Document:

Exhibit 10.2

 

RENTECH, INC.

2003 STOCK OPTION PLAN

 

ARTICLE I

ESTABLISHMENT AND PURPOSE

 

1.1                                 Establishment. Rentech, Inc., a Colorado corporation (“Company”),
hereby establishes a stock option plan for key employees, directors, and
consultants providing material services to the Company, as described herein,
which shall be known as the “2003 Stock Option Plan” (the “Plan”). It is
intended that certain of the options issued to employees pursuant to the Plan
may constitute incentive stock options within the meaning of Section 422A of
the Internal Revenue Code and that other options issued pursuant to the Plan
shall constitute nonstatutory options. The Board of Directors shall determine
which options are to be incentive stock options and which are to be nonstatutory
options and shall enter into option agreements with recipients accordingly.

 

1.2                                 Purpose. The purpose of this Plan is to enhance shareholder investment by
attracting, retaining and motivating key employees, directors and consultants
of the Company, and to encourage stock ownership by such persons by providing
them with a means to acquire a proprietary interest in the Company’s success,
and to align the interests of management with those of shareholders.

 

ARTICLE II

DEFINITIONS

 

2.1                                 Definitions. Whenever used herein, the following terms shall have the respective
meanings set forth below, unless the context clearly requires otherwise, and
when said meaning is intended, the term shall be capitalized.

 

(a)                                  “Board” means the Board of Directors
of the Company.

 

(b)                                 “Code” means the Internal Revenue Code
of 1986, as amended.

 

(c)                                  “Committee” shall mean the Committee
provided by  Article IV hereof, which may
be created at the discretion of the Board.

 

(d)                                 “Company” means Rentech, Inc., a
Colorado corporation.

 

(e)                                  “Consultant” means any person or
entity, including a Parent Corporation or a Subsidiary Corporation, that
provides services (other than as an Employee) to the Company, a Parent
Corporation or a Subsidiary Corporation, and shall include a Non-Employee Officer
or Non-Employee Director, as defined subsequently.

 

(f)                                    “Date of Exercise” means the date the
Company receives notice, by an Optionee, of the exercise of an Option pursuant
to Section 8.1 of this Plan. Such notice shall indicate the number of shares of
Stock the Optionee intends to exercise.

 

(g)                                 “Employee” means any person, including
an officer or director of the Company or a Subsidiary Corporation, who is
employed by the Company or a Subsidiary Corporation.

 

(h)                                 “Fair Market Value” means the fair market
value of Stock upon which an option is granted under this Plan, determined as
the average of the closing bid and asked prices of the Stock, as reported by
Nasdaq.

 

(i)                                     “Incentive Stock Option” means an
Option granted under this Plan which is intended to qualify as an “incentive
stock option” within the meaning of Section 422A of the Code.

 

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(j)                                     “Non-Employee Director” means a member
of the Board who is not an employee of the Company at the time an Option is
granted hereunder.

 

(k)                                  “Non-Employee Officer” means an
officer of the Company who is not an employee of the Company at the time an
Option is granted hereunder.

 

(l)                                     “Nonstatutory Option” means an Option
granted under this Plan which is not intended to qualify as an incentive stock
option within the meaning of Section 422A of the Code. Nonstatutory Options may
be granted at such times and subject to such restrictions as the Board shall
determine without conforming to the statutory rules of Section 422A of the Code
applicable to incentive stock options.

 

(m)                               “Option” means the right, granted under this Plan, to purchase
Stock of the Company at the option price for a specified period of time. For
purposes of this Plan, an Option may be either an Incentive Stock Option or a
Nonstatutory Option.

 

(n)                                 “Optionee” means an Employee or
Consultant holding an Option under the Plan.

 

(o)                                 “Parent Corporation” shall have the
meaning set forth in Section 425(e) of the Code with the Company being treated
as the employer corporation for purposes of this definition.

 

(p)                                 “Subsidiary Corporation” shall have
the meaning set forth in Section 425(f) of the Code with the Company being
treated as the employer corporation for purposes of this definition.

 

(q)                                 “Significant Shareholder” means an
individual who, within the meaning of Section 422A(b)(6) of the Code, owns
stock possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or of any Parent Corporation or Subsidiary
Corporation of the Company. In determining whether an individual is a
Significant Shareholder, an individual shall be treated as owning stock owned
by certain relatives of the individual and certain stock owned by corporations
in which the individual is a shareholder, partnerships in which the individual
is a partner, and estates or trusts of which the individual is a beneficiary,
all as provided in Section 425(d) of the Code.

 

(r)                                    “Stock” means the $.01 par value
common stock of the Company.

 

2.2                                 Gender and Number. Except when otherwise indicated by the
context, any masculine terminology when used in this Plan also shall include
the feminine gender, and the definition of any term herein in the singular also
shall include the plural.

 

ARTICLE III

ELIGIBILITY AND PARTICIPATION

 

3.1                                 Eligibility and Participation. All Employees are eligible to participate
in this Plan and receive either or both Incentive Stock Options and
Nonstatutory Options under the Plan. All Consultants are eligible to
participate in this Plan and receive Nonstatutory Options hereunder. Optionees
in the Plan shall be selected by the Board, in its sole discretion, from among
those Employees and Consultants who, in the opinion of the Board, are in a
position to contribute materially to the Company’s continued growth and
development and to its long-term financial success.

 

ARTICLE IV

ADMINISTRATION

 

4.1                                 Administration. The Board shall be responsible for
administering the Plan.

 

(a)  The Board
is authorized to interpret the Plan; to prescribe, amend, and rescind rules and
regulations relating to the Plan; to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company; and to
make all other determinations necessary or advisable for the administration of
the Plan. Determinations, interpretations, or other actions made or taken by
the Board,

 

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pursuant
to the provisions of this Plan, shall be final and binding and conclusive for
all purposes and upon all persons.

 

(b)  At the
discretion of the Board this Plan may be administered by a Committee which
shall be an executive committee of the Board, consisting of not less than two
members of the Board. The members of such Committee may be directors who are
eligible to receive Options under this Plan, but Options may be granted to such
persons only by action of the full Board and not by action of the Committee. Such
Committee shall have full power and authority, subject to the limitations of
the Plan and any limitations imposed by the Board, to construe, interpret and
administer this Plan and to make determinations which shall be final,
conclusive and binding upon all persons, including, without limitation, the
Company, the shareholders, the directors and any persons having any interests
in any Options which may be granted under this Plan, and, by resolution or
resolutions providing for the creation and issuance of any such Option, to fix
the terms upon which, the time or times at or within which, and the price or
prices at which any such shares may be purchased from the Company upon the
exercise of such Option. Such terms, time or times and price or prices shall,
in every case, be consistent with the provisions of this Plan, and shall be set
forth or incorporated by reference in the instrument or instruments evidencing
such Option.

 

(c)  If the
Committee has been appointed, the Board may from time to time remove members
from, or add members to, the Committee. The Board may terminate the Committee
at any time. Vacancies on the Committee, howsoever caused, shall be filled by
the Board. The Committee shall select one of its members as Chairman, and shall
hold meetings at such times and places as the Chairman may determine. A
majority of the Committee at which a quorum is present, or acts reduced to or
approved in writing by all of the members of the Committee, shall be the valid
acts of the Committee. A quorum shall consist of a majority of the members of
the Committee.

 

(d)  Where the
Committee has been created by the Board, references in this Plan to actions to
be taken by the Board shall be deemed to refer to the Committee as well, except
where limited by this Plan or by the Board.

 

(e)  The Board
shall have all of the enumerated powers of the Committee, but shall not be
limited to such powers. No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option granted under it.

 

4.2                                 Special Provisions for Grants to Officers or
Directors. Rule 16b-3 under
the Securities and Exchange Act of 1934 (the “Act”) provides that the grant of
a stock option to a director or officer of a company subject to the Act will be
exempt from the provisions of Section 16(b) of the Act if the conditions set
forth in said Rule are satisfied. Unless otherwise specified by the Board,
grants of Options hereunder to individuals who are officers or directors of the
Company shall be made in a manner that satisfies the conditions of said Rule.

 

ARTICLE V

STOCK SUBJECT TO THE PLAN

 

5.1                                 Number. The total number of shares of Stock hereby made available and
reserved for issuance under the Plan shall be 500,000 shares for Incentive
Stock Options and Nonstatutory Stock Options. The aggregate number of shares of
Stock available under this Plan shall be subject to adjustment as provided in
Section 5.3. The total number of shares of Stock may be authorized but unissued
shares of Stock, or Shares acquired by purchase as directed by the Board from
time to time in its discretion, to be used for issuance upon exercise of
Options granted hereunder.

 

5.2                                 Unused Stock. If an Option shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares of
Stock subject thereto shall (unless the Plan shall have terminated) become
available for other Options under the Plan.

 

5.3                                 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar corporate change, the
aggregate number of shares of Stock remaining subject to the Plan and to
Options previously granted shall be appropriately 

 

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adjusted by the Board, whose determination
shall be conclusive; provided however, that fractional shares shall be rounded
to the nearest whole share. In any such case, the number and kind of shares
that are subject to any Option (including any Option outstanding after
termination of employment) and the Option price per share shall be
proportionately and appropriately adjusted without any change in the aggregate
Option price to be paid therefor upon exercise of the Option.

 

ARTICLE VI

DURATION OF THE PLAN

 

6.1                                 Duration of the Plan. Subject to approval of shareholders, the
Plan shall be in effect for ten years from the date of its adoption by the
Board. Any Options outstanding at the end of said period shall remain in effect
in accordance with their terms. The Plan shall terminate before the end of said
period if all Stock subject to it has been purchased pursuant to the exercise
of Options granted under the Plan.

 

ARTICLE VII

TERMS OF STOCK OPTIONS

 

7.1                                 Grant of Options. Subject to Section 5.1, Options may be
granted to Employees or Consultants at any time and from time to time as
determined by the Board; provided, however, that Consultants may receive only
Nonstatutory Options and may not receive Incentive Stock Options. The Board
shall have complete discretion in determining the terms and conditions and
number of Options granted to each Optionee. In making such determinations, the
Board may take into account the nature of services rendered by such Employees
or Consultants, their present and potential contributions to the Company and
its Subsidiary Corporations, and such other factors as the Board in its
discretion shall deem relevant. The Board also shall determine whether an
Option is to be an Incentive Stock Option or a Nonstatutory Option.

 

(a)  In the
case of Incentive Stock Options, the total Fair Market Value (determined at the
date of grant) of shares of Stock with respect to which incentive stock options
granted after December 31, 1986 are exercisable for the first time by the
Optionee during any calendar year under all plans of the Company under which
incentive stock options may be granted (and all such plans of any Parent
Corporations and any Subsidiary Corporations of the Company) shall not exceed
$100,000. Hereinafter, this requirement is sometimes referred to as the “$100,000
Limitation”.

 

(b)  Nothing
in this Article VII of the Plan shall be deemed to prevent the grant of Options
permitting exercise in excess of the maximums established by the preceding
paragraph where such excess amount is treated as a Nonstatutory Option.

 

(c)  The Board
is expressly given the authority to issue amended or replacement Options with
respect to shares of Stock subject to an Option previously granted hereunder. An
amended Option amends the terms of an Option previously granted and thereby
supersedes the previous Option. A replacement Option is similar to a new Option
granted hereunder except that it provides that it shall be forfeited to the
extent that a previously granted Option is exercised, or except that its
issuance is conditioned upon the termination of a previously granted Option.

 

(d)  The date
of grant of an Option is either the date it is granted or such other date as
may be designed at the time of the award of the Option.

 

7.2                                 No Tandem Options. Where an Option granted under this Plan is
intended to be an Incentive Stock Option, the Option shall not contain terms
pursuant to which the exercise of the Option would affect the Optionee’s right
to exercise another Option, or vice versa, such that the Option intended to be
an Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under Section 422A of the Code.

 

7.3                                 Option Agreement: Terms and Conditions to
Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option
shall be evidenced by an Option agreement (the “Option Agreement”) that
includes the non-transferability provisions required by Section 10.2 hereof and
specifies: whether the Option is 

 

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an Incentive Stock Option or a Nonstatutory
option; the Option price; the duration of the Option; the number of shares of
Stock to which the Option applies; any vesting or exercisability restrictions
which the Board may impose; in the case of an Incentive Stock Option, a
provision implementing the $100,000 Limitation; and any other terms or
conditions which the Board may impose. All such terms and conditions shall be
determined by the Board at the time of grant of the Option.

 

(a)  If not
otherwise specified by the Board, the following terms and conditions shall
apply to Options granted under the Plan:

 

(i)  Term.
The duration of the Option shall be five years from the date of grant.

 

(ii)  Exercise
of Option. Unless an Option is terminated as provided hereunder, an
Optionee may exercise his Option for up to, but not in excess of, the amounts
of shares subject to the Option specified hereafter in this section, based on
the Optionee’s number of years of continuous service with the Company or a
Subsidiary Corporation from the date on which the Option is granted. In the case
of an Optionee who is an Employee, continuous service shall mean continuous
employment; in the case of an Optionee who is a Consultant, continuous service
shall mean the continuous provision of consulting services. In applying said
limitations, the amount of shares, if any, previously purchased by the Optionee
under the Option shall be counted in determining the amount of shares the
Optionee can purchase at any time. The Optionee may exercise his Option in the
following amounts:

 

(A)  After one
year of such continuous services, up to but not in excess of twenty percent of
the shares originally subject to the Option;

 

(B)  After two
years of such continuous services, up to but not in excess of forty percent of
the shares originally subject to the Option;

 

(C)  After
three years of such continuous services, up to but not in excess of sixty
percent of the shares originally subject to the Option;

 

(D)  After
four years of such continuous services, up to but not in excess of eighty
percent of the shares originally subject to the Option; and

 

(E)  At the
expiration of the fifth year of such continuous services, the Option may be
exercised, in whole or in part, and at any time and from time to time within
its term but it shall not be exercisable after the expiration of five years
from the date on which it was granted.

 

(b)  The Board
shall be free to specify terms and conditions other than those set forth above,
in its discretion.

 

(c)  All
Option Agreements shall incorporate the provisions of this Plan by reference,
with certain provisions to apply depending upon whether the Option Agreement
applies to an Incentive Stock Option or to a Nonstatutory Option.

 

7.4                                 Option Price. No Incentive Stock Option granted pursuant
to this Plan shall have an Option price that is less than the Fair Market Value
of Stock on the date the Option is granted. Incentive Stock Options granted to
Significant Shareholders shall have an Option price of not less than 110
percent of the Fair Market Value of Stock on the date of grant. The Option
price for Nonstatutory Options shall be established by the Board and shall not
be subject to the restrictions applicable to Incentive Stock Options.

 

7.5                                 Term of Options. Each Option shall expire at such time as
the Board shall determine when it is granted, provided however that under no
circumstances shall a Nonstatutory Option be exercisable later than the tenth
anniversary date of its grant, nor by its terms, shall an Incentive Stock
Option granted to a Significant Shareholder be exercisable later than the fifth
year from the anniversary date of its grant.

 

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7.6                                 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for all
Optionees.

 

7.7                                 Payment. Payment for all shares of Stock shall be made at the time that an
Option, or any part thereof, is exercised, and no shares shall be issued until
full payment has been made. Payment shall be made (i) in cash, or (ii) if
acceptable to the Board, in Stock or in some other form; provided, however, in
the case of an Incentive Stock Option, that said other form of payment does not
prevent the Option from qualifying for treatment as an incentive stock option
within the meaning of the Code.

 

ARTICLE VIII

WRITTEN NOTICE, ISSUANCE OF STOCK

CERTIFICATES. SHAREHOLDER PRIVILEGES

 

8.1                                 Written Notice. An Optionee wishing to exercise an Option
shall give written notice to the Company, in the form and manner prescribed by
the Board. Full payment for the shares exercised pursuant to the Option must
accompany the written notice.

 

8.2                                 Issuance of Stock Certificates. As soon as practicable after the receipt of
written notice and payment, the Company shall deliver to the Optionee or to a
permitted nominee of the Optionee a certificate or certificates for the
requisite number of shares of stock.

 

8.3                                 Privileges of a Shareholder. An Optionee or any other person entitled to
exercise an Option under this Plan shall not have stockholder privileges with
respect to any Stock covered by the Option until the date of issuance of a
stock certificate for such stock.

 

ARTICLE IX

TERMINATION OF EMPLOYMENT OR SERVICES

 

9.1                                 Death. If an Optionee’s employment in the case of an Employee, or provision
of services as a Consultant, in the case of a Consultant, terminates by reason
of death, the Option may thereafter be exercised at any time prior to the
expiration date of the Option or within 12 months after the date of such death,
whichever period is the shorter, by the person or persons entitled to do so
under the Optionee’s will or, if the Optionee shall fail to make a testamentary
disposition of an Option or shall die intestate, the Optionee’s legal representative
or representatives. The Option shall be exercisable only to the extent that
such Option was exercisable as of the date of death.

 

9.2                                 Termination other than for Cause or Due to
Death. In the event of an
Optionee’s termination of employment, in the case of an Employee, or
termination of the provision of services as a Consultant, in the case of a
Consultant, other than by reason of death, the Optionee may exercise such
portion of his Option as was exercisable by him at the date of such termination
(the “Termination Date”) at any time within three months of the Termination
Date; provided, however, that where the Optionee is an Employee, and is
terminated due to disability within the meaning of Code  422A, he may exercise such portion of his
Option as was exercisable by him on his Termination Date within one year of his
Termination Date. In any event, the Option cannot be exercised after the
expiration of the term of the Option. Options not exercised within the
applicable period specified above shall terminate.

 

(a)  In the
case of an Employee, a change of duties or position within the Company or an
assignment of employment in a Subsidiary Corporation or Parent Corporation of
the Company, if any, or from such a Corporation to the Company, shall not be considered
a termination of employment for purposes of this Plan.

 

(b)  The
Option Agreements may contain such provisions as the Board shall approve with
reference to the effect of approved leaves of absence upon termination of
employment.

 

9.3                                 Termination for Cause. In the event of an Optionee’s termination
of employment, in the case of an Employee, or termination of the provision of
services as a Consultant, in the case of a Consultant, which termination

 

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is by the Company or a Subsidiary Corporation
for cause, any Option or Options held by him under the Plan, to the extent not
exercised before such termination, shall terminate upon notice of termination
for cause.

 

ARTICLE X

RIGHTS OF OPTIONEES

 

10.1                           Service. Nothing in this Plan shall interfere with or limit in any way the
right of the Company or a Subsidiary Corporation to terminate any Employee’s
employment, or any Consultant’s services, at any time, nor confer upon any
Employee any right to continue in the employ of the Company or a Subsidiary
Corporation, or upon any Consultant any right to continue to provide services
to the Company or a Subsidiary Corporation.

 

10.2                           Non-transferability. All Options granted under this Plan shall
be non-transferable by the Optionee, other than by will or the laws of descent
and distribution, and shall be exercisable during the Optionee’s lifetime only
by the Optionee. No Option may be assigned, pledged, hypothecated or otherwise
alienated or encumbered (whether by operation of law or otherwise), and any
attempt to do so shall be null and void.

 

ARTICLE XI

OPTIONEE-EMPLOYEE’S TRANSFER OR LEAVE OF ABSENCE

 

11.1                           Optionee-Employee’s Transfer or Leave of
Absence. For purposes of
this Plan:

 

(a)  A
transfer of an Optionee who is an Employee from the Company to a Subsidiary
Corporation or Parent Corporation, or from one such Corporation to another, or

 

(b)  A leave
of absence for such an Optionee (i) which is duly authorized in writing by the
Company or a Subsidiary Corporation, and (ii) if the Optionee holds an
Incentive Stock Option, which qualifies under the applicable regulations under
the Code which apply in the case of incentive stock options, shall not be
deemed a termination of employment. However, under no circumstances may an
Optionee exercise an Option during any leave of absence, unless authorized by
the Board.

 

ARTICLE XII

AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN

 

12.1                           Amendment, Modification an d Termination of
the Plan.

 

(a)  The Board
may at any time terminate, and from time to time may amend or modify the Plan;
provided, however, that no such action of the Board, without approval of the
shareholders, may:

 

(i)  increase
the total amount of Stock which may be purchased through Options granted under
the Plan, except as provided in Article V;

 

(ii)  change
the class of Employees or Consultants eligible to receive Options; or

 

(iii)  extend
the maximum option period provided in this Plan.

 

 (b)  No amendment, modification, or termination of
the Plan shall in any manner adversely affect any outstanding Option under the
Plan without the consent of the Optionee holding the Option.

 

ARTICLE XIII

ACQUISITION, MERGER OR LIQUIDATION

 

13.1                           Acquisition.

 

(a)  In the
event that an Acquisition occurs with respect to the Company, the Company shall
have the option, but not the obligation, to cancel Options outstanding as of
the effective date of Acquisition, whether or not such Options are then
exercisable, in return for payment to the Optionees of an amount 

 

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equal
to a reasonable estimate of an amount (hereinafter the “Spread”) equal to the
difference between the net amount per share payable in the Acquisition or as a
result of the Acquisition, less the exercise price of the Option. In estimating
the Spread, appropriate adjustments to give effect to the existence of the
Options shall be made, such as deeming the Options to have been exercised, with
the Company receiving the exercise price payable thereunder, and treating the
stock receivable upon exercise of the Options as being outstanding in
determining the net amount per share.

 

(b)  For
purposes of this section, an “Acquisition” means any transaction in which
substantially all of the Company’s assets are acquired or in which a
controlling amount of the Company’s outstanding shares of Stock are acquired,
in each case by a single person or entity or an affiliated group of persons and
entities. For purposes of this section, a controlling amount shall mean more
than 50% of the issued and outstanding shares of Stock of the Company. The
Company shall have such an option regardless of how the Acquisition is
effectuated, whether by direct purchase, through a merger or similar corporate
transaction, or otherwise. In cases where the acquisition consists of the
acquisition of assets of the Company, the net amount per share shall be
calculated on the basis of the net amount receivable with respect to shares
upon a distribution and liquidation by the Company after giving effect to expenses
and charges, including but not limited to taxes, payable by the Company before
the liquidation can be completed.

 

(c)  Where the
Company does not exercise its option under this Section 13.1 the remaining
provisions of this Article XIII shall apply, to the extent applicable.

 

13.2                           Merger or Consolidation. Subject to any required action by the
shareholders, if the Company shall be the surviving corporation in any  merger or consolidation, any option granted
under this Plan shall pertain to and apply to the securities to which a holder
of the number of shares of Stock subject to the Option would have been entitled
in such merger or consolidation.

 

 13.3                        Other Transactions. A
dissolution or a liquidation of the Company or a merger and consolidation in
which the Company is not the surviving corporation shall cause every Option
outstanding hereunder to terminate as of the effective date of such
dissolution, liquidation, merger or consolidation. However, the Optionee either
(i) shall be offered a firm commitment whereby the resulting or surviving
corporation in a merger or consolidation will tender to the Optionee an option
(the “Substitute Option”) to purchase its shares on terms and conditions both
as to number of shares and otherwise, that will substantially preserve to the
Optionee the rights and benefits of the Option outstanding hereunder granted by
the Company, or (ii) shall have the right immediately prior to such
dissolution, liquidation, merger, or consolidation to exercise any unexercised
Options whether or not then exercisable, subject to the provisions of this Plan.
The Board shall have absolute and uncontrolled discretion to determine whether
the Optionee has been offered a firm commitment and whether the tendered
Substitute Option will substantially preserve to the Optionee the rights and
benefits of the Option outstanding hereunder. In any event, any Substitute
Option for an Incentive Stock Option shall comply with the requirements of Code
Section 425(a).

 

ARTICLE XIV

SECURITIES REGISTRATION

 

14.1                           Securities Registration. In the event that the Company shall deem it
necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to
qualify any such Options or Stock under the Securities Act of 1933, as amended,
or any other statute, then the Optionee shall cooperate with the Company and
take such action as is necessary to permit registration or qualification of
such Options or Stock.

 

14.2                           Representations. Unless the Company has determined that the
following representation is unnecessary, each person exercising an Option under
the Plan may be required by the Company, as a condition to the issuance of the
shares pursuant to exercise of the Option, to make a representation in writing
(i) that he is acquiring such shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution of any part
thereof, (ii) that before any transfer in connection with the resale of such
shares, he will obtain the written opinion of counsel for the Company, or other
counsel acceptable to the Company, that such shares may be transferred. The
Company may also require that the certificates representing such shares contain
legends reflecting the foregoing.

 

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ARTICLE XV

TAX WITHHOLDING

 

15.1                           Tax Withholding. Whenever shares of Stock are to be issued
in satisfaction of Options exercised under this Plan, the Company shall have
the power to require the recipient of the Stock to remit to the Company an
amount sufficient to satisfy any applicable federal, state, and local
withholding tax requirements.

 

ARTICLE XVI

INDEMNIFICATION

 

16.1                           Indemnification. To the extent permitted by law, each person
who is or shall have been a member of the Board shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a
party or in which he may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company’s approval, or paid by him in satisfaction
of judgment in any such action, suit, or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company’s
articles of incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company or any Subsidiary Corporation may have to indemnify them
or hold them harmless.

 

ARTICLE XVII

REQUIREMENTS OF LAW

 

17.1                           Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

17.2                           Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the state of
Colorado.

 

ARTICLE XVIII

EFFECTIVE DATE OF PLAN

 

18.1                           Effective Date. The Plan shall be effective on July 11,
2002.

 

ARTICLE XIX

COMPLIANCE WITH CODE

 

19.1                           Compliance with Code. Incentive Stock Options granted hereunder
are intended to qualify as “incentive stock options” under Code 422A. If any
provision of this Plan is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with Incentive Stock
Options granted under this Plan being treated as incentive stock options under
the Code.

 

ARTICLE XX

NO OBLIGATION TO EXERCISE OPTION

 

20.1                           No Obligation to Exercise. The granting of an Option shall impose no
obligation upon the holder thereof to exercise such Option.

 

9

 

THIS
2003 STOCK OPTION PLAN was adopted by the Board of Directors of Rentech, Inc.
on July 11, 2002 to be effective as of July 11, 2002. It was approved by shareholders
at the annual meeting of shareholders held on March 25, 2003.

 

	
   

  	
   

  	
  RENTECH,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dennis L. Yakobson

  
	
   

  	
   

  	
  Dennis
  L. Yakobson, President

  

 

10Exhibit 10.3

 

RENTECH, INC.

2005 STOCK OPTION PLAN

 

ARTICLE I

ESTABLISHMENT AND PURPOSE

 

1.1                                 Establishment. Rentech, Inc., a Colorado corporation
(“Company”), hereby establishes a stock option plan for key employees,
directors, and consultants providing material services to the Company, as
described herein, which shall be known as the “2005 Stock Option Plan” (the
“Plan”). It is intended that certain of the options issued to employees
pursuant to the Plan may constitute incentive stock options within the meaning
of Section 422A of the Internal Revenue Code and that other options issued
pursuant to the Plan shall constitute nonstatutory options. The Board of
Directors shall determine which options are to be incentive stock options and
which are to be nonstatutory options and shall enter into option agreements
with recipients accordingly.

 

1.2                                 Purpose. The purpose of this Plan is to enhance shareholder investment by
attracting, retaining and motivating key employees, directors and consultants
of the Company, and to encourage stock ownership by such persons by providing
them with a means to acquire a proprietary interest in the Company’s success,
and to align the interests of management with those of shareholders.

 

ARTICLE II

DEFINITIONS

 

2.1                                 Definitions. Whenever used herein, the following terms shall have the respective
meanings set forth below, unless the context clearly requires otherwise, and
when said meaning is intended, the term shall be capitalized.

 

(a)                                  “Board” means the Board of Directors
of the Company.

 

(b)                                 “Code” means the Internal Revenue Code
of 1986, as amended.

 

(c)                                  “Committee” shall mean the Committee
provided by  Article IV hereof, which may
be created at the discretion of the Board.

 

(d)                                 “Company” means Rentech, Inc., a
Colorado corporation.

 

(e)                                  “Consultant” means any person or
entity, including a Parent Corporation or a Subsidiary Corporation, that
provides services (other than as an Employee) to the Company, a Parent
Corporation or a Subsidiary Corporation, and shall include a Non-Employee Officer
or Non-Employee Director, as defined subsequently.

 

(f)                                    “Date of Exercise” means the date the
Company receives notice, by an Optionee, of the exercise of an Option pursuant
to Section 8.1 of this Plan. Such notice shall indicate the number of shares of
Stock the Optionee intends to exercise.

 

(g)                                 “Employee” means any person, including
an officer or director of the Company or a Subsidiary Corporation, who is
employed by the Company or a Subsidiary Corporation.

 

(h)                                 “Fair Market Value” means the fair market
value of Stock upon which an option is granted under this Plan, determined as
the average of the closing bid and asked prices of the Stock, as reported by
Nasdaq.

 

(i)                                     “Incentive Stock Option” means an
Option granted under this Plan which is intended to qualify as an “incentive
stock option” within the meaning of Section 422A of the Code.

 

1

 

(j)                                     “Non-Employee Director” means a member
of the Board who is not an employee of the Company at the time an Option is
granted hereunder.

 

 (k)                               “Non-Employee Officer” means an
officer of the Company who is not an employee of the Company at the time an
Option is granted hereunder.

 

(l)                                     “Nonstatutory Option” means an Option
granted under this Plan which is not intended to qualify as an incentive stock
option within the meaning of Section 422A of the Code. Nonstatutory Options may
be granted at such times and subject to such restrictions as the Board shall
determine without conforming to the statutory rules of Section 422A of the Code
applicable to incentive stock options.

 

(m)                               “Option” means the right, granted under this Plan, to purchase
Stock of the Company at the option price for a specified period of time. For
purposes of this Plan, an Option may be either an Incentive Stock Option or a
Nonstatutory Option.

 

(n)                                 “Optionee” means an Employee or
Consultant holding an Option under the Plan.

 

(o)                                 “Parent Corporation” shall have the
meaning set forth in Section 425(e) of the Code with the Company being treated
as the employer corporation for purposes of this definition.

 

(p)                                 “Subsidiary Corporation” shall have
the meaning set forth in Section 425(f) of the Code with the Company being
treated as the employer corporation for purposes of this definition.

 

(q)                                 “Significant Shareholder” means an
individual who, within the meaning of Section 422A(b)(6) of the Code, owns
stock possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or of any Parent Corporation or Subsidiary
Corporation of the Company. In determining whether an individual is a
Significant Shareholder, an individual shall be treated as owning stock owned
by certain relatives of the individual and certain stock owned by corporations
in which the individual is a shareholder, partnerships in which the individual
is a partner, and estates or trusts of which the individual is a beneficiary,
all as provided in Section 425(d) of the Code.

 

(r)                                    “Stock” means the $.01 par value
common stock of the Company.

 

2.2                                 Gender and Number. Except when otherwise indicated by the
context, any masculine terminology when used in this Plan also shall include
the feminine gender, and the definition of any term herein in the singular also
shall include the plural.

 

ARTICLE III

ELIGIBILITY AND PARTICIPATION

 

3.1                                 Eligibility and Participation. All Employees are eligible to participate
in this Plan and receive either or both Incentive Stock Options and
Nonstatutory Options under the Plan. All Consultants are eligible to
participate in this Plan and receive Nonstatutory Options hereunder. Optionees
in the Plan shall be selected by the Board, in its sole discretion, from among
those Employees and Consultants who, in the opinion of the Board, are in a
position to contribute materially to the Company’s continued growth and
development and to its long-term financial success.

 

ARTICLE IV

ADMINISTRATION

 

4.1                                 Administration. The Board shall be responsible for
administering the Plan.

 

(a)  The Board
is authorized to interpret the Plan; to prescribe, amend, and rescind rules and
regulations relating to the Plan; to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company; and to
make all other determinations necessary or advisable for the administration of
the Plan. Determinations, interpretations, or other actions made or taken by
the Board, 

 

2

 

pursuant
to the provisions of this Plan, shall be final and binding and conclusive for
all purposes and upon all persons.

 

(b)  At the
discretion of the Board this Plan may be administered by a Committee which
shall be an executive committee of the Board, consisting of not less than two
members of the Board. The members of such Committee may be directors who are
eligible to receive Options under this Plan, but Options may be granted to such
persons only by action of the full Board and not by action of the Committee. Such
Committee shall have full power and authority, subject to the limitations of
the Plan and any limitations imposed by the Board, to construe, interpret and
administer this Plan and to make determinations which shall be final,
conclusive and binding upon all persons, including, without limitation, the
Company, the shareholders, the directors and any persons having any interests
in any Options which may be granted under this Plan, and, by resolution or
resolutions providing for the creation and issuance of any such Option, to fix
the terms upon which, the time or times at or within which, and the price or
prices at which any such shares may be purchased from the Company upon the
exercise of such Option. Such terms, time or times and price or prices shall,
in every case, be consistent with the provisions of this Plan, and shall be set
forth or incorporated by reference in the instrument or instruments evidencing
such Option.

 

(c)  If the
Committee has been appointed, the Board may from time to time remove members
from, or add members to, the Committee. The Board may terminate the Committee
at any time. Vacancies on the Committee, howsoever caused, shall be filled by
the Board. The Committee shall select one of its members as Chairman, and shall
hold meetings at such times and places as the Chairman may determine. A
majority of the Committee at which a quorum is present, or acts reduced to or
approved in writing by all of the members of the Committee, shall be the valid
acts of the Committee. A quorum shall consist of a majority of the members of
the Committee.

 

(d)  Where the
Committee has been created by the Board, references in this Plan to actions to
be taken by the Board shall be deemed to refer to the Committee as well, except
where limited by this Plan or by the Board.

 

(e)  The Board
shall have all of the enumerated powers of the Committee, but shall not be
limited to such powers. No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option granted under it.

 

4.2                                 Special Provisions for Grants to Officers or
Directors. Rule 16b-3 under
the Securities and Exchange Act of 1934 (the “Act”) provides that the grant of
a stock option to a director or officer of a company subject to the Act will be
exempt from the provisions of Section 16(b) of the Act if the conditions set
forth in said Rule are satisfied. Unless otherwise specified by the Board,
grants of Options hereunder to individuals who are officers or directors of the
Company shall be made in a manner that satisfies the conditions of said Rule.

 

ARTICLE V

STOCK SUBJECT TO THE PLAN

 

5.1                                 Number. The total number of shares of Stock hereby made available and
reserved for issuance under the Plan shall be 1,000,000 shares for Incentive
Stock Options and Nonstatutory Stock Options. The aggregate number of shares of
Stock available under this Plan shall be subject to adjustment as provided in
Section 5.3. The total number of shares of Stock may be authorized but unissued
shares of Stock, or Shares acquired by purchase as directed by the Board from
time to time in its discretion, to be used for issuance upon exercise of
Options granted hereunder.

 

5.2                                 Unused Stock. If an Option shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares of
Stock subject thereto shall (unless the Plan shall have terminated) become
available for other Options under the Plan.

 

5.3                                 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar corporate change, the
aggregate number of shares of Stock remaining subject to the Plan and to
Options previously granted shall be appropriately 

 

3

 

adjusted
by the Board, whose determination shall be conclusive; provided however, that
fractional shares shall be rounded to the nearest whole share. In any such
case, the number and kind of shares that are subject to any Option (including
any Option outstanding after termination of employment) and the Option price
per share shall be proportionately and appropriately adjusted without any
change in the aggregate Option price to be paid therefor upon exercise of the
Option.

 

ARTICLE VI

DURATION OF THE PLAN

 

6.1                                 Duration of the Plan. Subject to approval of shareholders, the Plan
shall be in effect for ten years from the date of its adoption by the Board. Any
Options outstanding at the end of said period shall remain in effect in
accordance with their terms. The Plan shall terminate before the end of said
period if all Stock subject to it has been purchased pursuant to the exercise
of Options granted under the Plan.

 

ARTICLE VII

TERMS OF STOCK OPTIONS

 

7.1                                 Grant of Options. Subject to Section 5.1, Options may be
granted to Employees or Consultants at any time and from time to time as
determined by the Board; provided, however, that Consultants may receive only
Nonstatutory Options and may not receive Incentive Stock Options. The Board
shall have complete discretion in determining the terms and conditions and
number of Options granted to each Optionee. In making such determinations, the
Board may take into account the nature of services rendered by such Employees
or Consultants, their present and potential contributions to the Company and
its Subsidiary Corporations, and such other factors as the Board in its
discretion shall deem relevant. The Board also shall determine whether an
Option is to be an Incentive Stock Option or a Nonstatutory Option.

 

(a)  In the
case of Incentive Stock Options, the total Fair Market Value (determined at the
date of grant) of shares of Stock with respect to which incentive stock options
granted after December 31, 1986 are exercisable for the first time by the
Optionee during any calendar year under all plans of the Company under which
incentive stock options may be granted (and all such plans of any Parent
Corporations and any Subsidiary Corporations of the Company) shall not exceed
$100,000. Hereinafter, this requirement is sometimes referred to as the
“$100,000 Limitation”.

 

(b)  Nothing
in this Article VII of the Plan shall be deemed to prevent the grant of Options
permitting exercise in excess of the maximums established by the preceding
paragraph where such excess amount is treated as a Nonstatutory Option.

 

(c)  The Board
is expressly given the authority to issue amended or replacement Options with
respect to shares of Stock subject to an Option previously granted hereunder. An
amended Option amends the terms of an Option previously granted and thereby
supersedes the previous Option. A replacement Option is similar to a new Option
granted hereunder except that it provides that it shall be forfeited to the
extent that a previously granted Option is exercised, or except that its
issuance is conditioned upon the termination of a previously granted Option.

 

(d)  The date
of grant of an Option is either the date it is granted or such other date as
may be designed at the time of the award of the Option.

 

7.2                                 No Tandem Options. Where an Option granted under this Plan is
intended to be an Incentive Stock Option, the Option shall not contain terms
pursuant to which the exercise of the Option would affect the Optionee’s right
to exercise another Option, or vice versa, such that the Option intended to be
an Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under Section 422A of the Code.

 

7.3                                 Option Agreement: Terms and Conditions to
Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option
shall be evidenced by an Option agreement (the “Option Agreement”) that
includes the non-transferability provisions required by Section 10.2 hereof and
specifies: whether the Option is 

 

4

 

an Incentive Stock Option or a Nonstatutory
option; the Option price; the duration of the Option; the number of shares of
Stock to which the Option applies; any vesting or exercisability restrictions
which the Board may impose; in the case of an Incentive Stock Option, a
provision implementing the $100,000 Limitation; and any other terms or
conditions which the Board may impose. All such terms and conditions shall be
determined by the Board at the time of grant of the Option.

 

(a)  If not
otherwise specified by the Board, the following terms and conditions shall apply
to Options granted under the Plan:

 

(i)  Term.
The duration of the Option shall be five years from the date of grant.

 

(ii)  Exercise
of Option. Unless an Option is terminated as provided hereunder, an
Optionee may exercise his Option for up to, but not in excess of, the amounts
of shares subject to the Option specified hereafter in this section, based on
the Optionee’s number of years of continuous service with the Company or a
Subsidiary Corporation from the date on which the Option is granted. In the
case of an Optionee who is an Employee, continuous service shall mean
continuous employment; in the case of an Optionee who is a Consultant,
continuous service shall mean the continuous provision of consulting services. In
applying said limitations, the amount of shares, if any, previously purchased
by the Optionee under the Option shall be counted in determining the amount of
shares the Optionee can purchase at any time. The Optionee may exercise his
Option in the following amounts:

 

(A)  After one
year of such continuous services, up to but not in excess of twenty percent of
the shares originally subject to the Option;

 

(B)  After two
years of such continuous services, up to but not in excess of forty percent of
the shares originally subject to the Option;

 

(C)  After
three years of such continuous services, up to but not in excess of sixty
percent of the shares originally subject to the Option;

 

(D)  After
four years of such continuous services, up to but not in excess of eighty
percent of the shares originally subject to the Option; and

 

(E)  At the
expiration of the fifth year of such continuous services, the Option may be
exercised, in whole or in part, and at any time and from time to time within
its term but it shall not be exercisable after the expiration of five years
from the date on which it was granted.

 

(b)  The Board
shall be free to specify terms and conditions other than those set forth above,
in its discretion.

 

(c)  All
Option Agreements shall incorporate the provisions of this Plan by reference,
with certain provisions to apply depending upon whether the Option Agreement
applies to an Incentive Stock Option or to a Nonstatutory Option.

 

7.4                                 Option Price. No Incentive Stock Option granted pursuant
to this Plan shall have an Option price that is less than the Fair Market Value
of Stock on the date the Option is granted. Incentive Stock Options granted to
Significant Shareholders shall have an Option price of not less than 110
percent of the Fair Market Value of Stock on the date of grant. The Option
price for Nonstatutory Options shall be established by the Board and shall not
be subject to the restrictions applicable to Incentive Stock Options.

 

7.5                                 Term of Options. Each Option shall expire at such time as
the Board shall determine when it is granted, provided however that under no
circumstances shall a Nonstatutory Option be exercisable later than the tenth
anniversary date of its grant, nor by its terms, shall an Incentive Stock
Option granted to a Significant Shareholder be exercisable later than the fifth
year from the anniversary date of its grant.

 

5

 

7.6                                 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for all
Optionees.

 

7.7                                 Payment. Payment for all shares of Stock shall be made at the time that an
Option, or any part thereof, is exercised, and no shares shall be issued until
full payment has been made. Payment shall be made (i) in cash, or (ii) if
acceptable to the Board, in Stock or in some other form; provided, however, in
the case of an Incentive Stock Option, that said other form of payment does not
prevent the Option from qualifying for treatment as an incentive stock option
within the meaning of the Code.

 

ARTICLE VIII

WRITTEN NOTICE, ISSUANCE OF STOCK

CERTIFICATES. SHAREHOLDER PRIVILEGES

 

8.1                                 Written Notice. An Optionee wishing to exercise an Option
shall give written notice to the Company, in the form and manner prescribed by
the Board. Full payment for the shares exercised pursuant to the Option must
accompany the written notice.

 

8.2                                 Issuance of Stock Certificates. As soon as practicable after the receipt of
written notice and payment, the Company shall deliver to the Optionee or to a
permitted nominee of the Optionee a certificate or certificates for the
requisite number of shares of stock.

 

8.3                                 Privileges of a Shareholder. An Optionee or any other person entitled to
exercise an Option under this Plan shall not have stockholder privileges with
respect to any Stock covered by the Option until the date of issuance of a
stock certificate for such stock.

 

ARTICLE IX

TERMINATION OF EMPLOYMENT OR SERVICES

 

9.1                                 Death. If an Optionee’s employment in the case of an Employee, or provision
of services as a Consultant, in the case of a Consultant, terminates by reason
of death, the Option may thereafter be exercised at any time prior to the
expiration date of the Option or within 12 months after the date of such death,
whichever period is the shorter, by the person or persons entitled to do so
under the Optionee’s will or, if the Optionee shall fail to make a testamentary
disposition of an Option or shall die intestate, the Optionee’s legal
representative or representatives. The Option shall be exercisable only to the
extent that such Option was exercisable as of the date of death.

 

9.2                                 Termination other than for Cause or Due to
Death. In the event of an
Optionee’s termination of employment, in the case of an Employee, or
termination of the provision of services as a Consultant, in the case of a
Consultant, other than by reason of death, the Optionee may exercise such
portion of his Option as was exercisable by him at the date of such termination
(the “Termination Date”) at any time within six months of the Termination Date;
provided, however, that where the Optionee is an Employee, and is terminated
due to disability within the meaning of Code 
422A, he may exercise such portion of his Option as was exercisable by
him on his Termination Date within one year of his Termination Date. In any
event, the Option cannot be exercised after the expiration of the term of the
Option. Options not exercised within the applicable period specified above shall
terminate.

 

 (a)  In the case of an Employee, a change of
duties or position within the Company or an assignment of employment in a
Subsidiary Corporation or Parent Corporation of the Company, if any, or from
such a Corporation to the Company, shall not be considered a termination of
employment for purposes of this Plan.

 

(b)  The
Option Agreements may contain such provisions as the Board shall approve with
reference to the effect of approved leaves of absence upon termination of
employment.

 

9.3                                 Termination for Cause. In the event of an Optionee’s termination
of employment, in the case of an Employee, or termination of the provision of
services as a Consultant, in the case of a Consultant, which termination 

 

6

 

is by the Company or a Subsidiary Corporation
for cause, any Option or Options held by him under the Plan, to the extent not
exercised before such termination, shall terminate upon notice of termination
for cause.

 

ARTICLE X

RIGHTS OF OPTIONEES

 

10.1                           Service. Nothing in this Plan shall interfere with or limit in any way the
right of the Company or a Subsidiary Corporation to terminate any Employee’s
employment, or any Consultant’s services, at any time, nor confer upon any
Employee any right to continue in the employ of the Company or a Subsidiary
Corporation, or upon any Consultant any right to continue to provide services
to the Company or a Subsidiary Corporation.

 

10.2                           Non-transferability. All Options granted under this Plan shall
be non-transferable by the Optionee, other than by will or the laws of descent
and distribution, and shall be exercisable during the Optionee’s lifetime only
by the Optionee. No Option may be assigned, pledged, hypothecated or otherwise
alienated or encumbered (whether by operation of law or otherwise), and any
attempt to do so shall be null and void.

 

ARTICLE XI

OPTIONEE-EMPLOYEE’S TRANSFER OR LEAVE OF ABSENCE

 

11.1                           Optionee-Employee’s Transfer or Leave of
Absence. For purposes of
this Plan:

 

(a)  A
transfer of an Optionee who is an Employee from the Company to a Subsidiary
Corporation or Parent Corporation, or from one such Corporation to another, or

 

(b)  A leave
of absence for such an Optionee (i) which is duly authorized in writing by the
Company or a Subsidiary Corporation, and (ii) if the Optionee holds an
Incentive Stock Option, which qualifies under the applicable regulations under
the Code which apply in the case of incentive stock options, shall not be
deemed a termination of employment. However, under no circumstances may an
Optionee exercise an Option during any leave of absence, unless authorized by
the Board.

 

ARTICLE XII

AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN

 

12.1                           Amendment, Modification an d Termination of
the Plan.

 

(a)  The Board
may at any time terminate, and from time to time may amend or modify the Plan;
provided, however, that no such action of the Board, without approval of the
shareholders, may:

 

(i)  increase
the total amount of Stock which may be purchased through Options granted under
the Plan, except as provided in Article V;

 

(ii)  change
the class of Employees or Consultants eligible to receive Options; or

 

(iii)  extend
the maximum option period provided in this Plan.

 

 (b)  No amendment, modification, or termination of
the Plan shall in any manner adversely affect any outstanding Option under the
Plan without the consent of the Optionee holding the Option.

 

ARTICLE XIII

ACQUISITION, MERGER OR LIQUIDATION

 

13.1                           Acquisition.

 

(a)  In the
event that an Acquisition occurs with respect to the Company, the Company shall
have the option, but not the obligation, to cancel Options outstanding as of
the effective date of Acquisition, whether or not such Options are then
exercisable, in return for payment to the Optionees of an amount 

 

7

 

equal
to a reasonable estimate of an amount (hereinafter the “Spread”) equal to the
difference between the net amount per share payable in the Acquisition or as a
result of the Acquisition, less the exercise price of the Option. In estimating
the Spread, appropriate adjustments to give effect to the existence of the
Options shall be made, such as deeming the Options to have been exercised, with
the Company receiving the exercise price payable thereunder, and treating the
stock receivable upon exercise of the Options as being outstanding in
determining the net amount per share.

 

(b)  For
purposes of this section, an “Acquisition” means any transaction in which
substantially all of the Company’s assets are acquired or in which a
controlling amount of the Company’s outstanding shares of Stock are acquired,
in each case by a single person or entity or an affiliated group of persons and
entities. For purposes of this section, a controlling amount shall mean more
than 50% of the issued and outstanding shares of Stock of the Company. The
Company shall have such an option regardless of how the Acquisition is
effectuated, whether by direct purchase, through a merger or similar corporate
transaction, or otherwise. In cases where the acquisition consists of the
acquisition of assets of the Company, the net amount per share shall be
calculated on the basis of the net amount receivable with respect to shares
upon a distribution and liquidation by the Company after giving effect to expenses
and charges, including but not limited to taxes, payable by the Company before
the liquidation can be completed.

 

(c)  Where the
Company does not exercise its option under this Section 13.1 the remaining
provisions of this Article XIII shall apply, to the extent applicable.

 

13.2                           Merger or Consolidation. Subject to any required action by the
shareholders, if the Company shall be the surviving corporation in any  merger or consolidation, any option granted
under this Plan shall pertain to and apply to the securities to which a holder
of the number of shares of Stock subject to the Option would have been entitled
in such merger or consolidation.

 

 13.3                        Other Transactions. A
dissolution or a liquidation of the Company or a merger and consolidation in which
the Company is not the surviving corporation shall cause every Option
outstanding hereunder to terminate as of the effective date of such
dissolution, liquidation, merger or consolidation. However, the Optionee either
(i) shall be offered a firm commitment whereby the resulting or surviving
corporation in a merger or consolidation will tender to the Optionee an option
(the “Substitute Option”) to purchase its shares on terms and conditions both
as to number of shares and otherwise, that will substantially preserve to the
Optionee the rights and benefits of the Option outstanding hereunder granted by
the Company, or (ii) shall have the right immediately prior to such
dissolution, liquidation, merger, or consolidation to exercise any unexercised
Options whether or not then exercisable, subject to the provisions of this Plan.
The Board shall have absolute and uncontrolled discretion to determine whether
the Optionee has been offered a firm commitment and whether the tendered
Substitute Option will substantially preserve to the Optionee the rights and
benefits of the Option outstanding hereunder. In any event, any Substitute
Option for an Incentive Stock Option shall comply with the requirements of Code
Section 425(a).

 

ARTICLE XIV

SECURITIES REGISTRATION

 

14.1                           Securities Registration. In the event that the Company shall deem it
necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to
qualify any such Options or Stock under the Securities Act of 1933, as amended,
or any other statute, then the Optionee shall cooperate with the Company and
take such action as is necessary to permit registration or qualification of
such Options or Stock.

 

14.2                           Representations. Unless the Company has determined that the
following representation is unnecessary, each person exercising an Option under
the Plan may be required by the Company, as a condition to the issuance of the
shares pursuant to exercise of the Option, to make a representation in writing
(i) that he is acquiring such shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution of any part
thereof, (ii) that before any transfer in connection with the resale of such
shares, he will obtain the written opinion of counsel for the Company, or other
counsel acceptable to the Company, that such shares may be transferred. The
Company may also require that the certificates representing such shares contain
legends reflecting the foregoing.

 

8

 

ARTICLE XV

TAX WITHHOLDING

 

15.1                           Tax Withholding. Whenever shares of Stock are to be issued
in satisfaction of Options exercised under this Plan, the Company shall have
the power to require the recipient of the Stock to remit to the Company an
amount sufficient to satisfy any applicable federal, state, and local
withholding tax requirements.

 

ARTICLE XVI

INDEMNIFICATION

 

16.1                           Indemnification. To the extent permitted by law, each person
who is or shall have been a member of the Board shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a
party or in which he may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company’s approval, or paid by him in satisfaction
of judgment in any such action, suit, or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company’s
articles of incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company or any Subsidiary Corporation may have to indemnify them
or hold them harmless.

 

ARTICLE XVII

REQUIREMENTS OF LAW

 

17.1                           Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

17.2                           Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the state of
Colorado.

 

ARTICLE XVIII

EFFECTIVE DATE OF PLAN

 

18.1                           Effective Date. The Plan shall be effective on March 17,
2005.

 

ARTICLE XIX

COMPLIANCE WITH CODE

 

19.1                           Compliance with Code. Incentive Stock Options granted hereunder
are intended to qualify as “incentive stock options” under Code 422A. If any
provision of this Plan is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with Incentive Stock
Options granted under this Plan being treated as incentive stock options under
the Code.

 

ARTICLE XX

NO OBLIGATION TO EXERCISE OPTION

 

20.1                           No Obligation to Exercise. The granting of an Option shall impose no
obligation upon the holder thereof to exercise such Option.

 

9

 

THIS
2005 STOCK OPTION PLAN was adopted by the Board of Directors of Rentech, Inc.
on December 21, 2004 to be effective as of March 17, 2005. It was approved
by shareholders at the annual meeting of shareholders held on March 17, 2005.

 

	
   

  	
   

  	
  RENTECH,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dennis L. Yakobson

  
	
   

  	
   

  	
  Dennis
  L. Yakobson, President

  

 

10

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