Between
Rentech, Inc.
and
Richard T. Penning
THIS AGREEMENT was originally entered into as of
January 22, 2007 and made effective as of January 15,
2007 (the “ Prior Agreement ”) between Rentech,
Inc. (the “ Company ”) and Richard T. Penning
(“ Executive ”) and is hereby amended and
restated in its entirety as of December 31, 2008 (the “
Amendment Date ”).
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 has employed Executive and shall
continue to employ Executive, and Executive hereby agrees to
continue 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 ”).
(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, and (iii) 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. Executive
shall be eligible for an annual review of his Base Salary based on
performance as determined by the Board in its sole discretion, with
the first review following the Amendment Date to occur during
December 2009.
(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). If the Board determines, in its
sole discretion, that an Annual Bonus has become payable with
respect to a fiscal year based on the attainment of applicable
performance criteria, then 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 the fifteenth day of the third month 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.
(ii) Equity Awards . 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)
[INTENTIONALLY OMITTED]
(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, paid monthly.
(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.
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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.
(a) Termination Without Cause or for
Good Reason . In the event that Executive incurs a
“separation from service” from the Company (within the
meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue
Code of 1986, as amended (the “ Code ”) and
Treasury Regulation Section 1.409A-1(h)) (“
Separation from Service ”) (1) by the Company
without Cause (as defined herein), or (2) by Executive for
Good Reason (as defined herein), then, subject to Executive’s
execution and non-revocation of a Release substantially in the form
attached as Exhibit A within 30 days after such
Separation from Service, Executive shall be entitled to the
benefits set forth below in this Section 5(a). Each payment
under this Section 5(a) shall be treated as a separate payment for
purposes of Section 409A (as defined below).
(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, subject to Section 19
below: (A) the continuation of Base Salary shall be paid in
substantially equal installments over a period of one year from
Executive’s Separation from Service in accordance with the
payroll practices of the Company in effect from time to time,
beginning on the first payroll date occurring on or after the
thirtieth day following Executive’s Separation from Service
(such payroll date, the “First Payroll Date”) (with
amounts otherwise payable prior to the First Payroll Date paid on
the First Payroll Date) 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 earlier than the First Payroll Date and
no later than two and one-half months after the end of such fiscal
year.
(ii) All stock options, restricted stock,
restricted stock units and other similar equity awards shall be
governed by the terms of any applicable equity plans and award
agreements.
(iii) 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, subject to
Executive’s valid election to receive COBRA benefits, with
the premium paid at the Company’s expense until the first to
occur of (A) eighteen months from the date of termination,
(B) the expiration of the period of time during which
Executive is entitled to continuation coverage under the
Company’s group health plan under COBRA, or (C) such
date that Executive becomes eligible for coverage under the group
health plan of another employer, provided , that if any plan
pursuant to which such benefits are provided is not, or ceases
prior to the expiration of the period of continuation coverage to
be, exempt from the application of Section 409A under Treasury
Regulation Section 1.409A-1(a)(5), then an amount equal
to each remaining premium payment shall thereafter be paid to
Executive as currently taxable compensation in substantially equal
monthly installments over the continuation coverage period (or the
remaining portion thereof).
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(iv) The Housing Allowance (as defined
below) shall continue, subject to Section 19 below, to be paid
in accordance with Section 23(e) below until the first to occur of
(A) one year from the date of such termination, (B) the
third anniversary of the Permanent Housing Date (as defined below),
(C) the date that Executive accepts new employment or
(D) the date the relevant home is sold or, if leased, the
lease obligation is terminated; provided , however ,
that from and after Executive’s termination of employment,
Executive shall use his reasonable efforts in good faith to satisfy
either clause (B) or (C) of this Section 5(a)(iv) so
as to mitigate the Company’s obligations under this
Section 5(a)(iv).
In addition, if Executive’s employment
terminates pursuant to this Section 5(a), the Company shall
pay Executive the amounts described in Section 5(d)(i),
(ii) and (iii) within 30 days of the date of
termination (or such earlier date as may be mandated by applicable
law) and shall pay or provide the other benefits described in
Section 5(d) in accordance therewith.
(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) All stock options, restricted stock,
restricted stock units and other similar equity awards shall be
governed by the terms of any applicable equity plans and award
agreement(s); and
(ii) The Company shall pay Executive the
amounts described in Section 5(d)(i), (ii) and (iii)
within 30 days of the date of termination (or such earlier
date as may be mandated by applicable law) and shall pay or provide
the other benefits described in Section 5(d) in accordance
therewith.
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) All stock options, restricted stock,
restricted stock units and other similar equity awards shall be
governed by the terms of any applicable equity plans and award
agreement(s); and
(ii) The Company shall pay Executive the
amounts described in Section 5(d)(i), (ii) and (iii)
within 30 days of the date of termination (or such earlier
date as may be mandated by applicable law) and shall pay or provide
the other benefits described in Section 5(d) in accordance
therewith.
(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 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 Annual Bonus earned
or accrued by Executive as of the date of termination 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, and
(iv) all vested 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. All stock options, restricted stock,
restricted stock units and other similar equity awards shall be
governed by the terms of any applicable equity plans and award
agreement(s).
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(e) Termination Without Cause,
Non-Renewal or for Good Reason In Connection With a Change in
Control . In the event that Executive incurs a Separation from
Service during the period beginning three months before and ending
two-years immediately following a Change in Control (as defined
herein) of the Company (1) by the Company without Cause,
(2) as a result of the Company electing not to renew the
Agreement in accordance with Section 4 above on terms and
conditions substantially similar to those contained herein, if, at
the time of such non-renewal, (A) Executive is willing and
able to continue providing services on terms and conditions
substantially similar to those contained in this Agreement and
(B) the Company has not, since the date of such Change in
Control, already renewed this Agreement for a period of one or more
years from the date of such Change of Control in accordance with
Section 4 above, or (3) by Executive for Good Reason,
then, subject to Executive’s execution and non-revocation of
a Release substantially in the form attached as
Exhibit A within 30 days after such Separation
from Service, Executive shall be entitled to the benefits set forth
below in this Section 5(e) (in addition to the benefits set forth
in Sections 5(a)(iii) and 5(a)(iv) above).
(i) The Company shall pay Executive the
payments set forth in Section 5(a)(i) in accordance with the
terms and conditions set forth in Section 5(a);
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, subject to Section 19 below, payments
pursuant to Section 5(a)(i) shall be made in a lump sum (A) if
the Separation from Service occurs during the three-month period
preceding the Change in Control, on the 95th day following such
Separation from Service (to the extent not previously paid in
accordance with Section 5(a)(i)), and (B) if the
Separation from Service occurs during the two-year period following
the Change in Control, no later than 10 business days after
Executive’s Separation from Service.
(ii) All stock options, restricted stock,
restricted stock units and other similar equity awards shall be
governed by the terms of any applicable equity plans and award
agreement(s).
In addition, if Executive’s employment
terminates pursuant to this Section 5(e), the Company shall
pay Executive the amounts described in Section 5(d)(i),
(ii) and (iii) within 30 days of the date of
termination (or such earlier date as may be mandated by applicable
law) and shall pay or provide the other benefits described in
Section 5(d) in accordance therewith.
(f) Non-Renewal . In the event that
Executive incurs a Separation from Service as a result of the
Company electing not to renew the Agreement in accordance with
Section 4 above on terms and conditions substantially similar
to those contained herein and, (A) at the time of such
non-renewal, Executive is willing and able to continue providing
services on terms and conditions substantially similar to those
contained in this Agreement and (B) Section 5(e) does not
apply to such non-renewal, then, subject to Executive’s
execution and non-revocation of a Release substantially in the form
attached as Exhibit B within 30 days after such
Separation from Service, Executive shall be entitled to the
benefits set forth below in this Section 5(f).
5
(i) The Company shall pay Executive an
amount equal to twelve months of Executive’s Base Salary (as
in effect on the date of Executive’s termination), which
amount shall, subject to Section 19 below, be paid in
substantially equal installments over a period of twelve months
from Executive’s Separation from Service in accordance with
the payroll practices of the Company in effect from time to time
beginning on the First Payroll Date (with amounts otherwise payable
prior to the First Payroll Date paid on the First Payroll Date).
Each payment under this Section 5(f) shall be treated as a separate
payment for purposes of Section 409A. In addition, upon a
non-renewal described in this Section 5(f), if Executive has
not already been awarded an Annual Bonus in respect of the fiscal
year immediately preceding such non-renewal, the Company may, in
its sole discretion, award an Annual Bonus to Executive in respect
of such fiscal year based on Executive’s service and the
attainment of applicable performance objectives during such fiscal
year.
(ii) All stock options, restricted stock,
restricted stock units (including the Executive LTIP) and other
similar equity awards shall be governed by the terms of any
applicable equity plans and award agreements.
(iii) The
Company shall pay the Housing Allowance in accordance with
Section 5(a)(iv) above.
In addition, if Executive’s employment
terminates pursuant to this Section 5(f), the Company shall
pay Executive the amounts described in Section 5(d)(i),
(ii) and (iii) within 30 days of the date of
termination (or such earlier date as may be mandated by applicable
law) and shall pay or provide the other benefits described in
Section 5(d) in accordance therewith.
(g) 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 (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(g) 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.
(iii) Notwithstanding anything herein to
the contrary, any Gross-Up Payment or any payment of any income or
other taxes to be paid by the Company under this Section 5(g) shall
be made by the Company no later than the end of Executive’s
taxable year next following Executive’s taxable year in which
Executive remits the related taxes. Any costs and expenses incurred
by the Company on behalf of Executive under this Section 5(g) due
to any tax contest, audit or litigation shall be paid by the
Company as incurred and, in any event, no later than the end of
Executive’s taxable year following Executive’s taxable
year in which the taxes that are the subject of the tax contest,
audit or litigation are remitted to the taxing authority, or where
as a result of such tax contest, audit or litigation no taxes are
remitted, the end of Executive’s taxable year following
Executive’s taxable year in which the audit is completed or
there is a final and non-appealable settlement or other resolution
of the contest or litigation.
(h) No Other Payments . Except as
provided in Sections 5(a), (b), (c), (d), (e), (f) and
(g) 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).
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(i) 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 amount in respect of any of which Executive is
obligated to make repayment to the Company or any member of the
Company Group.
(j) 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:
(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(j)(ii)(A) or Section 5(j)(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 be
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