Exhibit 10.24



 





Exhibit 10.24




EMPLOYMENT AGREEMENT



  



Between

Rentech, Inc.

and

Richard T. Penning

 




     THIS AGREEMENT is entered into as of January 22, 2007 and made effective as of January 15,
2007 between Rentech, Inc. (the “Company”) and Richard T. Penning (“Executive”).



 



     In consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


1.      Employment.  The Company shall employ Executive, and Executive hereby accepts employment
with the Company, upon the terms and conditions set forth in this Agreement, for the period
beginning on January 15, 2007 (the “Commencement Date”) and ending as provided in Section 4
hereof (the “Employment Period”). 



2.      Position and Duties.




     (a) During the Employment Period, Executive shall serve as Executive Vice President of
Commercial Affairs of the Company. During the Employment Period, Executive shall render such
administrative, financial and other executive and managerial services to the Company and its
affiliates (the “Company Group”) as are consistent with Executive’s position and the
by-laws of the Company and as the Chief Executive Officer (“CEO”) may from time to time
reasonably direct.  Executive shall also serve for no additional compensation or remuneration as an
officer or director of such subsidiaries of the Company as may from time to time be designated by
the CEO or the Board of Directors of the Company (the “Board”).



     (b) During the Employment Period, Executive shall report to the CEO and shall devote his best
efforts and his full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs of the Company. 
Executive shall perform his duties, responsibilities and functions to the Company hereunder to the
best of his abilities in a diligent, trustworthy, professional and efficient manner and shall
comply with the Company’s policies and procedures in all material respects.  In performing his
duties and exercising his authority under this Agreement, Executive shall support and implement the
business and strategic plans approved from time to time by the Board and shall support and
cooperate with the Company’s efforts to operate in conformity with the business and strategic plans
approved by the Board.  During the Employment Period, Executive shall not serve as an officer or
director of, or otherwise perform services for compensation for, any other entity without the prior
written consent of the Board which shall not be unreasonably withheld.  Executive may serve as an
officer or director of or otherwise participate in purely educational, welfare, social, religious
and civic organizations so long as such activities do not interfere with Executive’s regular
performance of duties and responsibilities hereunder in any material respect.  Nothing contained
herein shall preclude Executive from (i) engaging in charitable and community activities,
(ii) participating in industry and trade organization activities, (iii) completing his external
consulting project underway on the Commencement Date (provided that such project requires no
material work time from Executive, and will in any event be completed no later than March 15,
2007), and (iv) managing his and his family’s personal investments and affairs; provided,
that Executive shall not have any ownership interest (of record or beneficial) in any firm,
corporation, partnership, proprietorship or other business that competes directly with the
Company’s Fischer-Tropsch business except for (x) an investment of not more than 1.0% of the



 









 




outstanding securities of a company traded on a public securities exchange or (y) investments
made through public mutual funds.




     3.      Compensation and Benefits.



     (a) The Company shall pay Executive an annual salary (the “Base Salary”) at the rate
of $265,000 in regular installments in accordance with the Company’s ordinary payroll practices (in
effect from time to time), but in any event no less frequently than monthly. Beginning October 1,
2007, and each October 1 thereafter during the Employment Period, Executive’s Base Salary shall
automatically be increased by the percentage increase in the Consumer Price Index for all Urban
Consumers (“CPI-U”) as published by the U.S. Department of Labor for the immediately
preceding August compared to the CPI-U for the month of August one year earlier. Executive shall
also be eligible for an annual review of his Base Salary based on performance as determined by the
Board in its sole discretion.



     (b) Bonuses and Incentive Compensation.



          (i) Annual Bonus.  For each fiscal year ending during the Employment Period, Executive
will be eligible to earn an annual bonus based on achievement of performance criteria established
by the Board as soon as administratively practicable following the beginning of each such fiscal
year (the “Annual Bonus”).  The target amount (the “Target Bonus”) of Executive’s
Annual Bonus shall equal 50% of Executive’s Base Salary (at the annual rate in effect at the start
of the fiscal year), with a maximum Annual Bonus in an amount equal to 100% of Executive’s Base
Salary (at the annual rate in effect at the start of the fiscal year). The Company shall pay the
Annual Bonus for each fiscal year in cash or equity awards, as determined by the Board, after the
end of the Company’s fiscal year in accordance with procedures established by the Board, but in no
event later than two and a half months following the end of such fiscal year. To be eligible for
an Annual Bonus pursuant to this Section 3(b), Executive must be an employee on the last day of the
relevant fiscal year. For the fiscal year ending September 30, 2007, the Target Bonus amount shall
be (A) based on the Executive’s Base Salary on the Commencement Date and (B) pro –rated to 75% of
the amount otherwise earned.




          (ii) Equity Grant.  The Company shall grant Executive 275,000 restricted stock units
(“Restricted Stock Units”) that are to be settled in common stock of the Company
(“Common Stock”). Such Restricted Stock Units will vest over a three-year period such that
one-third of Restricted Stock Units will vest and be settled within 30 days on each of (i) the
one-year anniversary of the Commencement Date, (ii) the two-year anniversary of the Commencement
Date, and (iii) the three-year anniversary of the Commencement Date. Such Restricted Stock Units
shall be referred to as the “Executive LTIP”.  The terms and conditions of the Executive
LTIP shall be governed by and subject to the award agreement to be entered into between Executive
and the Company, substantially in the form of Exhibit A (the “LTIP Award
Agreement”). Executive shall be eligible to be granted additional equity compensation awards
on a basis no less frequent than similarly situated executives; provided, however,
that the ultimate amount of any such award(s) to Executive shall be determined by the Board in its
sole discretion.




          (iii) Commencement Payment. Within 30 days of the Commencement Date, the Company
shall make a one-time payment to Executive of $15,000.




     (c) Expenses. During the Employment Period, the Company shall (i) reimburse Executive
for all reasonable business expenses incurred by him in the course of performing his duties and
responsibilities under this Agreement in accordance with the Company’s policies in effect from time
to time with respect to travel, entertainment and other business expenses for senior executives and
(ii) pay to Executive a monthly automobile allowance of $1,000.



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     (d) Other Benefits. Executive shall also be entitled to the following benefits during
the Employment Period, unless otherwise modified by the Board:



          (i) participation in the Company’s retirement plans, health and welfare plans, disability
insurance plans and other benefit plans of the Company as in effect from time to time, under the
terms of such plans and to the same extent and under the same conditions such participation and
coverages are provided generally to other senior executives of the Company;




          (ii) coverage for services rendered to the Company, its subsidiaries and affiliates while
Executive is a director or officer of the Company, or of any of its subsidiaries or affiliates,
under director and officer liability insurance policy(ies) maintained by the Company from time to
time; and




          (iii) five weeks of vacation per year.



4.      Termination.  The Employment Period shall end on the second anniversary of the
Commencement Date; provided, however, that the Employment Period shall be
automatically renewed for successive one-year terms thereafter on the same terms and conditions set
forth herein unless either party provides the other party with notice that it has elected not to
renew the Employment Period at least 90 days prior to the end of the initial Employment Period or
any subsequent extension thereof.  Notwithstanding the foregoing, (i) the Employment Period shall
terminate immediately upon Executive’s resignation (with or without Good Reason, as defined
herein), death or Disability (as defined herein) and (ii) the Employment Period may be terminated
by the Company at any time prior to such date for Cause (as defined herein) or without Cause. 
Except as otherwise provided herein, any termination of the Employment Period by the Company shall
be effective as specified in a written notice from the Company to Executive, but in no event more
than 90 days from the date of such notice.  The termination of the Employment Period shall not
affect the respective rights and obligations of the parties which, pursuant to the terms of this
Agreement, apply following the date of Executive’s termination of employment with the Company.



5.      Severance.




     (a) Termination Without Cause, Non-Renewal or for Good Reason.  In the event of
Executive’s termination of employment with the Company (1) by the Company without Cause (as defined
herein), (2) by reason of the Company electing not to offer to renew the Agreement on terms that
are based on competitive practices for companies of comparable size and standing in the same
industry (it being understood, however, that in any event such renewal must include a cash
severance benefit no less favorable than that included herein to satisfy the requirements of this
clause (2)), or (3) by Executive for Good Reason (as defined herein), subject to execution and
non-revocation of a Release substantially in the form attached as Exhibit B, Executive
shall be entitled to the benefits set forth below in this Section 5(a).



          (i) The Company shall pay Executive an amount equal to one times Executive’s Base Salary plus
one times Executive’s Target Bonus (as in effect on the date of Executive’s termination).  The
severance amount described in the previous sentence shall be paid as follows: (A) the continuation
of Base Salary shall be paid over a period of one year from the date of termination in accordance
with the payroll practices of the Company in effect from time to time and (B) the Target Bonus
shall be paid on the date that executive bonuses are paid generally for the fiscal year in which
the date of termination took place, which shall, in any event, be no later than two and one-half
months after the end of such fiscal year (the “Bonus Payment Date”); provided,
however, that, in the event that Executive is considered a “Specified Employee” as defined
in proposed or final Treasury Regulations promulgated under Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended




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(the “Code”), and payments under this Section 5(a) are considered “deferred
compensation” under Section 409A, the first payment shall be delayed for six months, in which event
Executive shall receive on the first business day that is at least six months and one day after the
date of termination a lump sum equal to all payments otherwise due during such six month period
pursuant to this Section 5(a)(i), along with interest at a floating rate equal to LIBOR from the
date such payments were otherwise due to the date of payment, and the remainder of such severance
amount shall be paid in equal installments over a period of six months thereafter in accordance
with the ordinary payroll practices of the company (in effect from time to time). For the
avoidance of doubt, if Executive is a “Specified Person” and the Bonus Payment Date occurs during
the six months after the date of such date of termination, such bonus shall instead be paid on the
first business day that is at least six months and one day after the date of termination with
interest from the date otherwise payable.




          (ii) The Executive LTIP shall be governed by the terms of any applicable LTIP Award
Agreement(s) and related plan(s).




          (iii) The Company shall pay Executive the amounts described in Section 5(d) within 14 days of
the date of termination.




          (iv)




          (v) Executive shall be entitled to benefits mandated under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), under Section 4980B of the Code, or any
replacement or successor provision of United States tax law, with the premium paid at the Company’s
expense until the first to occur of (A) eighteen months from the date of termination or (B) such
date that Executive becomes covered by successor group health coverage.




     (b) Termination for Cause or Voluntary Resignation.  In the event that Executive’s
employment with the Company is terminated (i) by the Board for Cause or (ii) by Executive’s
resignation from the Company for any reason other than Good Reason or Disability (as defined
herein), subject to applicable law, the Company agrees to the following:



          (i) The Executive LTIP shall be governed by the terms of any applicable LTIP Award
Agreement(s); and




          (ii) The Company shall pay Executive the amounts described in Section 5(d) within 14 days of
the date of termination.




          For purposes of this Agreement, Executive’s voluntary resignation or retirement shall be
considered Executive’s resignation from the Company without Good Reason.




     (c) Death or Disability.  In the event that Executive’s employment with the Company is
terminated as a result of Executive’s death or Disability, the Company agrees to the following:



          (i) The Executive LTIP shall be governed by the terms of any applicable LTIP Award
Agreement(s); and




          (ii) The Company shall pay Executive the amounts described in Section 5(d) within 14 days of
the date of termination.




     (d) Payments Upon Termination of Employment. In the case of any termination of
Executive’s employment with the Company, Executive or his estate or legal representative shall be



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entitled to receive, to the extent permitted by applicable law, from the Company
(i) Executive’s Base Salary through the date of termination to the extent not previously paid,
(ii) to the extent not previously paid, the amount of any bonus, incentive compensation, and other
compensation earned or accrued by Executive as of the date of termination under any compensation
and benefit plans, programs or arrangements maintained in force by the Company for any fiscal year
of the Company ended prior to the date of termination that is then unpaid, (iii) any vacation pay,
expense reimbursements and other cash entitlements accrued by Executive, in accordance with Company
policy for senior executives, as of the date of termination to the extent not previously paid,
(iv) any Restricted Stock Units and other equity awards outstanding under any Company long term
incentive plans or arrangements (other than the Executive LTIP), in accordance with the terms of
the plans or arrangements under which such awards were created or maintained, and (v) all benefits
accrued by Executive under all benefit plans and qualified and nonqualified retirement, pension,
401(k) and similar plans and arrangements of the Company, in such manner and at such times as are
provided under the terms of such plans and arrangements.




     (e) Termination Without Cause, Non-Renewal or for Good Reason Following a Change in
Control.  In the event of Executive’s termination of employment with the Company (1) by the
Company without Cause, (2) as a result of the Company electing not to offer to renew the Agreement
on terms that are consistent with competitive practices for companies of comparable size and
standing in the same industry (it being understood, however, that in any event such renewal must
include a cash severance benefit no less favorable than that included herein to satisfy the
requirements of this clause (2)), or (3) by Executive for Good Reason, in any case, during the
period beginning three months before and ending two years following a Change in Control (as defined
herein) of the Company, subject to Executive’s execution and non-revocation of a Release
substantially in the form attached as Exhibit B, Executive shall be entitled to the
benefits set forth below in this Section 5(e).



          (i) The Company shall pay Executive the payments set forth in Section 5(a)(i);
provided, however, that in determining the amount of payment due under
Section 5(a)(i), Executive’s actual Annual Bonus for the year preceding the Change in Control shall
be used, if higher than his Target Bonus; and provided, further, that payment shall
be made in a lump sum on the later of the date of the Change in Control or 10 business days after
Executive’s termination of employment except that, in the event Executive is considered a
“Specified Employee” as defined in proposed or final Treasury Regulations promulgated under Section
409A, and payments under this Section 5(e) are considered “deferred compensation” under Section
409A, Executive shall instead receive on the first business day that is at least six months and one
day after the date of termination a lump sum equal to all payments otherwise due pursuant to this
Section 5(e)(i), along with interest at a floating rate equal to LIBOR from the date of Executive’s
termination of employment to the date of payment.




          (ii) The Executive LTIP shall be governed by the terms of any applicable LTIP Award
Agreement(s).




          (iii) The Company shall pay Executive the amounts described in Section 5(d).




     (f) Excess Parachute Payments.



          (i) In the event any payment granted to Executive pursuant to the terms of this Agreement or
otherwise (a “Payment”) is determined to be subject to any excise tax (“Excise
Tax”) imposed by Section 4999 of the Code (or any successor to such Section), the Company shall
pay to Executive, no later than the time any Excise Tax is payable with respect to such Payment
(through withholding or otherwise), an additional amount (a “Gross-Up Payment”) which,
after the imposition of all income, employment, excise and other taxes, penalties and interest
thereon, is equal to the sum of




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(A) the Excise Tax on such Payment plus (B) any penalty and interest assessments associated
with such Excise Tax.




          (ii) The determinations to be made with respect to this Section 5(f) shall be made by a
certified public accounting firm designated by the Company and reasonably acceptable to Executive
and Executive may rely on such determination in making payments to the Internal Revenue Service.




     (g) No Other Payments.  Except as provided in Sections 5(a), (b), (c), (d), (e) and
(f) above, all of Executive’s rights to salary, bonuses, employee benefits and other compensation
hereunder which would have accrued or become payable after the termination or expiration of the
Employment Period shall cease upon such termination or expiration, other than those expressly
required under applicable law (such as COBRA).



     (h) No Mitigation, No Offset.  In the event of Executive’s termination of employment
for whatever reason, Executive shall be under no obligation to seek other employment, and there
shall be no offset against amounts due him under this Agreement or otherwise on account of any
remuneration attributable to any subsequent employment or claims asserted by the Company or any
affiliate; provided, that this provision shall not apply with respect to any amounts that
Executive owes to the Company or any member of the Company Group on account of any loan, advance or
other payment, in respect of any of which Executive is obligated to make repayment to the Company
or any member of the Company Group.



     (i) Definitions.  For purposes of this Agreement, the following terms shall have the
following meanings:



          (i) “Cause” shall mean one or more of the following:




               (A) the conviction of, or an agreement to a plea of nolo contendere to, a crime involving
moral turpitude or any felony;



               (B) Executive’s willful refusal substantially to perform duties as reasonably directed by the
CEO under this or any other agreement;



               (C) in carrying out his duties, Executive engages in conduct that constitutes fraud, willful
neglect or willful misconduct which, in either case, would result in demonstrable harm to the
business, operations, prospects or reputation of the Company;



               (D) a material violation of the requirements of the Sarbanes-Oxley Act of 2002 (“SOX”)
or other federal or state securities law, rule or regulation; or



               (E) any other material breach of this Agreement.



          For purpose of this Agreement, the Company is not entitled to assert that Executive’s
termination is for Cause unless the Company gives Executive written notice describing the facts
which are the basis for such termination and such grounds for termination (if susceptible to
correction) are not corrected by Executive within 30 days of Executive’s receipt of such notice to
the reasonable, good faith satisfaction of the Board.



 



          (ii) “Change in Control” shall mean the first to occur of any of the following events:




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               (A) A transaction or series of transactions (other than an offering of Common Stock to the
general public through a registration statement filed with the Securities and Exchange Commission)
whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other
than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or
any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly
controls, is controlled by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company possessing more than 50% of the total combined voting power of the
Company’s securities outstanding immediately after such acquisition; or



               (B) During any twelve-month period, individuals who, at the beginning of such period,
constitute the Board together with any new director(s) (other than a director designated by a
person who shall have entered into an agreement with the Company to effect a transaction described
in Section 5(i)(ii)(A) or Section 5(i)(ii)(C)) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the beginning of the twelve-month
period or whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or



               (C) The consummation by the Company (whether directly involving the Company or indirectly
involving the Company through one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination or (y) a sale or other disposition of all or substantially
all of the Company’s assets in any single transaction or series of related transactions or (z) the
acquisition of assets or stock of another entity, in each case other than a transaction:



                    (1) Which results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted into
voting securities of the Company or the person that, as a result of the transaction, controls,
directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of
the Company’s assets or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at least a majority of the
combined voting power of the Successor Entity’s outstanding voting securities immediately after the
transaction, and



                    (2) After which no person or group beneficially owns voting securities representing 35% or
more of the combined voting power of the Successor Entity; provided, however, that no person or
group shall be treated for purposes of this Section 5(i)(ii)(C)(2) as beneficially owning 35% or
more of combined voting power of the Successor Entity solely as a result of the voting power held
in the Company prior to the consummation of the transaction; or



               (D) The Company’s stockholders approve a liquidation or dissolution of the Company.



          The Board shall have full and final authority, which shall be exercised in its discretion, to
determine conclusively whether a Change in Control of the Company has occurred pursuant to the
above definition, and the date of the occurrence of such Change in Control and any incidental
matters relating thereto.




          (iii) “Disability” shall mean Executive’s  being unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months.




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          (iv) “Good Reason” shall mean Executive’s resignation from employment with the Company
prior to the end of the Employment Period as a result of one or more of the following reasons:




               (A) the Company reduces the amount of Executive’s then current Base Salary or the target for
his Annual Bonus (it being understood that Executive shall not have a basis to resign for Good
Reason if no bonus is paid, or the amount of the bonus is reduced as a result of the failure of
Executive or the Company to achieve applicable performance targets for such bonus);



               (B) a material diminution in Executive’s title, authority, duties or responsibilities or the
assignment of duties to Executive which are materially inconsistent with his position;
provided, however, that, following a Change in Control, any diminution of
Executive’s title, duties or responsibilities shall constitute Good Reason;



               (C) the failure of the Company to obtain in writing the obligation to perform this Agreement
by any successor to the Company or a purchaser of all or substantially all of the assets of the
Company within 15 days after a merger, consolidation, sale or similar transaction;



               (D) the failure of the Company to grant Executive the Executive LTIP within 30 days after the
Effective Date;



               (E) material breach of this Agreement by the Company; or



               (F) the requirement that Executive move his principal place of business by more than 50 miles
from that previously the case without his consent.



          Notwithstanding the foregoing, Executive agrees that he shall not be entitled to terminate his
employment for Good Reason in the event he is subject to any unintended or adverse tax consequences
under Section 409A or he is required to forfeit incentive or other compensation pursuant to
Section 304 of SOX.  For purposes of this Agreement, Executive is not entitled to assert that his
termination is for Good Reason unless Executive gives the Board written notice describing the event
or events which are the basis for such termination within 90 days after the event or events occur
and such grounds for termination (if susceptible to correction) are not corrected by the Company
within 30 days of the Company’s receipt of such notice to the reasonable, good faith satisfaction
of Executive.



6.      Insurance; Indemnification and Advancement of Expenses.




     (a) Insurance. The Company agrees to maintain director’s and officer’s liability
insurance covering the Executive for services rendered to the Company, its subsidiaries and
affiliates while Executive is a director or officer of the Company or any of its subsidiaries or
affiliates.



     (b) Indemnification and Advancement of Expenses. Executive shall be entitled to the
benefits of Articles Thirteen and Fourteen of the Company’s Amended and Restated Articles of
Incorporation and the Company shall not amend such provisions during the Employment Period without
advance written notice to Executive. The Company shall not during the Employment Period enter into
any supplemental indemnification agreement with its directors or executive officers, as such,
unless Executive is offered an agreement containing terms pertaining to indemnification and
advancement of expenses that are substantially identical to the most favorable indemnification and
advancement of expenses terms provided to such directors or executive officers (excepting standard
“Side A” and similar arrangements customarily provided solely to non-employee directors), which
agreement may not be amended without advance written notice to Executive.



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7.      Confidential Information.  Executive agrees to enter into the Company’s form of
Confidentiality and Invention Assignment Agreement attached hereto as Exhibit C
simultaneously with the execution of this Agreement.



8.      Non-Solicitation.




     (a) During the Employment Period and for one year thereafter (the “Restricted
Period”), Executive shall not directly or indirectly through another person or entity
(i) induce, solicit, encourage or attempt to induce, solicit or encourage any employee of the
Company to leave the employ of the Company, or in any way interfere with the relationship between
the Company and any employee thereof; or (ii)  induce, solicit, encourage or attempt to induce,
solicit or encourage any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company to cease doing business with the Company, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation of the Company
(including, without limitation, making any negative or disparaging statements or communications
regarding the Company). The Company covenants that it will not, and it will advise members of
senior management of the Company and the Board not to, make any negative or disparaging statements
or communications regarding Executive.



     (b) If, at the time of enforcement of this Section 8, a court shall hold that the duration,
scope or area restrictions stated herein are unreasonable under circumstances then existing, the
parties agree that the maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area permitted by law. 
Executive acknowledges that the restrictions contained in this Section 8 are reasonable and that he
has reviewed the provisions of this Agreement with his legal counsel.



     (c) Executive acknowledges that in the event of the breach or a threatened breach by Executive
of any of the provisions of this Section 8, the Company would suffer irreparable harm, and, in
addition and supplementary to other rights and remedies existing in its favor, the Company shall be
entitled to specific performance and/or injunctive or other equitable relief from a court of
competent jurisdiction in order to enforce or prevent any violations of the provisions hereof
(without posting a bond or other security). In addition, in the event of a breach or violation by
Executive of Section 8 (a), the Restricted Period shall be automatically extended by the amount of
time between the initial occurrence of the breach or violation and when such breach or violation
has been duly cured.


9.      Executive’s Representations.  Executive hereby represents and warrants to the Company
that (i) the execution, delivery and performance of this Agreement by Executive do not and shall
not conflict with, breach, violate or cause a default under, any contract, agreement, instrument,
order, judgment or decree to which Executive is a party or by which he is bound which has not been
waived; (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement
or confidentiality agreement with any other person or entity (except for a confidentiality
agreement with a former employer that the Executive represents will not limit his services under
this Agreement); and (iii) on the Commencement Date, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms. Executive represents and agrees
that he fully understands his right to discuss all aspects of this Agreement with his private
attorney, and that to the extent, if any, that he desired, he availed himself of such right.
Executive further represents that he has carefully read and fully understands all of the provisions
of this Agreement, that he is competent to execute this Agreement, that his agreement to execute
this Agreement has not been obtained by any duress and that he freely and voluntarily enters into
it, and that he has read this document in its entirety and fully understands the meaning, intent
and consequences of this document.




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10.      Employment At-Will. Subject to the termination obligations provided for in this
Agreement, Executive hereby agrees that the Company may dismiss him and terminate his employment
with the Company, with or without advance notice and without regard to (i) any general or specific
policies (whether written or oral) of the Company relating to the employment or termination of its
employees, or (ii) any statements made to Executive, whether made orally or contained in any
document, pertaining to Executive’s relationship with the Company, or (iii) the existence or
non-existence of Cause. Inclusion under any benefit plan or compensation arrangement will not give
Executive any right or claim to any benefit hereunder except to the extent such right has become
fixed under the express terms of this Agreement.



11.      Notices.  All notices or communications hereunder shall be in writing, addressed as
follows:




 


To the Company:



 


Chief Executive Officer

Rentech, Inc.

10877 Wilshire Blvd., 7th Floor

Los Angeles, CA 90024



  



with a copy to:                                                                



General Counsel

Rentech, Inc.

10877 Wilshire Blvd., 7th Floor

Los Angeles, CA 90024



To Executive:



 



     To the address on file in the permanent records of the Company at the time of the notice.


 

     In the event the Company shall relocate its executive offices, the then-effective address
shall be substituted for that set forth above. All notices hereunder shall be conclusively deemed
to be received and shall be effective (i) if sent by hand delivery, upon receipt or (ii) if sent by
electronic mail or facsimile, upon confirmation of receipt by the sender of such transmission.


12.      Severability.  In the event any provision or part of this Agreement is found to be
invalid or unenforceable, only that particular provision or part so found, and not the entire
Agreement, will be inoperative.



13.      Complete Agreement.  This Agreement, the LTIP Award Agreement(s) and those documents
expressly referred to herein embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in any way.



14.       No Strict Construction.  The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.



15.       Counterparts.  This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and the same agreement.




10









 







16.       Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit
of the beneficiaries, heirs and representatives of Executive and the successors and assigns of the
Company (including without limitation, any successor due to reincorporation of the Company or
formation of a holding company).  The Company shall require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation, acquisition of property or stock,
liquidation, or otherwise) to all or a majority of its assets, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform this Agreement if no
such succession had taken place.  Executive may not assign his rights (except by will or the laws
of descent and distribution) or delegate his duties or obligations hereunder.  Except as provided
by this Section 16, this Agreement is not assignable by any party and no payment to be made
hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or other charge.



17.       Choice of Law.  All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of California regardless of
the law that might be applied under principles of conflicts of laws.



18.      Amendment and Waiver.  The provisions of this Agreement may be amended, modified or
waived only with the prior written consent of the Company and Executive, and no course of conduct
or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the
provisions of this Agreement (including, without limitation, the Company’s right to terminate the
Employment Period for Cause) shall affect the validity, binding effect or enforceability of this
Agreement or be deemed to be an implied waiver of any provision of this Agreement.



19.       Internal Revenue Code Section 409A. This Agreement shall be interpreted, construed and
administered in a manner that satisfies the requirements of Section 409A and the Treasury
Regulations thereunder, and any payment scheduled to be made hereunder that would otherwise violate
Section 409A shall be delayed to the extent necessary for this Agreement and such payment to comply
with Section 409A and the Treasury Regulations thereunder.



20.      Insurance.  The Company may, at its discretion, apply for and procure in its own name
and for its own benefit life and/or disability insurance on Executive in any amount or amounts
considered advisable.  Executive agrees to cooperate in any medical or other examination, supply
any information and execute and deliver any applications or other instruments in writing as may be
reasonably necessary to obtain and constitute such insurance.  Executive hereby represents that he
has no reason to believe that his life is not insurable at rates now prevailing for healthy men of
his age.



21.      Withholding.  Any payments made or benefits provided to Executive under this Agreement
shall be reduced by any applicable withholding taxes or other amounts required to be withheld by
law or contract.



22.      Arbitration.  Any dispute or controversy arising under or in connection with this
Agreement or otherwise in connection with the Executive’s employment by the Company that cannot be
mutually resolved by the parties to this Agreement and their respective advisors and
representatives shall be settled exclusively by arbitration in Los Angeles, California in
accordance with the rules of the American Arbitration Association before one arbitrator of
exemplary qualifications and stature, who shall be selected jointly by an individual to be
designated by the Company and an individual to be selected by Executive, or if such two individuals
cannot agree on the selection of the arbitrator, who shall be selected by the American Arbitration
Association. The Company will pay the direct costs and expenses of any



11









 






such arbitration, including the fees and costs of the arbitrator; provided,
however, that the arbitrator may, at his or her election, award attorneys’ fees to the
prevailing party, if permitted by applicable law.



23.       Legal Fees; Moving Costs. The Company agrees that in connection with the commencement
of Executive’s employment hereunder it will reimburse Executive for (a) legal fees and expenses
actually incurred in connection with the review and preparation of this Agreement in an amount not
to exceed $7,500 and (b) the following costs of relocating to the Los Angeles area:




     (a) The reasonable documented out of pocket costs of up to two house hunting trips for the
Executive and his spouse;



     (b) The reasonable documented out of pocket costs to transport the Executive’s household goods
from Barrington Illinois to the Los Angeles, California area, up to $20,000;



     (c) The reasonable documented out of pocket costs of temporary living support for up to six
(6) months while the Executive’s household is closing in Illinois and the Executive is working in
Los Angeles, consisting of (x) rent of up to $4,000 per month and (y) transportation (ground and
coach air travel, consistent with the Company’s reimbursement policies) for one person to travel on
a round-trip basis between Los Angeles and Barrington, Illinois every two weeks, it being
understood that this Section 23(c) shall terminate upon the occurrence of the Permanent Housing
Date;



     (d) A miscellaneous relocation expense allowance to cover other reasonable documented out of
pocket expenses incurred as part of the Executive’s relocation, up to (i) $20,000 (the
“Allowance”) plus (ii) the Gross-Up Payment (as defined below) on the Allowance;
and



     (e) Commencing with the date of the closing of the Executive’s home purchase or, in the
alternative, the date he first occupies semi-permanent rental housing in either case in the Los
Angeles, California area (such date, the “Permanent Housing Date”), a housing allowance
(the “Housing Allowance”) of (i) $60,000 per year for a period of two years after the
Permanent Housing Date, and (ii) $48,000 per year for the third year after the Permanent Housing
Date, such allowance to be paid on a periodic basis at the same time, and as an element of, Base
Salary and payable so long as the Employment Period has not been terminated; provided,
however, that in the event of Executive’s termination of employment with the Company (1) by
the Company without Cause, (2) by reason of the Company electing not to offer to renew the
Agreement on terms that are based on competitive practices for companies of comparable size and
standing in the same industry (it being understood, however, that in any event such renewal must
include a cash severance benefit no less favorable than that included herein to satisfy the
requirements of this clause (2)), or (3) by Executive for Good Reason, the Housing Allowance shall
(subject to any limitations as to timing imposed by Section 19 hereof) continue to be paid in
accordance with this Section 23(e) until the first to occur of (w) one year from the date of such
termination, (x) the third anniversary of the Permanent Housing Date, (y) the date that Executive
accepts substitute employment or (z) the date such home is sold or, if leased, the lease obligation
is terminated; provided, further, however, that from and after the
termination of employment Executive shall use his reasonable efforts in good faith to satisfy
either clause (y) or (z) so as to mitigate the Company’s obligations under this Section 23(e).


In the case of the Allowance provided for in Section 23(d), each payment in respect thereof that
represents an amount includible as income to the Executive for federal income tax purposes shall be
increased by a single additional “gross-up” payment for state and federal taxes paid by Executive
with respect to such payment of some or all of the Allowance. Any such “gross-up” payment shall be
calculated assuming the Executive is subject to the maximum applicable tax rates in respect of
which such payment is being made.




12









 







24.       Executive’s Cooperation.  During the Employment Period and thereafter, Executive shall
cooperate with the Company and its affiliates, upon the Company’s reasonable request, with respect
to any internal investigation or administrative, regulatory or judicial proceeding involving
matters within the scope of Executive’s duties and responsibilities to the Company Group during the
Employment Period (including, without limitation, Executive being available to the Company upon
reasonable notice for interviews and factual investigations, appearing at the Company’s reasonable
request to give testimony without requiring service of a subpoena or other legal process, and
turning over to the Company all relevant Company documents which are or may come into Executive’s
possession during the Employment Period); provided, however, that any such request
by the Company shall not be unduly burdensome or interfere with Executive’s personal schedule or
ability to engage in gainful employment.  In the event the Company requires Executive’s cooperation
in accordance with this Section 24, the Company shall reimburse Executive for reasonable
out-of-pocket expenses (including travel, lodging and meals) incurred by Executive in connection
with such cooperation, subject to reasonable documentation. In the event that the obligations
under this Section 24 require more than 20 hours of the Executive’s time after the termination of
the Employment Period, the Company shall thereafter also pay to Executive compensation at an hourly
rate equal to result of (a) the Base Salary applicable on the date of the termination of
Executive’s employment , divided by (b) 1,750.




(Signature Page Follows)




13









 





     IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date
first written above.


 

	 	 	 	 	 	 	 	 	 
	 	 	RENTECH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ D. Hunt Ramsbottom	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	D. Hunt Ramsbottom, Jr.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	President and CEO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard T. Penning	 	 
	 	 	 	 	 
	 	 	Richard T. Penning	 	 
	 
	 	 	 	 	 	 	 	 





 

14









 





EXHIBIT A

 

RENTECH, INC.

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 




 









 








RENTECH, INC.

RESTRICTED STOCK UNIT AWARD




Preamble




     Pursuant to this Restricted Stock Unit Agreement dated January 22, 2007 (together with
Appendix A hereto, the “Agreement”), Rentech, Inc. (the “Company”) hereby
grants you, Richard T. Penning (the “Employee” (sometimes referred to herein as “you”)),
the following award of Restricted Stock Units (“RSUs”) pursuant to that certain Employment
Agreement, dated as of January 22, 2007, between you and the Company (the “Employment
Agreement”). This grant of RSUs contemplated by this Agreement shall be in satisfaction of the
Company’s obligations under Sections 3(b)(ii) of the Employment Agreement. All capitalized terms
used in this Agreement, but not defined, shall have the meanings provided in the Employment
Agreement. Subject to the terms of this Agreement provided in Appendix A, the principal
features of this award are as follows:



	 	 	 	 	 
	 
	 	Number of RSUs:	 	275,000
	 
	 	 	 	 
	 
	 	Grant Date:	 	January 22, 2007 (the “Grant Date”)
	 
	 	 	 	 
	 
	 	Vesting of RSUs:	 	Subject to Section 5 of Appendix A, the RSUs
	 
	 	 	 	will vest in three (3) equal installments of 83,333 Shares
(the final installment to be 83,334 Shares) on each of the first three
anniversaries of the Commencement Date provided for in the Employment
Agreement (January 15, 2007), provided that the Employment Period
continues through each such anniversary.






     The Employee’s signature below indicates his agreement and understanding that this award is
subject to all of the terms and conditions contained in this Agreement (including
Appendix A). THE EMPLOYEE ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS THIS AGREEMENT,
INCLUDING APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS GRANT OF RSUS.



	 	 	 	 	 	 	 	 	 
	RENTECH, INC.

	 	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	D. Hunt Ramsbottom, Jr.	 	 	 	Richard T. Penning
	 	 
	Chief Executive Officer

	 	 	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 	 	 





16









 





APPENDIX A




TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS




     1. Grant. The Company hereby grants to the Employee an award of 275,000 RSUs, subject
to all of the terms and conditions contained in this Agreement.



     2. Additional Definitions.




	 	a.	 	“Agreement” shall have the meaning provided in the Preamble.
	 
	 	b.	 	“Appendix A” shall have the meaning provided in the Preamble.
	 
	 	c.	 	“Board” means the Board of Directors of the Company or any
committee thereof to which the Board of Directors of the Company may properly
delegate its authority.
	 
	 	d.	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	e.	 	“Company” shall have the meaning provided in the Preamble.
	 
	 	f.	 	“Employee” shall have the meaning provided in the Preamble.
	 
	 	g.	 	“Employment Agreement” shall have the meaning provided in the
Preamble.
	 
	 	h.	 	“Exchange Act” means the Securities Exchange Act of 1934, as
amended.
	 
	 	i.	 	“Fair Market Value” means, as of any given date, (i) if Stock is
traded on an exchange, the closing price of a share of Stock as reported in the Wall
Street Journal for the first trading date immediately prior to such date during which
a sale occurred; or (ii) if Stock is not traded on an exchange but is quoted on
NASDAQ or a successor or other quotation system, (A) the last sales price (if Stock
is then listed as a National Market Issue under the NASD National Market System) or
(B) the mean between the closing representative bid and asked prices (in all other
cases) for the Stock on the date immediately prior to such date on which sales prices
or bid and asked prices, as applicable, are reported by NASDAQ or such successor
quotation system; or (iii) if Stock is not publicly traded, the fair market value
established by the Board acting in good faith, provided, that the Board may, in its
sole discretion, conduct such valuation in a manner that causes such valuation to
fall within the meaning of “fair market value” under Code Section 409A.
	 
	 	j.	 	“Grant Date” shall have the meaning provided in the Preamble.
	 
	 	k.	 	“RSUs” shall have the meaning provided in the Preamble.
	 
	 	l.	 	“Securities Act” shall mean the Securities Act of 1933, as amended.
	 
	 	m.	 	“Stock” means the common stock of the Company, par value $0.01 per
share, and such other securities of the Company that may be substituted for Stock
pursuant to




17









 






	 	 	 	Section 11 below.
	 	n.	 	“Stock Plan” means the Rentech, Inc. 2006 Incentive Award Plan, or
any successor plan pursuant to which the Stock is to be issued hereunder.
	 
	 	O.	 	“Subsidiary” means any “subsidiary corporation” of the Company as
defined in Section 424(f) of the Code and any applicable regulations promulgated
thereunder or any other entity of which a majority of the outstanding voting stock or
voting power is beneficially owned directly or indirectly by the Company.





     3. RSUs. Each RSU shall have a value equal to the Fair Market Value of a share of
Stock on the date each such RSU becomes vested and nonforfeitable. Unless and until an RSU will
have vested in the manner set forth in Sections 4 and 5 below, the Employee will have no right to
payment in respect of any such RSU. Prior to actual payment of any vested RSU, such RSU will
represent an unsecured obligation of the Company, payable (if at all) only from the general assets
of the Company.



     4. Vesting Schedule. Subject to Section 5 below and the continuation of the
Employment Period through each applicable vesting date, the RSUs awarded by this Agreement will
vest and become nonforfeitable according to the vesting schedule set forth on the first page of
this Agreement or, if earlier, immediately prior to a Change in Control of the Company.



     5. Termination of the Employment Period.



          a. Termination Without Cause or for Good Reason.  Subject to Section 5(b) and the
Employee’s execution and nonrevocation of a Release substantially in the form attached to the
Employment Agreement as Exhibit B, if the Employment Period is terminated (i) by the
Company without Cause, or (ii) by the Employee for Good Reason, all RSUs granted hereunder that
would vest and become nonforfeitable absent such termination during the next twelve (12)-month
period beginning on the date of such termination shall vest and become nonforfeitable on the first
day that the executed Release ceases to be revocable by its terms. All RSUs granted hereunder
that (x) have not vested and become nonforfeitable as of the date of such termination, and (y) do
not become vested and nonforfeitable pursuant to the terms of this Section 5(a), shall be
immediately forfeited by the Employee as of such date of termination without consideration
therefor.




          b. Certain Terminations Prior to a Change in Control. Subject to the Employee’s
execution and nonrevocation of a Release substantially in the form attached to the Employment
Agreement as Exhibit B, if the Employment Period is terminated (i) by the Company without
Cause, or (ii) by the Employee for Good Reason, in either case during the period beginning three
months prior and ending upon a Change in Control of the Company, all RSUs granted hereunder to the
Employee shall become fully vested and nonforfeitable, to the extent not already vested and
nonforfeitable, as of the first day that the executed Release ceases to be revocable by its terms.




          c. Termination for Cause, Voluntary Resignation Without Good Reason, Death and
Disability.  If the Employment Period is terminated (i) by the Company for Cause, (ii) by
reason of the Employee’s resignation from the Company for any reason other than Good




18









 




Reason, or (iii) as a result of the Employee’s death or Disability, all RSUs that have not
already vested as of the date of such termination shall be immediately forfeited by the Employee
as of such date of termination without consideration therefor.




     6. Payment after Vesting; Code Section 409A. Payments in respect of any RSUs that
vest in accordance herewith shall be made to the Employee (or in the event of the Employee’s death,
to his or her estate), in the sole discretion of the Board, in either cash, whole shares of Stock
or a combination thereof. The Company shall make such payments as soon as practicable after the
applicable vesting date, but in any event within thirty (30) days after such vesting date (it being
understood that this payment procedure is intended to comply with the “short-term deferral”
exemption from the application of Code Section 409A), provided, that if the Employee shall be a
“specified employee” with respect to the Company, within the meaning of Code Section 409A, any
payments in respect of vested RSUs that have not been made prior to the Employee’s “separation from
service” (within the meaning of Code Section 409A) shall be made within thirty (30) days after the
date which is six months after the date that such “separation from service” occurs (or, if earlier,
the date of the Employee’s death).



     7. Tax Withholding. The Company shall have the authority and the right to deduct or
withhold, or to require the Employee to remit to the Company, an amount sufficient to satisfy all
applicable federal, state and local taxes (including the Employee’s employment tax obligations)
required by law to be withheld with respect to any taxable event arising in connection with the
RSUs. The Board may, in its sole discretion and in satisfaction of the foregoing requirement,
allow the Employee to elect to have the Company withhold cash or shares of Stock otherwise issuable
under this Agreement (or allow the return of shares of Stock) having a Fair Market Value equal to
the sums required to be withheld, provided, that the number of shares of Stock which may be so
withheld with respect to a taxable event arising in connection with the RSUs shall be limited to
the number of shares which have a Fair Market Value on the date of withholding equal to the
aggregate amount of such liabilities based on the minimum statutory withholding rates for federal,
state and local income tax and payroll tax purposes that are applicable to such supplemental
taxable income.



     8. Rights as Stockholder. Neither the Employee nor any person claiming under or
through the Employee will have any of the rights or privileges of a stockholder of the Company in
respect of any shares of Stock deliverable hereunder unless and until certificates representing
such shares of Stock will have been issued, recorded on the records of the Company or its transfer
agents or registrars, and delivered to the Employee or any person claiming under or through the
Employee.



     9. Non-Transferability. Except (a) to the limited extent provided in Section 6 above
or (b) pursuant to any state or federal court order that satisfies the requirements of a domestic
relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, this Agreement and the rights and privileges conferred
hereby shall not be transferred, assigned, pledged or hypothecated in any way in favor of any party
other than the Company or a Subsidiary (whether by operation of law or otherwise) and shall not be
subject to any lien, obligation or liability of the Employee to any party other than the Company or
a Subsidiary. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this grant, or any right or privilege conferred hereby, or upon any



19









 




attempted sale under any execution, attachment or similar process, this grant and the rights
and privileges conferred hereby shall immediately become null and void. Notwithstanding the
foregoing, the Company may assign any of its rights under this Agreement to single or multiple
assignees and this Agreement shall inure to the benefit of the successors and assigns of the
Company.




     10. Distribution of Stock. Notwithstanding anything herein to the contrary, (a) no
payment shall be made under this Agreement in the form of Stock unless shares of Stock issuable
upon such payment are then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such payment and issuance would be exempt from the
registration requirements of the Securities Act, and (b) the Company shall not be required to issue
or deliver any certificates evidencing shares of Stock pursuant to this Agreement unless and until
the Board (i) has determined that the issuance and delivery of such certificates is in compliance
with all applicable laws, rules and regulations and, if applicable, the requirements of any
exchange on which the shares of Stock are listed or traded, and (ii) has obtained the consent or
approval of any governmental or regulatory authority that the Board deems to be necessary or
desirable as a condition to the issuance of any such certificates to the Employee (or his or her
estate). All Stock certificates delivered pursuant to this Agreement shall be subject to any
stop-transfer orders and other restrictions as the Board deems necessary or advisable to comply
with federal, state, or local securities or other laws, rules and regulations and the rules of any
national securities exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Board may place legends on any Stock certificate to reference restrictions applicable
to the Stock. In addition to the terms and conditions provided herein, the Board may require that
the Employee make such reasonable covenants, agreements, and representations as the Board, in its
sole discretion, deems advisable in order to comply with any such laws, regulations, or
requirements. The Board shall have the right to require the Employee to comply with any timing or
other restrictions with respect to the settlement of any RSUs pursuant to this Agreement, including
a window-period limitation, as may be imposed in the discretion of the Board. Any shares of Stock
that may be distributed pursuant to this Agreement may consist, in whole or in part, of authorized
and unissued Stock, treasury Stock or Stock purchased on the open market. No fractional shares of
Stock shall be issued and the Board shall determine, in its discretion, whether cash shall be given
in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up
or down as appropriate.



     11. Adjustments in Capitalization.



          a. In the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting the shares of Stock or
the share price of the Stock, the Board may make such proportionate adjustments, if any, as the
Board in its sole discretion may deem appropriate to reflect such change with respect to the
aggregate number and kind of shares or other securities that may be issued in respect of RSUs
under this Agreement.




          b. Subject to Section 5(b) above, in the event of any transaction or event described in
Section 11(a) or any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any



20









 






affiliate, or of changes in applicable laws, regulations or accounting principles, the Board,
in its sole discretion and on such terms and conditions as it deems appropriate, either by the
terms of this Agreement or by action taken prior to the occurrence of such transaction or event
and either automatically or upon the Employee’s request, is hereby authorized to take any one or
more of the following actions whenever the Board determines that such action is appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available under this Agreement, to facilitate such transactions or events or to give effect to
such changes in laws, regulations or principles:





	 	i.	 	To provide for either (A) termination of this Agreement in
exchange for an amount of cash, if any, equal to the amount that would have
been attained upon the vesting of RSUs under this Agreement as of the date of
such termination, or (B) the replacement of such RSUs with other rights or
property selected by the Board in its sole discretion;
	 
	 	ii.	 	To provide that the RSUs be (A) assumed by a successor or
survivor corporation, or a parent or subsidiary thereof, or (B) substituted
for by a similar award covering the stock of a successor or survivor
corporation, or a parent or subsidiary thereof, in either case, with
appropriate adjustments as to the number and kind of shares and prices;
	 
	 	iii.	 	To make adjustments in the number and type of shares of
Stock (or other securities or property) subject to the RSUs; and
	 
	 	iv.	 	To provide that RSUs subject to this Agreement shall be
exercisable or payable or fully vested with respect to all shares covered
thereby, notwithstanding anything to the contrary in this Agreement.





     12. No Effect on Employment. This Agreement is not an employment contract and nothing
herein shall be deemed to create in any way whatsoever any obligation on the Employee’s part to
continue in the employ of the Company or of the Company to continue the Employee’s employment with
the Company. The Employee’s employment with the Company is on an at-will basis only. Subject to
the terms of the Employment Agreement, the Company shall have the right, which is hereby expressly
reserved, to terminate or change the terms of the employment of the Employee at any time for any
reason whatsoever.



     13. Board Authority. The Board shall have the power to interpret this Agreement and
to adopt and interpret such rules for its administration, interpretation and application as are
consistent with the terms hereof (including, but not limited to, the determination of whether or
not any RSUs have vested). All actions taken and all interpretations and determinations made by
the Board in good faith will be final and binding upon Employee, the Company and any and all other
interested persons. No member of the Board will be personally liable for any action, determination
or interpretation made in good faith with respect to this Agreement and, to the greatest extent
allowable pursuant to applicable law, each member of the Board shall be fully indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with such administration of this Agreement.



21









 





     14. Notices. Any notice to be given to the Company under the terms of this Agreement
will be addressed to the Company at its principal place of business (attention: General Counsel),
or at such other address as the Company may hereafter designate in writing. Any notices provided
for in this Agreement shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by the Company to the Employee, five (5) days after deposit in
the United States mail, postage prepaid, addressed to the Employee at the address specified on the
first page of this Agreement or at such other address as the Employee may hereafter designate by
written notice to the Company.



     15. Severablility. In the event that any provision in this Agreement is held invalid
or unenforceable, such provision will be severable from, and such invalidity or unenforceability
will not be construed to have any effect on, the remaining provisions of this Agreement, which
shall remain in full force and effect.



     16. Tax Consultation. The Employee understands that he may suffer adverse tax
consequences in connection with the RSUs granted pursuant to this Agreement, including in
connection with the vesting of any such RSUs. The Employee represents that he has consulted with
any tax consultants that he deems advisable in connection with the RSUs and that he is not relying
on the Company for tax advice.



     17. Amendment. Subject to Section 11 above, this Agreement may only be amended,
modified or terminated by a writing executed by the Employee and by a duly authorized
representative of the Company.



     18. Relationship to other Benefits. Neither the RSUs nor payment in respect thereof
shall be taken into account in determining any benefits pursuant to any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any
Subsidiary.



     19. Governing Law. The laws of the State of Colorado shall govern the interpretation,
validity, administration, enforcement and performance of the terms of this Agreement regardless of
the law that might be applied under principles of conflicts of laws.



     20. Stock Plan Governs. Except as expressly provided to the contrary herein, this
Agreement shall be governed by the terms of the Stock Plan.



     21. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.



* * * * * * * * * * * *




22









 





 EXHIBIT B




 

FORM OF RELEASE

 



This General Release of all Claims (this “Agreement”) is entered into by Richard T. Penning
(“Executive”“) and Rentech, Inc. (the “Company”), effective as of



In further consideration of the promises and mutual obligations set forth in the Employment
Agreement between Executive and the Company, dated  (the
“Employment Agreement”), Executive and the Company agree as follows:




1.      Return of Property.  All Company files, access keys, desk keys, ID badges, computers,
electronic devices, telephones and credit cards, and such other property of the Company as the
Company may reasonably request, in Executive’s possession must be returned no later than the date
of Executive’s termination from the Company.




2.      General Release and Waiver of Claims.




     (a) Release.  In consideration of the payments and benefits provided to Executive
under the Employment Agreement and after consultation with counsel, Executive, personally and on
behalf of each of Executive’s respective heirs, executors, administrators, representatives, agents,
successors and assigns (collectively, the “Releasors”) hereby irrevocably and
unconditionally releases and forever discharges the Company and its subsidiaries and affiliates and
each of their respective officers, employees, directors, and agents (“Releasees”) from any
and all claims, actions, causes of action, rights, judgments, obligations, damages, demands,
accountings or liabilities of whatever kind or character (collectively, “Claims”),
including, without limitation, any Claims under any federal, state, local or foreign law, that the
Releasors had, have, may have, or in the future may possess, arising out of (i) Executive’s
employment relationship with and service as an employee, officer or director of the Company, and
the termination of such relationship or service, and (ii) any event, condition, circumstance or
obligation that occurred, existed or arose on or prior to the date hereof; provided,
however, that Executive does not release, discharge or waive any rights to payments and
benefits provided under the Employment Agreement that are contingent upon the execution by
Executive of this Agreement, any vested benefits, any rights to indemnification, or any rights as a
shareholder of the Company.



     THE EXECUTIVE ACKNOWLEDGES THAT HE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:



     “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”



     BEING AWARE OF SAID CODE SECTION, THE EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE
THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.



     (b) Specific Release of ADEA Claims.  In further consideration of the payments and
benefits provided to Executive under the Employment Agreement, the Releasors hereby unconditionally
release and forever discharge the Releasees from any and all Claims that the Releasors may have as
of the date Executive signs this Agreement arising under the Federal Age Discrimination in
Employment Act of



 









 




1967, as amended, and the applicable rules and regulations promulgated thereunder
(“ADEA”).  By signing this Agreement, Executive hereby acknowledges and confirms the
following:  (i) Executive was advised by the Company in connection with his termination to consult
with an attorney of his choice prior to signing this Agreement and to have such attorney explain to
Executive the terms of this Agreement, including, without limitation, the terms relating to
Executive’s release of claims arising under ADEA, and Executive has in fact consulted with an
attorney; (ii) Executive was given a period of not fewer than 21 days to consider the terms of this
Agreement and to consult with an attorney of his choosing with respect thereto; and (iii) Executive
knowingly and voluntarily accepts the terms of this Agreement.  Executive also understands that he
has seven days following the date on which he signs this Agreement within which to revoke the
release contained in this paragraph, by providing the Company a written notice of his revocation of
the release and waiver contained in this paragraph.




     (c) No Assignment.  Executive represents and warrants that he has not assigned any of
the Claims being released under this Agreement.


3.      Proceedings.  Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding against the Releasees before
any local, state or federal agency, court or other body relating to his employment or the
termination of his employment, other than with respect to the obligations of the Company to
Executive under the Employment Agreement (each, individually, a “Proceeding”), and agrees
not to participate voluntarily in any Proceeding.  Executive waives any right he may have to
benefit in any manner from any relief (whether monetary or otherwise) arising out of any
Proceeding.



4.      Remedies.  In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this Agreement or his post-termination
obligations contained in the Employment Agreement, or if he revokes the ADEA release contained in
Paragraph 2(b) of this Agreement within the seven-day period provided under Paragraph 2(b), the
Company may, in addition to any other remedies it may have, reclaim any amounts paid to him under
the severance provisions of the Employment Agreement or terminate any benefits or payments that are
subsequently due under the Employment Agreement, without waiving the release granted herein. 
Executive acknowledges and agrees that the remedy at law available to the Company for breach of any
of his post-termination obligations under the Employment Agreement or his obligations under
Paragraphs 2 and 3 of this Agreement would be inadequate and that damages flowing from such a
breach may not readily be susceptible to being measured in monetary terms.  Accordingly, Executive
acknowledges, consents and agrees that, in addition to any other rights or remedies that the
Company may have at law or in equity, the Company shall be entitled to seek a temporary restraining
order or a preliminary or permanent injunction, or both, without bond or other security,
restraining Executive from breaching his post-termination obligations under the Employment
Agreement or his obligations under Paragraphs 2 and 3 of this Agreement.  Such injunctive relief in
any court shall be available to the Company, in lieu of, or prior to or pending determination in,
any arbitration proceeding.




     Executive understands that by entering into this Agreement he will be limiting the
availability of certain remedies that he may have against the Company and limiting also his ability
to pursue certain claims against the Company.


5.      Severability Clause.  In the event any provision or part of this Agreement is found to
be invalid or unenforceable, only that particular provision or part so found, and not the entire
Agreement, will be inoperative.



6.      Non-admission.  Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.




 









 







7.      Governing Law.  All matters affecting this Agreement, including the validity thereof,
are to be governed by, and interpreted and construed in accordance with, the laws of the State of
California regardless of the law that might be applied under principles of conflicts of laws.



8.      Arbitration.  Any dispute or controversy arising under or in connection with this
Agreement or otherwise in connection with Executive’s employment by the Company that cannot be
mutually resolved by the parties to this Agreement and their respective advisors and
representatives shall be settled exclusively by arbitration in Los Angeles, California in
accordance with the rules of the American Arbitration Association before one arbitrator of
exemplary qualifications and stature, who shall be selected jointly by an individual to be
designated by the Company and an individual to be selected by Executive or, if such two individuals
cannot agree on the selection of the arbitrator, who shall be selected by the American Arbitration
Association. The Company will pay the direct costs and expenses of any such arbitration, including
the fees and costs of the arbitrator; provided, however, that the arbitrator may,
at his or her election, award attorneys’ fees to the prevailing party, if permitted by applicable
law.



9.      Notices.  All notices or communications hereunder shall be in writing, addressed as
follows:




 


To the Company:



Rentech, Inc.

 



To Executive:

 



With a copy to:



 



     All such notices shall be conclusively deemed to be received and shall be effective (i) if
sent by hand delivery, upon receipt or (ii) if sent by electronic mail or facsimile, upon
confirmation of receipt by the sender of such transmission.


 

     EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY KNOWS, UNDERSTANDS
AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES THE SAME AND MAKES THIS AGREEMENT AND THE
RELEASE AND AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.


 

 









 




 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth
above.


 

	 	 	 	 	 	 	 
	 	 	RENTECH, INC.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Richard T. Penning	 	 






 









 






EXHIBIT C




CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT




 









 





CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT




     This Confidentiality and Invention Assignment Agreement (the “Agreement”) is made as
of the ___day of ___2006 between RENTECH, INC., a Colorado corporation (the
“Company”), and ___(the “Employee”).



WITNESSETH:




     WHEREAS, the Company is engaged in the highly specialized business of designing and developing
the technical and operational know-how of a process capable of converting synthesis gas, a mixture
of hydrogen and carbon monoxide derived from coal and other solid and liquid carbon-bearing
materials, as well as from industrial gas and natural gas into clean-burning liquid hydrocarbon
products, including diesel fuel, aviation fuel, naphtha and other chemicals; and



     WHEREAS, Employee has been or is being employed by the Company because of skills and abilities
in work which requires the Company to impose the highest degree of trust and confidence in
Employee, and Employee recognizes that it is necessary for the Company to safeguard its legitimate
proprietary interests either through patents or by holding such information secret or confidential;



     NOW, THEREFORE, in consideration of the initiation or continuance of the employment, and of
other good and valuable consideration received by Employee, receipt of which is hereby
acknowledged, the parties agree as follows:



1.      Ownership of Ideas, Inventions and Other Improvements



1.1      All ideas, inventions, trademarks, proprietary information, know-how, processes, designs,
systems, techniques and other developments or improvements conceived by the Employee, alone or with
others, whether or not during working hours, which are within the scope of the work, business
operations, or projects of the Company, during the Employee’s employment with the Company, shall be
the exclusive property of the Company. In accordance with Section 2872 of the California Employee
Patent Act, West’s Cal. Lab. Code Section 2870 et. seq., if applicable, Employee is hereby advised
that this Article 1.1 does not apply to any invention, new development or method (and all copies
and tangible embodiments thereof) made solely by Employee for which no equipment, facility,
material, Confidential Information (as defined below) or intellectual property of the Company or
any of its affiliates was used and which was developed entirely on Employee’s own time;
provided, however, that Article 1.1 shall apply if the invention, new development
or method (i) relates at the time of its conception or reduction to practice to the Company’s or
any of its affiliates’ business, or actual or demonstrably anticipated research and development,
or (ii) results from any work performed by Employee for the Company or any of its affiliates.



1.2      The Employee agrees to disclose promptly to the Company any and all inventions, discoveries,
trademarks, proprietary information, know-how, processes or improvements, patentable or otherwise,
which Employee may conceive or make in the performance of Employee’s work with the Company from the
beginning of Employee’s employment until the termination thereof, whether they are made solely or
jointly with others. The Employee further agrees to assist the Company, at its sole option and
expense, in obtaining patents or trademarks in the United States of America or elsewhere on any
such ideas, inventions, trademarks, and other developments which the Employee conceives or makes
solely or jointly with others in the performance of the work of the Company and which the Company
may undertake to patent or trademark, and agrees to execute all documents necessary to obtain such
patents in the name of the Company.



1.3      Employee’s obligations and covenants contained in this Article 1 shall continue in effect after
the termination of Employee’s employment with respect to all and any inventions, discoveries and
improvements made or conceived by Employee during the term of Employee’s employment, and this
obligation shall be binding upon Employee’s assigns, heirs, executors, administrators or other
legal representatives.




2.      Nondisclosure of Information




 









 







2.1      Employee further agrees and covenants that Employee will not at any time, either during
Employee’s employment or after said employment is terminated, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person, firm or corporation
in any manner whatsoever, any proprietary information, confidential information, trade secrets or
sensitive business information (hereinafter called “Confidential Information”) concerning
or relating to the business of the Company. Without limiting the generality of the foregoing, the
foregoing shall include the items described in Article 1.1, the names of any company customers (as
such), its customer lists (as such), the prices it obtains or has obtained or at which it sells or
has sold its products or at which it buys or has bought materials, components or other supplies,
estimates of the foregoing, sales projections, advertising, personnel history or any other
information of, about or concerning the business of the Company, its relations with its employees,
including salaries, job classifications, skill levels, and its manner of operation, its inventions,
plans, processes, or other data of any kind, nature or description. Notwithstanding these
prohibitions, Employee shall be entitled to divulge or authorize others in writing to divulge all
information regarding his or her own employment. The parties hereto stipulate that as between
them, the foregoing are the exclusive property of the Company and are important, material,
confidential, and trade secrets, and gravely affect the successful conduct of the business of the
Company and its goodwill, and that any breach of the terms of this paragraph is a material breach
hereof.



2.2      Employee agrees that upon termination of Employee’s employment for any reason, Employee will
deliver to the company in good condition the original and all copies of any records in Employee’s
possession relating to the Confidential Information described in Articles 1 and 2.1.



2.3      Employee agrees that the terms of this paragraph shall survive the termination of Employee’s
employment, and Employee shall be bound by its terms at all times subsequent to the termination of
Employee’s employment for seven (7) years after the execution of this Agreement so long as the
Company continues to conduct the same business or businesses it was conducting during the period of
this contract.



3.      It is understood and agreed that this CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT
supercedes and replaces all previous written or oral confidentiality and invention assignment
agreements and understandings between the parties.




     Executed as of the day and year first written above.



	 	 	 	 	 	 	 
	 	 	Company:	 	 
	 
	 	 	 	 	 	 
	 	 	RENTECH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Employee
	 	: