conversion using Rentech’s proprietary and
patented Fischer-Tropsch technology and product upgrading.

 

 

 

 

PDU Objectives

In addition to producing large quantities of product for testing, operation of
the PDU is designed to demonstrate the value of Rentech’s FT technology to
potential customers, partners and other stakeholders. It will allow the Company
to address the scale-up issues attendant with commercializing the FT technology
and it will be the first fully integrated facility in the US capable of
providing fuels for testing from a continuous coal-based FT process. A facility
of this size can demonstrate unit reliability, efficiency and flexibility under
varying conditions using multiple feedstocks to confirm previous results from
other test environments. It will be the basis for creating operating procedures
for larger commercial-sized units and can/will be used as an operator training
facility.

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PDU Design

Below is a simple flow sheet for the proposed PDU unit.

 

Message [image002.gif]

 

 

 

 

Gasification

The coal gasification unit is being built by Bio Conversion Technology LLC, a
local Denver company. The designed unit is capable of converting 20-35 tons per
day of various carbon bearing materials to synthesis gas (syngas), a mixture of
carbon monoxide (CO) and hydrogen (H2). Possible feedstocks include a wide
variety of coals, petroleum coke, tires, wood waste and other bio-mass
materials. Since this is not an oxygen blown system, the gasifier will produce a
higher than needed H2:CO ratio syngas, potentially in excess of 2.5:1. It will
also produce a syngas requiring gas clean-up of sulfur, CO2, C6+, and other
potential contaminants. While this adds to the cost of the front-end, and
reduces the fuel efficiency of the overall unit, it is an excellent
demonstration of the ability for Rentech’s catalyst and FT system to operate in
an efficient and environmentally sound manner.

 

Message [image003.gif]

 

 

 

 

 

The goal is to remove any contained sulfur to less than 1 ppmv and then route
the syngas through a CO2 removal unit to reduce the CO2 level to less than 5%. A
hydrogen membrane will be used to extract excess hydrogen to meet a target H2:CO
ratio of between 0.8-1.0 in order to simulate typical syngas streams from other
conventional gasification processes.

Page 30

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The unit will be built specifically for Rentech by Bio-Conversion LLC. Estimated
delivery of the gasification module to Sand Creek is June, 2006. Once in-place,
local support will be provided by Bio-Conversion.

 

Message [image004.gif]

 

 

 

Fischer-Tropsch

The Fischer-Tropsch section uses Rentech’s patented and proprietary technology.
The planned reactor will produce up to 15 barrels per day of unrefined (crude or
intermediate) FT products using one 16” diameter by 115’ tall FT slurry reactor.
While smaller in diameter than a commercial scale unit, the height is similar.
The excess hydrogen will be removed from the syngas prior to the FT reactor.

 

 

 

 

 

 

The picture at the right is one of two FT reactors that were located at
Rentech’s Pueblo Plant and were operated in 1992 and 1993. By comparison, these
reactors were designed to produce 230 bpd of crude FT products and   were 72” in
diameter by 55’ tall. The FT reactor module was designed, fabricated, installed
and operated by Rentech. At that time the two reactors were the world’s largest
FT slurry reactors and are still the largest ever operated outside of South
Africa. Rentech is working with Zeton - a Canadian company with a strong
reputation in modular design and construction – regarding the possible
construction of this unit using road transportable skid modules.

 

 

 

 

Product Upgrading

The crude FT products will be processed via an onsite product upgrading unit to
produce saleable Fischer-Tropsch products.  Storage will be provided for both
crude and final products.  The upgrading unit will run on a continuous basis
from intermediate product storage tanks located within the existing containment
area.  The products are expected to be FT naphtha, ultra-clean burning FT diesel
and aviation fuels for the DoD. The design of a skid based upgrading unit has
been completed by Zeton and they have now been awarded the contract to construct
the final unit using UOP technology as a basis. UOP, ex Chicago, IL, has been
involved in the development process to assure that the final design has
sufficient flexibility to effectively operate under a wide range of conditions.

Page 31

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Project Timing

Long lead items have been ordered. It is anticipated that the entire design and
construction of the PDU project will be completed by late 2006 with an
additional 3-4 months required for start-up and unit stabilization. The total
system will be delivered and initiated on a phased basis with the gasifier first
arriving in mid-year, the FT section in September and the upgrading section by
year-end. Each can begin the integration and start-up process as it is received.

 

 

 

 

 

While the existing permits needs to be revised, there are no obvious permitting
issues for this location. The proposed timeline is as follows:

 

 

Message [image005.gif]

Stream Characteristics

 

 

 

 

Syngas Quality

Syngas quality is critical to the design and efficiency of the FT reactor. Based
on historical research and development work completed in both lab scale (Rentech
BCR) and semi-commercial scale facilities (Synhytech), the following are
scoping-basis only syngas feed specifications.  These specifications will be
optimized for licensee’s facility during the feasibility study and FEED and
validated during the PDU testing phase.

 

 

 

 

 

 

 

 

 

              H2:CO - Ratio

 

[*]

 

              CO2 - % - Once Through Operation

 

[*]

 

                               Recycle Operation

 

[*]

 

              Total Sulfur – ppmv

 

[*]

 

 

 

 

 

              N2 & Argon  - %

 

[*]

 

              CH4 - %

 

[*]

 

              CH2+ - %

 

[*]

 

              Ammonia - ppmv

 

[*]

 

              Mercury – ppmv

 

[*]

 

              Halogens – ppmv

 

[*]

 

              Arsenic, as AsH3 – ppmv

 

[*]

 

              HCL – ppmv

 

[*]

 

              Ni(CO)4 – ppmv

 

[*]

 

              HCN – ppmv

 

[*]

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Conditions for syngas delivered to the FT unit are:

 

 

 

 

 

 

 

Temperature – oF

 

[*]

 

 

Pressure – PSIG

 

[*]

 

 

 

 

 

Product Description

There are three main product collections that constitute the Intermediate
Hydrocarbon Products which are noted in the process diagram in Exhibit D:

 

 

 

 

 

 

FT1

A light, crude naphtha or light distillate with a bulk hydrocarbon range of C5
to C9.  The light distillate cut also contains alcohols, acids, ketones and
aldehydes.

 

 

 

 

 

 

FT2

A crude middle distillate in the diesel or jet range with a bulk hydrocarbon
range of C10 to C19, also containing alcohols, acids ketones and aldehydes.

 

 

 

 

 

 

FT3

A heavy wax stream with a typical hydrocarbon range from C20 to in-excess of
C100.

 

 

 

 

 

 

All of these products, when measured in volume, are based on the density
(specific gravity) at a standard temperature of 60o F.

 

 

 

 

 

Plant Parameters

Under Sections 2.7 and 6.2 of this agreement, there are three levels of
operating parameters defined. The first is a set of minimum standards by which
Rentech’s technology and its ability to perform is judged. The second is a set
of design parameters developed on the basis of the results from the preliminary
engineering and PDU test using Licensee coal. The third is a range outside of
the design parameters which would define limitations on the acceptable operating
range of the technology once the actual unit is operating. Only the minimum
standards and the ranges are set at the time of agreement execution.

 

 

 

 

 

 

The minimum conversion rate is set at [*] pounds of collected Intermediate
Hydrocarbon Products per pound-mole of CO feed into the FT reactor. All
measurements are done on a mass basis to eliminate errors from density
conversion. The Intermediate Hydrocarbon Products measured are collected at
points FT1, FT2, and FT3 as shown on the process diagram in Exhibit D, and
generally consistent with the definitions above.

 

 

 

 

 

 

The maximum catalyst consumption rate is defined as the rate of catalyst
addition required per unit production to maintain a constant conversion rate at
or above the minimum conversion rate listed above. The maximum catalyst
consumption rate is [*] pounds per thousand (1,000) pounds of Intermediate
Hydrocarbon Product collected

 

 

 

 

 

 

After the facility is in operation, and lined-out to an equilibrium level,
actual operating data will be collected. If the Plant Conversion Rate cannot be
maintained at levels greater than [*]% of the Design Conversion Rate while the
Plant Catalyst Consumption Rate is not greater than [*]% of the Design Catalyst
Consumption Rate, then the provisions of Section 6.3 (c) are invoked.

Page 33

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 Test Procedures

 

 

 

 

 

PDU Testing

As stated above, the objectives for the PDU (in addition to making product) is
to test various coals and develop a series of operating parameters to optimize
the performance of Rentech’s FT technology on a coal feedstock.

 

 

 

 

 

Process for Testing

Key steps to running the Licensee test per Section 2.7:

 

 

 

 

 

 

FT Unit Preparation – As part of the start-up program for the PDU, syngas will
be charged to the reactor for a period of time to condition the catalyst and
reach equilibrium for its activity. This will be done using a reference coal,
such as a local Powder River Basin coal or an Illinois Basin coal. It’s expected
that this unit line-out will take at least 3 months from initial charge of
syngas to the reactor.

 

 

 

 

 

 

Coal Supply – The unit is designed to operate at a maximum consumption of 25
TPD. In order to maintain ongoing operations without unit trips, an inventory of
roughly 100-200 tons should be on hand at all times. Initially, coal deliveries
are expected to be via truck only, although rail delivery may be available in
the future.

 

 

 

 

 

 

Operating Transition – For best results, the unit will transition from the
reference coal to the Licensee coal over a several day period. Adjustments in
gas clean-up will need to be made as well as control of the H2:CO ratio to meet
the target levels. A critical risk at this juncture could be an excursion of
contaminants into the catalyst reactor from inadequate capture in gas clean-up;
therefore the transition must be on a controlled basis.

 

 

 

 

 

 

Operating & Results Reporting – Once the system is operating on a relatively
equilibrium basis, sampling of the syngas input and production output will be
conducted on a 24 hour basis. Data required to accurately calculate the Test
Conversion Rates will be collected over at least 5 separate 24 hour periods.

 

 

 

 

 

 

Catalyst loss in the secondary filtration system will be calculated and make-up
added to maintain a constant catalyst load in the reactor. Once the conversion
degradation has been quantified, additional catalyst will be added to maintain a
constant conversion rate. The sum of catalyst loss in the filtration process as
well as catalyst make-up from other losses will be used to determine the loss
per barrel of production over a weekly basis.

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Successful Test

The tests will be deemed successful and confirm the desired design condition if
at least 5 reporting periods show a conversion rate in excess of the Minimum
Conversion Rate set at [*] pounds of Intermediate Hydrocarbon Products per
pound-mole of CO; and concurrently, the catalyst make-up required to meet these
conversion rates is no more than [*] pounds per thousand pounds of Intermediate
Hydrocarbon Products, as measured over a one week period during which at least 2
of these reporting periods occurred.

 

 

 

 

 

Design Parameters

It is recognized and agreed that the Design Parameters being developed from this
testing are not a mathematical average of all results, but rather an assessment
of realistic targets for actual operations based on process trend information
and good engineering practice.

 

 

 

 

 

Reported results

Licensee will be provided a report within 30 days of the end of testing which
includes:

 

 

 

 

 

 

1.

A summary of all actual test data on an average basis,

 

 

 

 

 

 

2.

The new design parameters developed by Rentech and required as referenced in
Section 2.7, with supporting documentation as to how these figures were
developed,

 

 

 

 

 

 

3.

A general summary of operating results and recommendations for further testing
needs, if required.

 

 

 

 

 

 

The licensee may have a representative in attendance during this period of
testing, recognizing that all results fall under the confidentiality provisions
of the agreement.

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EXHIBIT D:  FT SECTION

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EXHIBIT E:  CATALYST TERM SHEET

 

a.

Licensee:  Medicine Bow Fuel & Power LLC

 

 

 

 

b.

Licensor:  Rentech, Inc.

 

 

 

 

c.

Quantity:  Licensee will purchase the necessary catalyst from Licensor in
quantities required at the Project.  The Licensor will be obligated to deliver
the catalyst subject only to force majeure events to be set forth in the
Catalyst Purchase Agreement; otherwise, Licensor will provide replacement
catalyst to Licensee at the agreed-upon price in the Catalyst Purchase
Agreement.

 

 

 

 

d.

Term:  The Catalyst Purchase Agreement will terminate concurrently with the Site
License Agreement.

 

 

 

 

e.

Price: The catalyst price will be agreed upon between the Parties; however, the
price structure will include the sum of the following (broken down by category):
(i) manufacturer cost, (ii) the manufacturer’s reasonably commercial markup or
profit, and (iii) Licensor’s markup for oversight services (“Licensor’s
Markup”).  The Licensor’s Markup will be equal to a fixed amount of [*] ($[*])
per pound of catalyst, adjusted for inflation in a similar manner as the license
fee adjustment cited in Exhibit  B  of the Site License Agreement. However,
during the course of any year, the Licensor will not be compensated on extra
catalyst sales required should the Actual Catalyst Conversion Rate exceed the
Maximum Catalyst Conversion Rate as stipulated in Section 2.7 of the Site
License Agreement - which is roughly equivalent to [*] of catalyst per barrel of
Intermediate Hydrocarbon Product. As such, the maximum total Licensor’s Mark-up
for the year collected by the Licensor shall not exceed a value equal to the
Licensor’s Mark-up times the total actual barrels produced during that annual
period, taking in to account adjustments in inventory. For example, if in any
given calendar year the annual production of Intermediate Hydrocarbon Products
is equal to [*] barrels, then the maximum total Licensor’s Mark-up is set at an
inflation adjusted $[*] times [*] barrels or $[*]. If it takes [*] pounds to
manufacture that volume ([*] pound per barrel), the total Licensor’s Mark-up is
$[*], if it takes [*] pound to produce that volume ([*] pounds per barrel), the
total Licensor’s Mark-up is capped at $[*]. Any overage billed during any annual
period will be refunded within 30 days of receipt of the year-end semi-annual
report.  Additionally, Licensee acknowledges that the selected catalyst
manufacturer may not agree to provide the catalyst on a cost plus basis, but
instead, may propose a fixed price per pound, in which case subsections (i) and
(ii) will be deemed replaced by such amount, subject to the agreement of
Licensee and Licensor.

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f.

Qualified Catalyst Manufacturer:  Licensee will have the right to nominate an
alternative catalyst manufacturer, and Licensor will use reasonably commercial
efforts to certify if such manufacturer meets all standards as a qualified
vendor to supply catalyst under the Catalyst Purchase Agreement.  The Catalyst
Purchase Agreement will detail a general process and timing of the certification
process and notification process by Licensee to Licensor regarding the selection
of the qualified catalyst vendor. While Licensor will use commercially
reasonable efforts to provide Licensee with catalyst of optimum value for the
Project, whether from its own supply sources or from any qualified alternative
supplier, Licensor will retain the ultimate right to select the source of
catalyst.  Nothing in this agreement will obligate Licensor to default on
existing supply agreements nor divert supply away from in-house facilities built
specifically to supply Licensee and other customers. Should an alternative
supplier be approved and selected for supply, all catalyst sales will continue
to be between the Licensor and the Licensee per this agreement, and not with the
alternative source.

 

 

 

 

g.

Qualified Catalyst:  Licensee will have the right to nominate an alternative
catalyst, and Licensor will use reasonably commercial efforts to certify if such
catalyst meets all standards as a qualified alternative to the Rentech catalyst
for supply under the Catalyst Purchase Agreement without materially altering the
Rentech Technology.  The Catalyst Purchase Agreement will detail a general
process and timing of the certification process and notification process by
Licensee to Licensor regarding the selection of the qualified catalyst. While
Licensor will use commercially reasonable efforts to provide Licensee with
catalyst of optimum value for the Project, Licensor will retain the ultimate
right to select the catalyst. Nothing in this agreement will obligate Licensor
to default on existing supply agreements nor divert supply away from in-house
facilities built specifically to supply licensee and other customers. Should an
alternative catalyst be approved and selected for supply, all catalyst sales
will continue to be between the Licensor and the Licensee per this agreement,
and not with an alternative source.  Should an alternate catalyst be used, the
Catalyst Purchase Agreement will identify appropriate limitations on certain
Licensor obligations under the Site License Agreement (e.g., appropriate
limitations on Rentech’s infringement indemnification obligations and on any
performance guarantees included in the Site License Agreement).

 

 

 

 

h.

Performance:  The Catalyst Purchase Agreement will include remedies, including
termination, if the catalyst fails to perform properly (subject to subsection
(g) above) or if the manufacturer fails to supply catalyst meeting the quality
specifications.

 

 

 

 

i.

Other:  The Catalyst Purchase Agreement will include customary terms and
conditions that are standard for the purchase and sale of products outlined
herein.

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