-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VarfZPI0MGbGtFw5TF+ed1cRV4MKN+ReWqmj8cfompD55UVv3mjgWZ1N+OFABVWm sMN3I8qt/vN2RcMchY6OkQ== 0000912057-00-014101.txt : 20000329 0000912057-00-014101.hdr.sgml : 20000329 ACCESSION NUMBER: 0000912057-00-014101 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000328 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RENTECH INC /CO/ CENTRAL INDEX KEY: 0000868725 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 840957421 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-42225 FILM NUMBER: 581524 BUSINESS ADDRESS: STREET 1: 1331 17TH STREET SUITE 720 CITY: DENVER STATE: CO ZIP: 80202-1566 BUSINESS PHONE: 3032988008 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FOREST OIL CORP CENTRAL INDEX KEY: 0000038079 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 250484900 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1600 BROADWAY STREET 2: 2200 COLORADO STATE BANK BLDG CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038121400 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(a) RENTECH, INC (Name of Issuer) COMMON STOCK, PAR VALUE $.01 PER SHARE (Title of Class of Securities) [ 760112102 ] (CUSIP Number) JOAN C. SONNEN FOREST OIL CORPORATION 1600 BROADWAY, SUITE 2200 DENVER, COLORADO 80202 (303) 812-1400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) MARCH 18, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. / / (Continued on following pages) (Page 1 of 5 ) CUSIP NO. [ 760112102 ] Page 2 of 5 - -------------------------------------------------------------------------------- 1 Name of Reporting Person I.R.S. Identification No. of above person (entities only) Forest Oil Corporation I.R.S. Employer Identification No. 25-0484900 - -------------------------------------------------------------------------------- 2 Check the appropriate box if a member of a group(1) (a) / / (b) /X/ - -------------------------------------------------------------------------------- 3 SEC use only - -------------------------------------------------------------------------------- 4 Source of Funds WC - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization New York, United States - -------------------------------------------------------------------------------- 7 Sole Voting Power(1)(2) 4,000,000 Number of Shares Beneficially ------------------------------------------------ 8 Shared Voting Power 0 Owned by Each Reporting ------------------------------------------------ 9 Sole Dispositive Power(1)(2) 4,000,000 Person With ------------------------------------------------ 10 Shared Dispositive Power 0 - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by each Reporting Person(2) 4,000,000 - -------------------------------------------------------------------------------- 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares / / - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11)(2) 6.5% - -------------------------------------------------------------------------------- 14 Type of Reporting Person CO - -------------------------------------------------------------------------------- (1) The Reporting Person expressly disclaims (a) the existence of any group and (b) beneficial ownership with respect to any shares other than the shares owned of record by such reporting person. (2) Includes shares of Common Stock that the Reporting Person may purchase pursuant to (a) stock options expiring on December 31, 2001 that are immediately exercisable to purchase 2,000,000 shares of Common Stock with an exercise price of $1.25 per share, and (b) stock options expiring on December 31, 2004 that are immediately exercisable to purchase 1,000,000 shares of Common Stock with an exercise price of $5.00 per share. See Items 5 and 6. Page 3 of 5 ITEM 1. SECURITY AND ISSUER. The class of equity securities to which this Schedule 13D (this "Statement") relates is the Common Stock, par value $.01 per share (the "Common Stock"), of Rentech, Inc., a Colorado corporation (the "Issuer"). The address of the Issuer's principal executive offices is 1331 17th Street, Suite 720, Denver, Colorado 80202. ITEM 2. IDENTITY AND BACKGROUND. (a) The name of the Person filing this Statement (the "Reporting Person") is Forest Oil Corporation. (b) The state of organization of the Reporting Person is the State of New York. (c) The principal business of the Reporting Person is the acquisition, exploration, development, production and marketing of natural gas and liquids. (d) The address of the Principal Business and the principal office of the Reporting Person is 1600 Broadway, Suite 2200, Denver, Colorado 80202. (e) The Reporting Person has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (f) The Reporting Person has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violations with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. As more fully described in Item 6 below, on March 18, 2000, the Reporting Person purchased from the Issuer the number of shares of Common Stock and the number of Options to purchase shares of Common Stock at the purchase price set forth below.
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF PURCHASABLE PURCHASABLE SHARES PURCHASED PURSUANT TO 2001 OPTIONS PURSUANT TO 2004 OPTIONS PURCHASE PRICE 1,000,000 2,000,000 1,000,000 $ 650,000
The Reporting Person obtained funds for the purchase price of its shares of Common Stock and its Options from working capital. ITEM 4. PURPOSE OF THE TRANSACTION. The Reporting Person consummated the transactions described herein in order to acquire an interest in the Issuer for investment purposes. The Reporting Person intends to review continuously its position in the Issuer. Depending upon future evaluations of the business prospects of the Issuer and upon other developments including, but not limited to, general economic and business conditions and stock market conditions, the Reporting Person may retain or from time to time increase its holdings or may dispose of all or a portion of its holdings, subject to any applicable legal and contractual restrictions on its ability to do so. Page 4 of 5 In addition, the matters set forth in Item 6 below are incorporated in this Item 4 by reference as if fully set forth herein. Except as set forth in this Item 4 (including the matters described in Item 6 below which are incorporated in this Item 4 by reference), the Reporting Person has no present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the Exchange Act. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The Reporting Person is the record and beneficial owner of 1,000,000 shares of Common Stock, 2,000,000 options to purchase Common Stock pursuant to the 2001 Options, and 1,000,000 options to purchase Common Stock pursuant to the 2004 Options. Assuming exercise of all such options, the Reporting Person is the beneficial owner of 4,000,000 shares of Common Stock which, based on calculations made in accordance with Rule 13d-3 of the Exchange Act and, as of March 22, 2000, there being 61,494,080 shares of Common Stock outstanding, represents approximately 6.5% of the outstanding shares of Common Stock, including the shares we have a right to acquire within 60 days. The Reporting Person expressly disclaims (a) the existence of any group and (b) beneficial ownership with respect to any shares other than the shares owned of record by such Reporting Person. (b) The information set forth in Items 7 through 11 of the cover page hereto is incorporated herein by reference. (c) Except as set forth herein, the Reporting Person has not effected any transactions in shares of Common Stock during the past 60 days. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The matters set forth in Item 2 are incorporated in this Item 6 by reference as if fully set forth herein. (a) Stock Purchase Agreement Pursuant to the Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of March 18, 2000, by and between the Issuer and the Reporting Person, the Issuer agreed to sell to the Reporting Person, and the Reporting Person agreed to purchase from the Issuer, 1,000,000 shares of Common Stock ("Purchased Common Shares"), options to purchase 2,000,000 shares of Common Stock having an exercise price of $1.25 per share and expiring December 31, 2001 ("2001 Options"), and options to purchase 1,000,000 shares of Common Stock having an exercise price of $5.00 per share and expiring December 31, 2004 ("2004 Options"), collectively referred to as the "Purchased Securities", for an aggregate purchase price of $650,000.00. The 2001 Options and the 2004 Options are subject to the terms of their respective option agreements. The foregoing description of the Stock Purchase Agreement is not, and does not purport to be, complete and is qualified in its entirety by reference to the Stock Purchase Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference. (b) Registration Rights Agreement The Issuer, the Reporting Person and Anschutz Investment Company entered into a Registration Rights Agreement (the "Registration Rights Agreement"), dated as of March 18, 2000, pursuant to which the Issuer agreed to use its best efforts to file a registration statement within 30 days from the date thereof , and to cause it to become effective within 90 days thereof, covering the resale of all of Reporting Person's Registrable Securities. In addition, the Reporting Person has certain piggyback registration rights in connection with registrations of the Issuer's securities under the Securities Act of 1933 (the "Securities Act"). Page 5 of 5 As used in this statement, "Registrable Securities" means the Purchased Common Shares, the shares purchasable under the 2001 Options and the 2004 Options, and any shares of capital stock issued or issuable with respect to the Purchased Securities as a result of any sale or issuance of Common Stock by the Issuer for less than its then prevailing fair market value, any stock split, stock dividend, recapitalization, exchange or similar event. The foregoing description of the Registration Rights Agreement is not, and does not purport to be, complete and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 hereto and is incorporated herein by reference. (c) Option Agreements In furtherance of the Stock Purchase Agreement, the Issuer and the Reporting Person entered into two Option Agreements (the "Option Agreements"), both dated as of March 18, 2000, in respect of the 2001 Options and the 2004 Options. Under the 2001 Option Agreement, the Reporting Person or its permitted assignee is entitled to purchase from the Issuer an aggregate of 2,000,000 shares of Common Stock at an exercise price of $1.25 per share, as adjusted from time to time pursuant to the terms thereof. The 2001 Option Agreement expires on December 31, 2001. Under the 2004 Option Agreement, the Reporting Person or its permitted assignee is entitled to purchase from the Issuer an aggregate of 1,000,000 shares of Common Stock at an exercise price of $5.00 per share as adjusted from time to time pursuant to the terms thereof. The 2004 Option Agreement expires on December 31, 2004. The foregoing description of the 2001 Option Agreement and the 2004 Option Agreement is not, and does not purport to be, complete and is qualified in its entirety by reference to the Option Agreements. A copy of the 2001 Option Agreement is filed as Exhibit 10.3(a) hereto, and is incorporated herein by reference, and a copy of the 2004 Option Agreement is filed as Exhibit 10.3(b) hereto, and is incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 10.1: Stock Purchase Agreement, dated as of March 18, 2000, between the Issuer and the Reporting Person relating to the purchase and sale of Common Stock, and options to purchase Common Stock, of Rentech, Inc.. Exhibit 10.2: Registration Rights Agreement, dated as of March 18, 2000, by and among the Issuer, the Reporting Person, and Anschutz Investment Company. Exhibit 10.3(a): 2001 Option Agreement dated as of March 18, 2000, between the Issuer and the Reporting Person. Exhibit 10.3(b): 2004 Option Agreement dated as of March 18, 2000, between the Issuer and the Reporting Person. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. March 28, 2000 Forest Oil Corporation By: /s/ Joan C. Sonnen ------------------------------------ Name: Joan C. Sonnen TItle: Vice President, Controller and Corporate Secretary S-1 EXHIBIT INDEX Exhibit 10.1: Stock Purchase Agreement, dated as of March 18, 2000, between the Issuer and the Reporting Person relating to the purchase and sale of Common Stock, and options to purchase Common Stock, of Rentech, Inc.. Exhibit 10.2: Registration Rights Agreement, dated as of March 18, 2000, by and among the Issuer, the Reporting Person, and Anschutz Investment Company. Exhibit 10.3(a): 2001 Option Agreement dated as of March 18, 2000, between the Issuer and the Reporting Person. Exhibit 10.3(b): 2004 Option Agreement dated as of March 18, 2000, between the Issuer and the Reporting Person. 1 EX-10.1 2 EXHIBIT 10.1 EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of March 18, 2000, by and between RENTECH, INC., a corporation organized under the laws of the State of Colorado, with headquarters located at 1331 17th Street, Suite 720, Denver, Colorado 80202 (the "Company") and FOREST OIL CORPORATION, a corporation organized under the laws of the State of New York, with headquarters located at 1600 Broadway, Suite 2200, Denver, Colorado 80202 (the "Buyer"). BACKGROUND CIRCUMSTANCES. A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D ("Regulation D") as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act"); B. The Buyer desires to purchase from the Company, and the Company desires to sell to the Buyer, for the amount and upon the terms and conditions stated in this Agreement, in a closing or closings as herein described, 1,000,000 shares of the Company's common stock, par value $.01 per share ("Common Stock"), an option to purchase 2,000,000 shares of Common Stock having an exercise price of $1.25 per share and expiring December 31, 2001, and an option to purchase 1,000,000 shares of Common Stock having an exercise price of $5.00 per share and expiring December 31, 2004. The options are granted in separate agreements executed by the parties concurrently with this Agreement (the "Option Agreements"). NOW, THEREFORE, in consideration of their respective promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the Company and the Buyer hereby agree as follows: SECTION 1. PURCHASE AND SALE OF SECURITIES. (a) PURCHASE. The Buyer hereby agrees to purchase from the Company, and the Company agrees to sell to the Buyer, 1,000,000 shares of Common Stock ("Stock"), an option to purchase 2,000,000 shares of Common Stock having an exercise price of $1.25 per share and expiring December 31, 2001 ("2001 Option"), and an option to purchase 1,000,000 shares of Common Stock having an exercise price of $5.00 per share and expiring December 31, 2004 ("2004 Option" and, together with the Stock and the 2001 Option, the "Securities"). The 2001 Option and the 2004 Option (collectively, the "Options") shall be subject to the terms and conditions of the Option Agreements. (b) PURCHASE PRICE. The purchase price for the Stock and the 2001 Option is $600,000. The purchase price for the 2004 Option is $50,000. The aggregate purchase price for the Securities is $650,000 (the "Purchase Price"). 2 (c) THE CLOSING. The date of the Closing shall be March 20, 2000. The Purchase Price shall be delivered to the Company by cashier's check or by wire transfer of immediately available funds in United States Dollars. At the Closing, the Company shall deliver certificates representing the Stock, duly issued and executed by the authorized officers on behalf of the Company, to the Buyer, and the Company and Buyer shall sign and the Company shall deliver to Buyer the Option Agreements and the Registration Rights Agreement (as defined below). SECTION 2. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer understands, agrees with, and represents and warrants to the Company with respect to its purchase hereunder, that: (a) INVESTMENT PURPOSES; COMPLIANCE WITH 1933 ACT. The Buyer is purchasing the Securities for its own account for investment only and not with a view towards, or in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the 1933 Act. The Buyer is not purchasing the Securities for the purpose of covering short sale positions in Common Stock established on or prior to the date of the Closing. The Buyer agrees to offer, sell or otherwise transfer the Securities only (i) in accordance with the terms of this Agreement and the Option Agreements, as the same may be applicable, and (ii) pursuant to registration under the 1933 Act or to a transaction for which registration under the 1933 Act is not required. Except as set forth in Section 2(f) of that certain Registration Rights Agreement dated as of the date hereof by and among the Company, Buyer and Anschutz Investment Company (the "Registration Rights Agreement") the Buyer does not by its representations contained in this Section 2(a) agree to hold the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time pursuant to a registration statement or in accordance with an exemption from registration under the 1933 Act, in all cases in accordance with applicable state and federal securities laws. (b) ACCREDITED INVESTOR STATUS. The Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D. The Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment made pursuant to this Agreement. The Buyer is aware that it may be required to bear the economic risk of an investment made pursuant to this Agreement for an indefinite period of time, and is able to bear such risk for an indefinite period. (c) RELIANCE ON EXEMPTIONS. The Buyer understands the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the applicable United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, acknowledgments, understandings, agreements and covenants of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities. 3 (d) INFORMATION. The Buyer and its advisors, if any, have been furnished with the Company's Form 10-KSB as filed with the SEC for the fiscal year ended September 30, 1999, the Company's Form 10-QSB for the fiscal quarter ended December 31, 1999, and the Company's private placement memorandum dated October 12, 1999 that was not prepared for the offer and sale of the Securities. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received complete and satisfactory answers to any such inquiries. The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to an informed investment decision with respect to the investment made pursuant to this Agreement. (e) NO GOVERNMENT REVIEW. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities. (f) TRANSFER OR RESALE. The Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and that the Stock may not be offered for sale, sold, assigned or transferred unless either (x) subsequently registered thereunder or (y) the Buyer shall have delivered to the Company, if so requested by the Company, a legal opinion reasonably satisfactory to the Company's outside counsel to the effect that the securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, (ii) the sale, assignment or transfer of the Options or any shares of Common Stock issuable upon the exercise thereof are subject to certain restrictions as set forth in the Option Agreements and (iii) except as set forth in the Registration Rights Agreement, neither the Company nor any other person is under any obligation to register such securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. (g) LEGEND. The Buyer understands that unless the resale of the shares of the Stock or Common Stock underlying the Options (collectively, the "Subject Shares") has been registered under the 1933 Act or may be sold by the Buyer pursuant to paragraph (k) of Rule 144 (as amended, or any applicable rule which operates to replace said Rule) promulgated under the 1933 Act ("Rule 144"), the stock certificates representing the Common Stock will bear a restrictive legend (the "Legend") in substantially the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS. The Legend will be removed and the Company will issue certificates without the Legend to the transferee of the applicable Subject Shares upon which the Legend is stamped, if, unless otherwise required by state securities laws, (a) such Subject Shares were resold pursuant to and in accordance 4 with the registration of same under the 1933 Act, or (b) in connection with a resale transaction, such holder provides the Company an opinion by counsel reasonably acceptable to the Company's outside counsel, to the effect that a public sale, assignment or transfer of the Common Stock may be made without registration under the 1933 Act. (h) AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validly authorized, executed and delivered by the Buyer and is a valid and binding agreement of the Buyer enforceable against Buyer in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally. (i) NO BROKERS; NO GENERAL SOLICITATION. Buyer has taken no action that would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments relating to this Agreement and the transactions contemplated hereby. Buyer acknowledges that no broker was involved with respect to the transactions contemplated hereby. SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company understands, agrees with, and represents and warrants to the Buyer that: (a) ORGANIZATION AND QUALIFICATION: REPORTING COMPANY STATUS. The Company and its subsidiaries are corporations duly organized and existing in good standing under the laws of the respective jurisdictions in which they are incorporated and have the requisite corporate power to own their properties and to carry on their business as now being conducted. Each of the Company and its subsidiaries are duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary. The Company has registered its Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "1934 Act") and sales of its Common Stock are reported by the National Quotation Bureau, Inc. on the Over the Counter Bulletin Board. (b) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement and the other agreements contemplated hereby or referred to herein (collectively, the "Agreements") and to issue and sell the Securities in accordance with the terms hereof, (ii) the execution, delivery and performance of the Agreements by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by the Company's Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its stockholders is required, (iii) the Agreements and, on the date of the Closing, the Securities sold at the Closing, have been duly and validly authorized, executed and delivered by the Company, and (iv) the Agreements constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting, generally, the enforcement of creditors' rights and remedies or by other equitable principles of general application. The Company 5 (and its legal counsel) have examined this Agreement and is satisfied in its sole discretion that this Agreement and the accompanying Exhibits, Schedules and the Addenda, if any, are in accordance with Regulation D. (c) CAPITALIZATION. As of December 31, 1999, the authorized Common Stock of the Company consists of 100,000,000 shares of Common Stock of which 52,619,372 shares were issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. No shares of Common Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances, whether or not contingent. Except as disclosed in the Company's Form 10-KSB for the year ended September 30, 1999, and its Form 10-QSB for the fiscal quarter ended December 31, 1999, (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, and (ii) there are no outstanding debt securities. The Company has made available to the Buyer true and correct copies of the Company's Articles of Incorporation, as amended, as in effect on the date hereof ("Certificate of Incorporation"), and the Company's Bylaws, as in effect on the date hereof ("Bylaws"). (d) ISSUANCE OF SECURITIES. The Stock is all duly authorized and reserved for issuance, and shall be validly issued, fully paid and non-assessable, free from all taxes, liens and charges with respect to the issue thereof, and will not be subject to preemptive rights or other similar rights of stockholders of the Company. (e) NO REGISTRATION REQUIREMENTS. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances which would prevent the parties hereto from consummating the sale contemplated hereby pursuant to an exemption from registration under the 1933 Act and specifically in accordance with the provisions of Regulation D. The sale contemplated hereby is exempt from the registration requirements of the 1933 Act, assuming the accuracy of the representations and warranties contained herein of the Buyer. (f) NO CONFLICTS. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (i) result in a violation of the Articles of Incorporation or Bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected. Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or other organizational documents, and neither the Company nor any of its subsidiaries are in default (and no event has occurred which, with notice or lapse of time or both, would put the Company or any 6 of its subsidiaries in default) under, nor has there occurred any event giving others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its subsidiaries is a party. The business of the Company and its subsidiaries is not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, in accordance with the terms hereof. (g) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 1997, the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules hereto and documents (other than exhibits) incorporated by reference therein, being hereinafter referred to as the "SEC Documents"). The Company has made available to the Buyer true and complete copies of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents. Except as set forth in the financial statements of the Company included in the SEC Documents and a finder's fee claim by John M. King IV, the Company has no liabilities, contingent or otherwise, other than (i) liabilities subsequent to the date of such financial statements incurred in the ordinary course of business and consistent with past practice and (ii) obligations under contracts and commitments incurred in the ordinary course of business and consistent with past practice and not required under generally accepted accounting principles to be reflected in such financial statements, in each case of clause (i) and (ii) next above which, individually or in the aggregate, are not material to the financial condition, business, operations, properties, operating results or prospects of the Company. Except for the finder's fee claim of John M. King IV, the SEC Documents contain a description of the general nature of all material undischarged written and oral contracts, agreements, leases or other instruments to which the Company or any subsidiary is a party or by which the Company or any subsidiary is subject (each a "Contract"). None of the Company, its subsidiaries or, to the best of the Company's knowledge, any of the other parties thereto, is in breach or violation of any Contract. No event, occurrence or condition exists which, with the lapse of time, the giving of notice, or both, or the happening of any further event or condition, would become a default by the Company or its subsidiaries thereunder which would, individually or in the aggregate with any other such defaults by the Company or its subsidiaries, have a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on the operations, properties or financial condition of the Company and its subsidiaries taken as a whole. (h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, there has been no material adverse change and no material adverse development in the business, properties, operation, financial condition, results of operations or prospects of the Company. 7 (i) ABSENCE OF LITIGATION. Except as specifically disclosed in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company. (j) NO BROKERS; NO GENERAL SOLICITATION. The Company has taken no action that would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments relating to this Agreement and the transactions contemplated hereby. The Company acknowledges that no broker was involved with respect to the transactions contemplated hereby. (k) INTELLECTUAL PROPERTY. (i) As used herein, "Intellectual Property" shall mean all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof, trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, copyrightable works, all copyrights and all applications, registrations and renewals in connection therewith, mask works and all applications, registrations and renewals in connection therewith, trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals), proprietary software, proprietary rights and copies and tangible embodiments thereof (in whatever form or medium). (ii) Except as set forth on SCHEDULE 3(k)(ii) hereto, the Company and its subsidiaries own or are licensed or otherwise have the right to use, without payment to any other person, the Intellectual Property used in or necessary for each of their businesses, as presently conducted. Neither the Company nor any of its subsidiaries has entered into any agreement that restricts or affects its use and/or location of use of any of its Intellectual Property. (iii) Without limiting the scope of the Company's warranty and representation in sub-paragraph (ii) above, (w) each trademark registration included in the Intellectual Property exists and is owned by the Company or any of its subsidiaries and has been maintained in good standing; (x) each patent and application included in the Intellectual Property exists, is owned by or licensed to the Company or one of its subsidiaries, and has been maintained in good standing; (y) each copyright registration included in the Intellectual Property exists and is owned by the Company or one of it subsidiaries; and (z) to the Company's knowledge, no other firm, corporation, association or person claims the right to use in connection with similar or related goods and in any geographic area, any mark, logo, name, symbol, device, or slogan which is identical or confusingly similar to any of the trademarks included in the Intellectual Property or which could serve to dilute the distinctiveness of such trademarks. (iv) The Company and its subsidiaries' ownership and/or use of Intellectual Property in their businesses, as presently conducted, does not conflict with, or result in any violation 8 of, or default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, or result in any loss of a material benefit under, or the creation of any lien in or upon any of the properties or assets of the Company or its subsidiaries under, any contract between the Company and any person or, to the Company's knowledge, any other intellectual property rights of any other person, except for any such conflict, violation, default, right of termination, cancellation acceleration, loss of material benefit or creation of any lien which would not have a material adverse effect with respect to the Company. (v) The Company has not received any communications alleging that the Company or one of its subsidiaries has violated or, by conducting its business, would infringe upon the intellectual property rights of any other person. The Company is not aware of any infringement or misappropriation by others of any of its or its subsidiaries' Intellectual Property. (l) PERMITS AND LICENSES. The Company holds all material licenses, permits and other authorizations of any agency, public, regulatory or other governmental authority necessary to conduct its business as now being conducted or, under currently applicable statutes, rules, ordinances, regulations or other laws, to continue to conduct its business as now being conducted. Such licenses, permits and other authorizations held by the Company are valid and in full force and effect, and there are no legal actions pending or, to the knowledge of the Company, threatened that could result in the termination, impairment or nonrenewal thereof. (m) OTHER INFORMATION. No representation or warranty of the Company in this Agreement, nor any statement, certificate or other document furnished or to be furnished by the Company to the Buyer pursuant to this Agreement, nor any exhibits or schedules hereto, contains any untrue statement of a material fact, or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 4. COVENANTS. (a) BEST EFFORTS. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement. (b) SECURITIES LAWS. The Company agrees to timely file a Form D (or equivalent form required by applicable state law) with respect to the Securities if and as required under Regulation D and applicable state securities laws. The Company shall, on or before the date of the Closing, take such action as is necessary to sell the Securities being sold to the Buyer under applicable securities laws of the United States, and shall if specifically so requested provide evidence of any such action so taken to the Buyer on or prior to the Closing Date. (c) REPORTING STATUS. So long as the Buyer beneficially owns any of the Securities, the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act on a timely 9 basis, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations hereunder would permit such termination. (d) USE OF PROCEEDS. The Company will use the proceeds from the sale of the Securities for the Company's internal working capital purposes, including costs and expenses of the Company's business operations and payment of certain outstanding obligations of the Company, research and development, and to the extent deemed advisable by the Company, for the purchase of new technologies for use by the Company and its subsidiaries, and for the purchase of additional subsidiaries and the development and marketing of their technologies. (e) RESERVATION OF SHARES. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock to provide for the issuance of the Securities and any Common Stock issuable upon the exercise or conversion thereof. (f) PROSPECTUS DELIVERY REQUIREMENT. The Buyer understands that the 1933 Act requires under certain circumstances the delivery of a prospectus relating to the Common Stock in connection with any resale thereof, and the Buyer shall comply with any applicable prospectus delivery requirements of the 1933 Act in connection with any such sale. (g) INTENTIONAL ACTS OR OMISSIONS. Neither party shall intentionally perform any act which if performed, or omit to perform any act which if omitted to be performed, would prevent or excuse the performance of this Agreement or any of the transactions contemplated hereby. SECTION 5. REMOVAL OF LEGEND. The Legend will be removed and the Company will issue certificates without the Legend to the transferee of the applicable Subject Shares upon which the Legend is stamped, if, unless otherwise required by state securities laws, (a) such Subject Shares were resold pursuant to and in accordance with the registration of same under the 1933 Act, or (b) in connection with a resale transaction, such holder provides the Company an opinion by counsel reasonably acceptable to the Company's outside counsel, to the effect that a public sale, assignment or transfer of the Common Stock may be made without registration under the 1933 Act. The Buyer agrees that its resale of all Common Stock, shall be made only pursuant to an effective registration statement and to deliver a prospectus in connection with such sale, or in a transaction in which registration is not required under the registration requirements of the 1933 Act. In the event the Legend is removed from any certificate for Common Stock or any Common Stock is issued without the Legend and thereafter the effectiveness of a registration statement covering the sales of such Common Stock is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities laws, then upon reasonable advance notice to the holder of such Security, the Company shall be entitled to require that the Legend be placed upon any such Security which cannot then be sold pursuant to an effective registration statement or with respect to which the opinion referred to in clause (b) next above has not been rendered, which Legend shall be removed when such Common 10 Stock may be sold pursuant to an effective registration statement or at such time as such holder provides the opinion with respect thereto described in clause (b) next above. SECTION 6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder to sell the Securities at the Closing is subject to the satisfaction, on or before the date of the Closing as described herein, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion: (a) The parties shall have executed this Agreement, and the parties shall have delivered executed originals of the documents to the other party. (b) The Buyer shall have delivered to the Company the Purchase Price for the Securities, as provided in this Agreement. (c) The representations and warranties of the Buyer shall be true and correct in all material respects as of the date made and as of the date of the Closing as though made at that time (except for representations and warranties that refer to a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the date of the Closing. (d) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self regulatory organization having authority over the matters contemplated hereby which restricts or prohibits the consummation of any of the transactions contemplated herein. SECTION 7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of the Buyer to purchase the Securities is subject to the satisfaction, on or before the date of the Closing, of each of the following conditions, provided that these conditions are for the sole benefit of the Buyer and may be waived by the Buyer at any time in its sole discretion: (a) The parties shall have executed this Agreement and the Registration Rights Agreement, and the parties shall have delivered executed originals of the respective documents to the other party. (b) The Company shall have delivered to the Buyer the Securities (including the Option Agreements executed on behalf of the Company), as provided in this Agreement. 11 (c) The representations and warranties of the Company shall be true and correct in all material respects as of the date made and as of the date of the Closing as though made at that time (except for representations and warranties that refer to a specific date), and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the date of the Closing. The Buyer may require a certificate, executed by the Chief Executive Officer or a Vice President of the Company, dated as of the date of the Closing, to the foregoing effect. (d) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self regulatory organization having authority over the matters contemplated hereby which restricts or prohibits the consummation of any of the transactions contemplated herein. (e) An opinion of counsel to the Company, in form and substance acceptable to the Buyer. SECTION 8. GOVERNING LAW; MISCELLANEOUS. (a) GOVERNING LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado without regard to the principles of conflict of laws. In the event of any litigation regarding the interpretation or application of this Agreement, the parties irrevocably consent to jurisdiction in any of the state or federal courts located in the State of Colorado and waive their rights to object to venue in any such court, regardless of the convenience or inconvenience thereof to any party. Service of process in any civil action relating to or arising out of this Agreement (including also all Exhibits or Addenda hereto, if any), or the transactions contemplated herein may be accomplished in any manner provided by law. The parties hereto agree that a final, non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. (b) COUNTERPARTS. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and signature pages from such counterparts have been delivered to the other party. In the event any signature page is delivered by facsimile transmission (which the parties agree is an acceptable form of delivery), the party using such means of delivery shall cause two (2) additional originally executed signature pages to be physically delivered to the other party within three (3) business days of the execution and delivery hereof. (c) HEADINGS; GENDER, ETC. The headings of this Agreement are for convenience of reference and shall not form a part of, or affect the interpretation of this Agreement. As used herein, the masculine shall refer to the feminine and neuter, the feminine to the masculine and neuter, and the neuter to the masculine and feminine, as the context may require. As used herein, unless the 12 context clearly requires otherwise, the words "herein," "hereunder" and "hereby," shall refer to this entire Agreement and not only to the Section or paragraph in which such word appears. If any date specified herein falls upon a Saturday, Sunday or public or legal holidays, the date shall be construed to mean the next business day following such Saturday, Sunday or public or legal holiday. For purposes of this Agreement, a "business day" is any day other than a Saturday, Sunday or public or legal holiday. (d) SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. (e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. (f) NOTICES. Any notices required or permitted to be given under the terms of this Agreement shall be sent by U. S. Mail or delivered personally or by courier or via facsimile (if via facsimile, to be followed within three (3) business days by an original of the notice document via U.S. Mail or courier) and shall be effective five (5) days after being placed in the mail, if mailed, certified or registered, return receipt requested, or upon receipt, if delivered personally or by courier or by facsimile, in each case properly addressed to the party to receive the same. The addresses for such communications shall be: If to the Company: Rentech, Inc. 1331 17th Street, Suite 720 Denver, Colorado 80202 Telephone: (303) 298-8008 Facsimile: (303) 298-8010 Attention: Mr. Ronald C. Butz, Vice President & COO If to the Buyer, at the address on the signature page of this Agreement. Each party shall provide written notice to the other party of any change in address. (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors. Neither party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), except that Buyer may assign its rights hereunder in whole or in part to (i) any entity or person that directly, or indirectly through one or more intermediaries, is controlled by, or is under common control with Buyer (an "Affiliate") or (ii) any director, officer, employee, representative or agent of Buyer or any of its Affiliates. Any 13 assignee of the Buyer shall be an "accredited investor" as that term is defined in Rule 501(a) of Regulation D, and no assignment shall be made by the Buyer unless it is made in accordance with any applicable securities laws. (h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. (i) SURVIVAL. The representations and warranties of the Company and the Buyer contained in Sections 2 and 3 and the agreements and covenants set forth in Sections 4 shall survive the Closing of the purchase and sale of Securities purchased and sold hereby. (j) FURTHER ASSURANCE. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. (k) REMEDIES. No provision of this Agreement providing for any specific remedy to a party shall be construed to limit such party to the specific remedy described, and any other remedy that would otherwise be available to such party at law or in equity shall be so available. Nothing in this Agreement shall limit any rights a party may have with any applicable federal or state securities laws with respect to the transactions contemplated hereby. [Signature Page Follows] 14 IN WITNESS WHEREOF, the Buyer and the Company have caused this Stock Purchase Agreement to be duly executed as of the date first written above. Rentech, Inc. Forest Oil Corporation By:/s/ Dennis L. Yakobson By:/s/ David H. Keyte ---------------------------- -------------------------- Dennis L. Yakobson David H. Keyte President Executive Vice President Forest Oil Corporation 1600 Broadway, Suite 2200 Denver, Colorado 80202 EX-10.2 3 EXHIBIT 10.2 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), is made and entered into as of the 18th day of March, 2000, by and among RENTECH, INC., a Colorado corporation (the "Company"), and FOREST OIL CORPORATION and ANSCHUTZ INVESTMENT COMPANY (each of whom is individually referred to as a "Purchaser" and all of whom collectively are referred to as the "Purchasers"). Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreements (as defined below). BACKGROUND In connection with the consummation of the transactions contemplated by those certain Stock Purchase Agreements (the "Purchase Agreements") of even date herewith by and between the Company and each of the Purchasers respectively in connection with a private placement by the Company pursuant to Rule 506 under Regulation D of the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (the "1933 Act"), the Company has agreed, upon the terms and subject to the conditions of the Purchase Agreements, to issue and sell to each of the Purchasers 1,000,000 shares of Common Stock (the "Purchased Common Shares") and to issue stock options (the "Options") to each of the Purchasers for the purchase by each Purchaser of an aggregate of 3,000,000 shares of Common Stock (as the same may be adjusted in accordance with the agreements governing such options, the "Option Shares"). Collectively, the Purchased Common Shares and the Option Shares are hereinafter collectively referred to as the "Purchased Securities". To induce Purchasers to execute and deliver their respective Purchase Agreements, the Company has agreed to file a Registration Statement covering the Purchased Common Shares and the Option Shares under the 1933 Act and applicable state securities laws. For and in consideration of the background circumstances and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows: SECTION 1. DEFINITIONS. As used in this Agreement, the following capitalized terms are used with the meanings there after ascribed. (a) "Investor" means any Purchaser and any permitted transferee or assignee thereof to whom any Purchaser assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9. (b) "Person" means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof, or a governmental agency. (c) "Register," "Registered," and "Registration" refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC"). (d) "Registrable Securities" means the Purchased Common Shares, and the Option Shares and any shares of capital stock issued or issuable with respect to the Purchased Securities or the Option Shares as a result of any sale or issuance of Common Stock by the Company for less than its then prevailing fair market value, any stock split, stock dividend, recapitalization, exchange, or similar event. (e) "Registration Statement" means a registration statement of the Company filed under the 1933 Act. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. SECTION 2. REGISTRATION. (a) MANDATORY REGISTRATION. (i) The Company shall use its best efforts to prepare, and, on or before the date that is thirty (30) days after the date hereof, file with the SEC a Registration Statement or Registration Statements (as necessary) on Form S-3 (or, if such form is unavailable for such a registration, on such other form as is available for such a registration of all of the Registrable Securities) (any of which may contain a combined prospectus with other registrations by the Company), covering the resale of all of the Registrable Securities, which Registration Statement(s), to the extent allowable under the 1933 Act and the rules promulgated thereunder (including without limitation Rule 416), shall state that such Registration Statement(s) also covers such indeterminate number of additional shares (the "Indeterminate Shares") of Common Stock as may become issuable upon the adjustment of the Options as the result of any sale or issuance of Common Stock by the Company for less than its then prevailing fair market value or any stock splits, stock dividends or similar transactions requiring adjustment of the number of Option Shares issuable upon the exercise or conversion of the Options in accordance with the Option Agreements. (ii) To the extent the Indeterminate Shares for any reason cannot be registered under the Registration Statement(s) required under Section 2(a)(i) above, then with respect to such Indeterminate Shares, the Company shall use its best efforts to 2 prepare, and, on or before the date that is thirty (30) days after the Indeterminate Shares become issuable, file with the SEC a Registration Statement or Registration Statements (as necessary) on Form S-3 (or, if such form is unavailable for such a registration, on such other form as is available for such a registration of all of the Indeterminate Shares) (any of which may contain a combined prospectus with other registrations by the Company), covering the resale of all of the Indeterminate Shares. (iii) A copy of the Registration Statement(s) (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided to (and subject to the approval of the Investors, which approval shall not be unreasonably withheld or denied) the Investors and their counsel prior to its filing or other submission. (iv) The Company shall use its best efforts to obtain effectiveness of the Registration Statement(s) as soon as practicable. (b) MAINTENANCE OF EFFECTIVENESS; REGISTRATION PERIOD. The Company shall use its best efforts to cause the Registration Statement(s) relating to the Registrable Securities filed in accordance with Section 2(a) to become effective as soon as possible after such filing, but in no event later than the Registration Deadline (as defined below), and to keep the Registration Statement(s) effective pursuant to Rule 415 at all times until the earlier of (i) the date on which all of the Registrable Securities have been sold (and no further Registrable Securities may be issued in the future) or (ii) the date as of which the Investors may immediately sell all of the Registrable Securities without restriction pursuant to Rule 144 promulgated under the 1933 Act (or successor thereto) or otherwise, not to exceed seven (7) years from the effective date(s) of the Registration Statement(s) (the "Registration Period"). (c) PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of the Registration Period the Company proposes to file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its securities (other than on Form S-4 or Form S-8 or their then equivalents relating to securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans) the Company shall promptly send to each Investor who holds Registrable Securities written notice of the Company's intention to file a Registration Statement and of such Investor's rights under this Section 2(c) and, if within twenty (20) days after receipt of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities that such Investor requests to be registered, subject to the priorities set forth in Section 2(d) below. No right to registration of Registrable Securities under this Section 3 2(c) shall be construed to limit any registration required under Section 2(a) hereof. The obligations of the Company under this Section 2(c) may be waived by each individual Investor holding Registrable Securities, in its sole discretion, without effect to any other Investor. If an offering in connection with which an Investor is entitled to registration under this Section 2(c) is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering. (d) PRIORITY IN PIGGY-BACK REGISTRATION RIGHTS. If the registration referred to in Section 2(c) is to be an underwritten public offering for the account of the Company and the managing underwriter(s) advise the Company in writing that, in their reasonable good faith opinion, marketing or other factors dictate that a limitation on the number of shares of Common Stock which may be included in the Registration Statement is necessary to facilitate and not adversely affect the proposed offering, then the Company shall include in such registration: (i) first, all securities the Company proposes to sell for its own account, (ii) second, up to the full number of securities proposed to be registered for the account of the holders of securities entitled to inclusion of their securities in the Registration Statement by reason of demand registration rights, (iii) third, the securities requested to be registered by the Investors, pro rata based on the number of Registrable Shares each has requested to be included in such registration, and (iv) fourth, the other holders of securities entitled to participate in the registration, drawn from them pro rata based on the number each has requested to be included in such registration. (e) ELIGIBILITY FOR FORM S-3. The Company represents, warrants and covenants that it has filed and shall file all reports required to be filed by the Company with the SEC in a timely manner so as to obtain and maintain such eligibility for the use of Form S-3. In the event that Form S-3 is not available for sale by the Investors of the Registrable Securities, then (i) the Company, with the consent of each Investor pursuant to Section 2(a), shall register the sale of the Registrable Securities on another appropriate form, such as Form SB-2, and (ii) the Company shall undertake to register the Registrable Securities on Form S-3 as soon as such form is available. (f) LOCK-UP PERIOD. Each Purchaser agrees (y) not to offer, sell, contract to sell or otherwise dispose of any of its Purchased Common Shares during the 90-day period beginning on the date of the closing of its respective Purchase Agreement, and (z) upon the expiration of the aforesaid 90-day period, not to offer, sell, contract to sell or otherwise dispose of more than 50% of its Purchased Common Shares for an additional 90-day period beginning on the day following the expiration of the aforesaid 90-day period. 4 SECTION 3. RELATED OBLIGATIONS. Whenever an Investor has requested that any Registrable Securities be registered pursuant to Section 2(c) hereof, or at such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a) hereof, the Company will use its best efforts to effect the registration of the Registrable Securities in accordance with the respective method of disposition thereof as required by such provisions and, pursuant thereto, and the Company shall have the following obligations: (a) The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities within the time provided in Section 2(a) for the registration of Registrable Securities pursuant to Section 2(a) or Section 2(c), if applicable, and use its best efforts to cause such Registration Statement(s) relating to Registrable Securities to become effective as soon as possible after such filing and in any event within sixty (60) days after filing with the SEC (the "Registration Deadline") and PROVIDED FURTHER that the Registration Deadline shall not exceed ninety (90) days from the date hereof, and keep the Registration Statement(s) effective pursuant to Rule 415 at all times until the completion of the Registration Period. The Registration Statement(s) (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (b) The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement(s) and the prospectus(es) used in connection with the Registration Statement(s), which prospectus(es) are to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep the Registration Statement(s) effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement(s) until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement(s). In the event the number of shares available under a Registration Statement filed pursuant to this Agreement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within fifteen (15) days after the necessity therefor arises (based on the market price of the Common Stock and other relevant factors on which the Company reasonably elects to rely) or upon reasonable request therefor by any Investor. The Company shall use its best efforts to cause such 5 amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed "insufficient to cover all of the Registrable Securities" if at any time the number of Registrable Securities issued or issuable is in excess of the number of shares of Common Stock eligible for resale under the then effective Registration Statement(s) filed to cover the Registrable Securities in accordance with this Agreement. (c) The Company shall furnish to each Investor whose Registrable Securities are included in the Registration Statement(s) and its legal counsel, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of the Registration Statement and any amendment thereto, including financial statements and schedules, all documents incorporated therein by reference, and all exhibits, the prospectus(es) included in such Registration Statement(s) (including each preliminary prospectus) and all correspondence by or on behalf of the Company to the SEC or the staff of the SEC and all correspondence from the SEC or the staff of the SEC to the Company or its representatives, related to such Registration Statement(s), (ii) upon the effectiveness of any Registration Statement, such number of copies of the prospectus included in such Registration Statement and all amendments and supplements thereto as such Investor may reasonably request, and (iii) such other documents, including any preliminary prospectus, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor. (d) The Company shall (i) register and qualify the Registrable Securities covered by the Registration Statement(s) under such other securities or "blue sky" laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions, Provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, and further provided that (anything in this Section to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the securities in that jurisdiction be borne by selling shareholders pro rata, to the extent required by such jurisdiction. The Company shall promptly notify each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction 6 in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose. (e) In the event Investors who hold a majority of the Registrable Securities being offered in the offering select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering. (f) As promptly as practicable after becoming aware of such event, the Company shall notify each Investor in writing of the happening of any event, of which the Company has knowledge, as a result of which, the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to each Investor as such Investor may reasonably request. The Company shall also promptly notify each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor by facsimile by the next business day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. (g) The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment, and to notify each Investor who holds Registrable Securities being sold (and, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof, or its receipt of actual notice of the initiation, or threatened initiation of any proceeding for such purpose. (h) The Company shall permit each Investor a single firm of counsel or such other counsel as thereafter designated as selling stockholders' counsel by the Investors who hold a majority of the Registrable Securities being sold, to review and comment upon the Registration Statement(s) and all amendments and supplements thereto at least seven (7) days prior to their filing with the SEC, and not file any document in a form to 7 which such counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement(s) or any amendment or supplement thereto without the prior approval of such counsel, which consent shall not be unreasonably withheld. (i) At the request of the Investors who hold a majority of the Registrable Securities being sold, the Company shall furnish, on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement (i) if required by an underwriter, a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope, and substance as is customarily given in an underwritten public offering, addressed to the underwriters and the Investors. (j) The Company shall make available for inspection by (i) any Investor, (ii) any underwriter participating in any disposition pursuant to a Registration Statement, (iii) one firm of attorneys and one firm of accountants or other agents retained by each Investor, and (iv) one firm of attorneys retained by all such underwriters (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors, and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence; Provided However, that each Inspector shall hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (A) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (B) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (C) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. (k) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure 8 of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. (l) The Company shall use its best efforts to secure the inclusion for quotation on the Over the Counter Bulletin Board for the Registrable Securities, and, to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(l). (m) The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, any managing underwriter or underwriters, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as any managing underwriter or underwriters or the Investors may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Investors may request. Not later than the date on which any Registration Statement registering the resale of Registrable Securities is declared effective, the Company shall deliver to its transfer agent instructions, accompanied by any reasonably required opinion of counsel, that permit sales of unlegended securities in a timely fashion that complies with then mandated securities settlement procedures for regular way market transactions. (n) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable Securities pursuant to a Registration Statement. (o) The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of such Registration Statement. (p) If requested by the managing underwriters or an Investor, the Company shall promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters and the Investors agree should be included therein relating to the sale and distribution of Registrable Securities, including, without 9 limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters, and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by a shareholder or any underwriter of such Registrable Securities. (q) The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities. (r) The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder. SECTION 4. OBLIGATIONS OF THE INVESTORS. (a) At least seven (7) days prior to the first anticipated filing date of the Registration Statement(s), the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor's Registrable Securities included in the Registration Statement(s). It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities, and shall execute such documents in connection with such registration as the Company may reasonably request. (b) Each Investor by such Investor's acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement(s) hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement(s). (c) In the event Investors holding a majority of the Registrable Securities being registered determine to engage the services of an underwriter, each Investor agrees to enter into and perform such Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and 10 contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor notifies the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement(s). (d) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement(s) covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of 3(f) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. (e) No Investor may participate in any underwritten registration hereunder unless such Investor (i) agrees to sell such Investor's Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions. SECTION 5. EXPENSES OF REGISTRATION. All expenses incurred in connection with registrations, filings, or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and printing fees, accounting fees, and fees and disbursements of counsel for the Company and fees and disbursements of one counsel for the Investors, shall be borne by the Company. SECTION 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement: (a) The Company will, and hereby does, indemnify, hold harmless, and defend each Investor who holds such Registrable Securities, the directors, officers, partners, employees, agents, and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 ACT"), 11 and any underwriter (as defined in the 1933 Act) for the Investors, and the directors and officers of, and each Person, if any, who controls, any such underwriter within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several (collectively, "Claims") incurred in investigating, preparing, or defending any action, claim, suit, inquiry, proceeding, investigation, or appeal taken from the foregoing by or before any court or governmental, administrative, or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject to the restrictions set forth in Section 6(d) with respect to the number of legal counsel, the Company shall reimburse the Investors and each such underwriter or controlling person, promptly as such expenses are incurred and are due and payable, for reasonable legal fees or other expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement(s) or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c); (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that 12 are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or mission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(c), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used the incorrect prospectus; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company; and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. (b) The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in any distribution, to the same extent as provided above, with respect to information such persons so furnished in writing expressly for inclusion in the Registration Statement(s). (c) Promptly after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person; Provided However, that an Indemnified Person shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding. The Company shall pay reasonable fees for only one separate legal counsel for the Investors, and such legal counsel shall be selected by the Investors holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Person fully apprised at all 13 times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, Provided However, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Person with respect to all third parties, firms, or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. (d) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred. (e) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. SECTION 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided however, that: (i) no contribution shall be made under circumstances where the party against whom indemnification is otherwise sought would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation, and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. SECTION 8. REPORTS UNDER THE 1934 ACT. 14 With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the investors to sell securities of the Company to the public without registration ("RULE 144"), the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and (c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act, and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the investors to sell such securities pursuant to Rule 144 without registration. SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assignable by the Investors to any permitted transferee of all or any portion of Registrable Securities according to the provisions of the Purchase Agreements and the Stock Option Agreements if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreements; (vi) such transferee shall be an "accredited investor" as that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii) in the event the assignment occurs subsequent to the date of effectiveness of the Registration Statement(s) required to be filed pursuant to Section 15 2(a), the transferee agrees to pay all reasonable expenses of amending or supplementing such Registration Statement(s) to reflect such assignment. SECTION 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who hold two-thirds of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. SECTION 11. MISCELLANEOUS. (a) A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices, or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice, or election received from the registered owner of such Registrable Securities. (b) Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days after being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: RENTECH, INC. 1331 17th Street, Suite 720 Denver, CO 80202 Attn: Ronald C. Butz, Vice President Telephone: (303) 298-8008 Facsimile: (303) 298-8010 with a copy (which shall not constitute notice) to: Loren L. Mall, Esq. 16 Brega & Winters, P.C. 1700 Lincoln Street, Suite 2222 Denver, CO 80203 Telephone: (303) 866-9400 Facsimile: (303) 861-9109 If to a Purchaser, to its address and facsimile number on the Schedule of Purchasers, with copies to such Purchaser's counsel as set forth on the Schedule of Purchasers. Each party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number. (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. (d) This Agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado without regard to the principles of conflict of laws. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. (e) This Agreement, the Purchase Agreements and the Option Agreements constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties, or undertakings, other than those set forth or referred to herein and therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. (f) Subject to the requirements of Section 9, this Agreement shall inure to the benefit and of and be binding upon the permitted successors and assigns of each of the parties hereto. (g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. 17 (i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. [Signature Page Follows] 18 IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written. COMPANY: RENTECH, INC. By:/s/ Dennis L. Yakobson -------------------------------- Dennis L. Yakobson, President FOREST OIL CORPORATION ANSCHUTZ INVESTMENT COMPANY By:/s/ David H. Keyte By:/s/ Clifford Hickey ------------------------------ -------------------------------- Authorized Agent Authorized Agent Address:_________________________ Address:___________________________ Telephone:_______________________ Telephone:_________________________ Facsimile:_______________________ Facsimile:_________________________ EX-10.3(A) 4 EXHIBIT 10-3(A) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS. RENTECH, INC. OPTION TO PURCHASE SHARES OF COMMON STOCK OF RENTECH, INC. FOR VALUE RECEIVED, FOREST OIL CORPORATION ("Optionee"), is entitled to purchase, subject to the provisions of this Option, from RENTECH, INC., a Colorado corporation ("Company"), at any time not later than 5.00 P.M., Denver time, on December 31, 2001 (the "Expiration Date"), 2,000,000 shares of common stock, having $.01 par value per share, of the Company ("Common Stock") at an exercise price, subject to adjustment as set forth below, of $1.25 per share. The number of shares of Common Stock to be received upon the exercise of this Option and the price to be paid for a share of Common Stock are subject to adjustment from time to time as hereinafter set forth. 1. OPTION PRICE; FAIR MARKET VALUE. (a) The option price is $1.25 for each share of Common Stock., as the same may be adjusted from time to time in accordance with Section 4 hereof; provided, however, that the maximum aggregate option price for all shares of Common Stock issuable upon the exercise of this Option (or the aggregate of all Options resulting from the subdivision of this Option) shall not exceed $2,500,000.00. (b) For purposes of this Option, but only if and to the extent applicable, the fair market value of such Common Stock (the "Fair Market Value") shall be determined as follows: (i) if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange, then the Fair Market Value shall be the last reported sale price of the Common Stock on the composite tape of such exchange, or, if no such sale is made on any trading day, the average closing bid and asked prices for such day on the composite tape of such exchange; or (ii) if the Common Stock is not so listed or admitted to unlisted trading privileges, the Fair Market Value shall be the average of the last reported bid and asked prices reported by the National Association of Securities Dealers Quotation System (or if not quoted on NASDAQ, by the National Quotation Bureau, Inc. or other reporting medium, including the Over the Counter Bulletin Board); or (iii) otherwise the Fair Market Value shall be an amount not less than book value determined in such reasonable manner as may be prescribed by the Board of Directors of the Company (the "Board"). If an Optionee disagrees with the Fair Market Value as determined by the Board pursuant to clause (iii) of the preceding sentence, such Optionee may provide written notice of such disagreement to the Company that states in reasonable detail the basis of the disagreement and such Optionee's determination of the Fair Market Value (a "Dispute Notice"). The Board and the Optionee shall attempt to resolve the disagreement as to the Fair Market Value within ten days after the Dispute Notice is given to the Company, and if they are unable to do so within such time period, the Board and/or the Optionee may submit the dispute to a "big five" independent accounting firm (that directly represents neither the Company nor the Optionee and the selection of which shall be mutually agreed upon) (the "Accountant") in Denver, Colorado. The determination of the Accountant as to the Fair Market Value shall be conclusive and binding upon the Optionee and the Company. The Company and the Optionee shall bear equally the fees and expenses of the Accountant unless the determination of the Accountant results in a net increase of the Fair Market Value of more than five percent over the amount determined by the Board, in which case the Company shall be solely responsible for the payment of such fees and expenses. 1 2. OPTION PERIOD. This Option may be exercised not later than 5:00 P.M., Denver time, on December 31, 2001. The Option granted shall be void if not exercised during the option period. 3. EXERCISE OF OPTION. Unless the Option is terminated as provided pursuant to this Option, an Optionee may exercise this option for up to, but not in excess of, the amounts of shares subject to the Option. The Option may be exercised, in whole or in part, and at any time and from time to time within its term. (a) METHOD OF EXERCISE. This Option shall be exercisable by a written notice delivered to the Company (the "Notice of Exercise") which shall: (i) State the election to exercise the Option, the number of shares of Common Stock in respect of which it is being exercised (which must be in multiples of one hundred shares), and the entity in whose name the stock certificate or certificates for such shares of Common Stock is to be registered, with that entity's address and taxpayer identification number; and (ii) Be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any entity or entities other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such entity or entities to exercise the Option. (b) PAYMENT OF OPTION PRICE. Payment of the option price for any shares of Common Stock with respect to which the Option is being exercised shall be by wire transfer, cash, certified check or other means acceptable to the Company, and shall be delivered with the Notice of Exercise. The certificate or certificates for shares of Common Stock as to which the Option shall be exercised shall be registered in the name of the entity or entities indicated in the notice of exercise in accordance with Section 3(a)(i). (c) RESTRICTIONS ON EXERCISE. As a condition to exercise of this Option, the Company may require the person or entity exercising this Option to make any representation and warranty as may be required by any applicable law or regulation. 4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In order to prevent dilution of the rights granted under this Option, the option price and the number of shares purchasable hereunder shall be subject to adjustment from time to time as follows: (a) ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK UPON ISSUANCE OF COMMON STOCK OR COMMON STOCK EQUIVALENTS. If and whenever the Company issues or sells, or in accordance with paragraph (b) is deemed to have issued or sold, any Common Stock for a consideration per share less than the Fair Market Value per share at the time of such issue or sale (not including the issuance of the Permitted Stock (as defined below)) then forthwith upon such issue or sale, the shares of Common Stock subject to this Option (the "Subject Shares") will be increased by multiplying such number by a fraction, (A) the numerator of which is the Fair Market Value per share at the time of such issue or sale and (B) the denominator of which is the amount determined by dividing (a) the sum of (1) the product derived by multiplying the Fair Market Value per share at the time of such issue or sale times the number of shares of Common Stock outstanding on a Fully-Diluted Basis immediately prior to such issue or sale, plus (2) the aggregate consideration, if any, received by the Company upon such issue or sale, by (b) the number of shares of Common Stock outstanding on a Fully-Diluted Basis immediately after such issue or sale. (b) EFFECT ON SUBJECT SHARES OF CERTAIN EVENTS. For purposes of determining the adjusted Subject Shares under paragraph (a) above, the following will be applicable: (i) ISSUANCE OF COMMON STOCK EQUIVALENTS. If the Company in any manner grants any Common Stock Equivalent (as defined below) (other than Permitted Stock) and the lowest price per share for which any one share of Common Stock of the Company is issuable upon the exercise of any such Common Stock Equivalent is less than the Fair Market Value of the Common Stock at the time of the granting of such 2 Common Stock Equivalent, then all of such shares of Common Stock will be deemed to have been issued and sold by the Company for such price per share (other than pursuant to antidilutive adjustments to the Options). For purposes of this paragraph, the "lowest price per share for which any one share is issuable" will be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share upon the exercise of the Common Stock Equivalent (whether by conversion, exchange or otherwise) or other similar indication of the price per share as of the time of granting (such as the floor value for stock appreciation rights). No further adjustment of the Subject Shares will be made upon the actual issue of such shares of Common Stock or upon the exercise of any right under the Common Stock Equivalents. (ii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase price provided for in any Common Stock Equivalent (other than Permitted Stock), the additional consideration, if any, payable upon the issue, conversion or exchange of any Common Stock Equivalent, or the rate at which any Common Stock Equivalent is convertible into or exchangeable for shares of Common Stock changes at any time, the Subject Shares in effect at the time of such change will be readjusted to the Subject Shares which would have been in effect at such time had such Common Stock Equivalent still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. (iii) TREATMENT OF EXPIRED AND UNEXERCISED COMMON STOCK EQUIVALENTS. Upon the expiration of any Common Stock Equivalent or the termination of any right to convert or exchange any Common Stock Equivalent without the exercise of such Common Stock Equivalent, the Subject Shares then in effect will be adjusted to the Subject Shares which would have been in effect at the time of such expiration or termination had such Common Stock Equivalent, to the extent outstanding immediately prior to such expiration or termination, never been issued. (iv) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock or Common Stock Equivalents (other than Permitted Stock) are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company. In case any Common Stock or Common Stock Equivalents (other than Permitted Stock) are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair market value of such consideration. In case any Common Stock or Common Stock Equivalents (other than Permitted Stock) are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of such portion of the net assets and business of the nonsurviving entity as is attributable to such Common Stock or Common Stock Equivalents, as the case may be. (v) INTEGRATED TRANSACTIONS. In case any Common Stock Equivalent (other than Permitted Stock) is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Common Stock Equivalent by the parties thereto, the Common Stock Equivalent will be deemed to have been issued without consideration. (vi) RECORD DATE. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock or Common Stock Equivalents or (B) to subscribe for or purchase Common Stock or Common Stock Equivalents, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding Common Stock into a greater number of shares of Common Stock, the Subject Shares in effect immediately prior to such subdivision will be proportionately increased. If the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock, the Subject Shares in effect immediately prior to such combination will be proportionately decreased. 3 (d) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another person or entity or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Optionees holding Options representing a majority of the Subject Shares issuable under all Options then outstanding) to insure that each of the Optionees will thereafter have the right to acquire in lieu of the Subject Shares immediately theretofore acquirable and receivable upon the exercise of such Optionee's Option, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the Subject Shares immediately theretofore acquirable and receivable upon exercise of such Optionee's Option had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to the Optionees holding Options representing a majority of the Subject Shares issuable under all Options then outstanding) with respect to such Optionees' rights and interests to insure that the provisions of this Section 4 will thereafter be applicable to the Options (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the option price to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the Subject Shares, if the value so reflected is less than the option price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the corporation purchasing such assets assumes by written instrument (in form and substance satisfactory to the Optionees), the obligation to deliver to each such Optionee such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Optionee may be entitled to acquire. (e) NOTICES. (i) Immediately upon any adjustment of the Subject Shares, the Company will give written notice thereof to the Optionee, setting forth in reasonable detail and certifying the calculation of such adjustment. (ii) The Company will give written notice to the Optionee at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, dissolution or liquidation. (iii) The Company will also give written notice to the Optionees at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place. (f) LIQUIDATING DIVIDENDS. If the Company declares or pays a dividend or makes a distribution upon the Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in accordance with generally accepted accounting principles) except for a dividend payable in Common Stock (a "Liquidating Dividend"), then the Company will pay to each Optionee at the time of payment thereof the Liquidating Dividend which would have been paid to such Optionee on the Common Stock had the Options been fully exercised immediately prior to the date on which a record is taken for such Liquidating Dividend, or, if no record is taken, the date as of which the record holders of Common Stock entitled to such dividends are to be determined. (g) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or readjustment of the option price for the number of shares of Common Stock or other securities issuable upon exercise of the Options, if the Option is then exercisable pursuant to this Section 4, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered Optionee at the Optionee's address as shown in the Company's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or deemed to be received by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or 4 sold, (ii) the option price at the time in effect, (iii) the number of additional shares of Common Stock, and (iv) the type and amount, if any, of other property which at the time would be received upon exercise of Options. (h) CERTAIN DEFINITIONS. As used in this Section 4, the following terms shall have the meanings ascribed to them: (i) "Common Stock Equivalent" means any option, warrant, right or similar security exercisable into, exchangeable for, or convertible to Common Stock or the economic equivalent value of Common Stock, other than any Permitted Stock. (ii) "Control Basis" means the valuation of securities by determining on an aggregate basis the fair market value of all securities of such type on the basis of the securities being sold in the aggregate to a third party buyer in an arm's length transaction with conveyance of control, without discount for minority interests, illiquidity or restrictions on transfer, and then dividing such amount by the number of all securities of such type on a Fully-Diluted Basis. (v) "fair market value" means (a) as to securities regularly traded in the organized securities markets, the average of the Closing Price for the security in question for the thirty (30) trading days immediately preceding the date of determination; and (b) as to all securities not regularly traded in the securities markets and other property, the fair market value of such securities, on a Control Basis, or property as of the date of the delivery of a notice from a Optionee necessitating the determination of fair market value (unless some other date of valuation is provided herein) as determined in good faith by the Board (provided that any such determination by the Board shall be subject to the same rights of dispute and resolution on the part of the Optionee as set forth in Section 1(b) hereof). Notwithstanding the foregoing, the Fair Market Value of any shares of Common Stock shall be as determined in accordance with Section 1(b). (vi) "Fully-Diluted Basis" when used means including as outstanding all Common Stock and Common Stock Equivalents including, without limitation, the Common Stock issuable upon exercise of Options. (vii) "Permitted Stock" shall include all shares of Common Stock or Common Stock Equivalents issued or issuable on or prior to the date of this Option. 5. NOTICES. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. Each notice shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to it at its principal office, attention of the Secretary. Each Optionee or other person or persons then entitled to exercise the Option shall be addressed to the Optionee at the Optionee's address set forth below the Optionee's signature. Anyone to whom a notice may be given under this Option may designate a new address by notice to that effect. 6. BENEFITS OF OPTION. All obligations imposed upon the Company and all rights granted to the Optionee under this Option shall be binding upon the Company's successors. All obligations imposed upon the Optionee and all rights granted to the Company under this Option shall be binding upon the Optionee's successors or assignees. This Option shall be the sole and exclusive source of any and all rights which the Optionee, and successors or assignees of Optionee, may have in respect to any options for purchase of shares of Common Stock granted hereunder. 7. TRANSFER OF OPTION. (a) OPTION REGISTER. The Company will maintain a register (the "Option Register") containing the names and addresses of the Optionee or Optionees. Any Optionee of this Option or any portion thereof may change his or her address as shown on the Option Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Optionee may be delivered or given by mail to such 5 Optionee as shown on the Option Register and at the address shown on the Option Register. Until this Option is transferred on the Option Register of the Company, the Company may treat the holder as shown on the Option Register as the absolute owner of this Option for all purposes, notwithstanding any notice to the contrary. (b) OPTION AGENT. The Company may, by written notice to the Optionee, appoint an agent for the purpose of maintaining the Option Register referred to in Section 7(a) above, issuing the Common Stock or other securities then issuable upon the exercise of this Option, exchanging this Option, replacing this Option, or any or all of the foregoing. Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, shall be made at the office of such agent. (c) TRANSFERABILITY AND NON-NEGOTIABILITY OF OPTION. This Option may not be transferred or assigned, in whole or in part, without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company's outside counsel, if such are requested by the Company) and without the prior written consent of the Company (which consent shall not be unreasonably withheld or delayed) except that the Optionee may assign its rights hereunder in whole or in part, to (i) any entity or person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Optionee (an "Affiliate") or (ii) any director, officer, employee, representative or agent of Optionee or any of its Affiliates. Subject to the provisions of this Option, title to this Option may be transferred by endorsement and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery. (d) EXCHANGE OF OPTION UPON A TRANSFER. On surrender of this Option for exchange, properly endorsed and subject to the provisions of this Option with respect to compliance with the Securities Act of 1933, as amended (the "Act"), and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the Optionee a new Option or Options of like tenor, in the name of the Optionee or as the Optionee (on payment by the Optionee of any applicable transfer taxes) may direct, for the number of shares of Common Stock issuable upon exercise hereof. (e) COMPLIANCE WITH SECURITIES LAWS. (i) The Optionee of this Option, by acceptance hereof, acknowledges that this Option and the shares of Common Stock to be issued upon exercise hereof or conversion thereof are being acquired solely for the Optionee's own account and not as a nominee for any other party, and for investment, and that the Optionee will not offer, sell or otherwise dispose of this Option or any shares of Common Stock to be issued upon exercise hereof or conversion thereof except under circumstances that will not result in a violation of the Act or any state securities laws. Upon exercise of this Option, the Optionee shall, if requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the shares of Common Stock so purchased are being acquired solely for the Optionee's own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale. (ii) This Option and all shares of Common Stock issued upon exercise hereof or conversion thereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS. The Company may place an appropriate stop transfer order with the Company's transfer agent with respect to the shares of Common Stock represented by such certificates. 6 8. REPLACEMENT OF OPTION. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Option and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Option, the Company at its expense shall execute and deliver, in lieu of this Option, a new option of like tenor and amount. 9. AMENDMENTS. (a) Any term of this Option may be amended only with the written consent of the Board and the Optionee. (b) No waivers of, or exceptions to, any term, condition or provision of this Option, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. 10. GOVERNING LAW. This Option shall be governed by and construed in accordance with the laws of the State of Colorado (without giving effect to the choice of law principles thereof). [SIGNATURE PAGE FOLLOWS] 7 IN WITNESS WHEREOF, the Company and the Optionee have caused this Option to be executed as of March 18, 2000. OPTIONEE: FOREST OIL CORPORATION RENTECH, INC. By:/s/ David H. Keyte By:/s/ Dennis L. Yakobson ---------------------------------- --------------------------------- David H. Keyte, Dennis L. Yakobson, President Executive Vice President Forest Oil Corporation 1600 Broadway, Suite 2200 Denver, Colorado 80202 RENTECH, INC. NOTICE OF EXERCISE OF STOCK OPTION ISSUED To: Rentech, Inc. 1331 17th Street, Suite 720 Denver, CO 80202 I hereby exercise my Option dated ______________________________ to purchase ____________________ shares of $.01 par value common stock of the Company at the option exercise price of $_______________ per share. Enclosed is a certified or cashier's check in the total amount of $_______________, or payment in such other form as the Company has specified and agreed to accept, which is described at the bottom of this notice. I represent to you that I am acquiring said shares for investment purposes and not with a view to any distribution thereof. I understand that my stock certificate may bear an appropriate legend restricting the transfer of my shares and that a stop transfer order may be placed with the Company's transfer agent with respect to such shares. I request that my shares be issued in the name of: _______________________________________________________________________________ (Print your name in the form in which you wish to have the shares registered) _______________________________________________________________________________ (Social Security Number) _______________________________________________________________________________ (Street and Number) _______________________________________________________________________________ (City) (State) (Zip Code) Optionee: Dated: _______________________, 20____. ________________________________ Signature: By:_____________________________ Authorized Agent EX-10.3(B) 5 EXHIBIT 10-3(B) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS. RENTECH, INC. OPTION TO PURCHASE SHARES OF COMMON STOCK OF RENTECH, INC. FOR VALUE RECEIVED, FOREST OIL CORPORATION ("Optionee"), is entitled to purchase, subject to the provisions of this Option, from RENTECH, INC., a Colorado corporation ("Company"), at any time not later than 5.00 P.M., Denver time, on December 31, 2004 (the "Expiration Date"), 1,000,000 shares of common stock, having $.01 par value per share, of the Company ("Common Stock") at an exercise price, subject to adjustment as set forth below, of $5.00 per share. The number of shares of Common Stock to be received upon the exercise of this Option and the price to be paid for a share of Common Stock are subject to adjustment from time to time as hereinafter set forth. 1. OPTION PRICE; FAIR MARKET VALUE. (a) The option price is $5.00 for each share of Common Stock., as the same may be adjusted from time to time in accordance with Section 4 hereof; provided, however, that the maximum aggregate option price for all shares of Common Stock issuable upon the exercise of this Option (or the aggregate of all Options resulting from the subdivision of this Option) shall not exceed $5,000,000.00. (b) For purposes of this Option, but only if and to the extent applicable, the fair market value of such Common Stock (the "Fair Market Value") shall be determined as follows: (i) if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange, then the Fair Market Value shall be the last reported sale price of the Common Stock on the composite tape of such exchange, or, if no such sale is made on any trading day, the average closing bid and asked prices for such day on the composite tape of such exchange; or (ii) if the Common Stock is not so listed or admitted to unlisted trading privileges, the Fair Market Value shall be the average of the last reported bid and asked prices reported by the National Association of Securities Dealers Quotation System (or if not quoted on NASDAQ, by the National Quotation Bureau, Inc. or other reporting medium, including the Over the Counter Bulletin Board); or (iii) otherwise the Fair Market Value shall be an amount not less than book value determined in such reasonable manner as may be prescribed by the Board of Directors of the Company (the "Board"). If an Optionee disagrees with the Fair Market Value as determined by the Board pursuant to clause (iii) of the preceding sentence, such Optionee may provide written notice of such disagreement to the Company that states in reasonable detail the basis of the disagreement and such Optionee's determination of the Fair Market Value (a "Dispute Notice"). The Board and the Optionee shall attempt to resolve the disagreement as to the Fair Market Value within ten days after the Dispute Notice is given to the Company, and if they are unable to do so within such time period, the Board and/or the Optionee may submit the dispute to a "big five" independent accounting firm (that directly represents neither the Company nor the Optionee and the selection of which shall be mutually agreed upon) (the "Accountant") in Denver, Colorado. The determination of the Accountant as to the Fair Market Value shall be conclusive and binding upon the Optionee and the Company. The Company and the Optionee shall bear equally the fees and expenses of the Accountant unless the determination of the Accountant results in a net increase of the Fair Market Value of more than five percent over the amount determined by the Board, in which case the Company shall be solely responsible for the payment of such fees and expenses. 2. OPTION PERIOD. This Option may be exercised not later than 5:00 P.M., Denver time, on December 31, 2004. The Option granted shall be void if not exercised during the option period. 3. EXERCISE OF OPTION. Unless the Option is terminated as provided pursuant to this Option, an Optionee may exercise this option for up to, but not in excess of, the amounts of shares subject to the Option. The Option may be exercised, in whole or in part, and at any time and from time to time within its term. (a) METHOD OF EXERCISE. This Option shall be exercisable by a written notice delivered to the Company (the "Notice of Exercise") which shall: (i) State the election to exercise the Option, the number of shares of Common Stock in respect of which it is being exercised (which must be in multiples of one hundred shares), and the entity in whose name the stock certificate or certificates for such shares of Common Stock is to be registered, with that entity's address and taxpayer identification number; and (ii) Be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any entity or entities other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such entity or entities to exercise the Option. (b) PAYMENT OF OPTION PRICE. Payment of the option price for any shares of Common Stock with respect to which the Option is being exercised shall be by wire transfer, cash, certified check or other means acceptable to the Company, and shall be delivered with the Notice of Exercise. The certificate or certificates for shares of Common Stock as to which the Option shall be exercised shall be registered in the name of the entity or entities indicated in the notice of exercise in accordance with Section 3(a)(i). (c) RESTRICTIONS ON EXERCISE. As a condition to exercise of this Option, the Company may require the person or entity exercising this Option to make any representation and warranty as may be required by any applicable law or regulation. 4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In order to prevent dilution of the rights granted under this Option, the option price and the number of shares purchasable hereunder shall be subject to adjustment from time to time as follows: (a) ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK UPON ISSUANCE OF COMMON STOCK OR COMMON STOCK EQUIVALENTS. If and whenever the Company issues or sells, or in accordance with paragraph (b) is deemed to have issued or sold, any Common Stock for a consideration per share less than the Fair Market Value per share at the time of such issue or sale (not including the issuance of the Permitted Stock (as defined below)) then forthwith upon such issue or sale, the shares of Common Stock subject to this Option (the "Subject Shares") will be increased by multiplying such number by a fraction, (A) the numerator of which is the Fair Market Value per share at the time of such issue or sale and (B) the denominator of which is the amount determined by dividing (a) the sum of (1) the product derived by multiplying the Fair Market Value per share at the time of such issue or sale times the number of shares of Common Stock outstanding on a Fully-Diluted Basis immediately prior to such issue or sale, plus (2) the aggregate consideration, if any, received by the Company upon such issue or sale, by (b) the number of shares of Common Stock outstanding on a Fully-Diluted Basis immediately after such issue or sale. (b) EFFECT ON SUBJECT SHARES OF CERTAIN EVENTS. For purposes of determining the adjusted Subject Shares under paragraph (a) above, the following will be applicable: (i) ISSUANCE OF COMMON STOCK EQUIVALENTS. If the Company in any manner grants any Common Stock Equivalent (as defined below) (other than Permitted Stock) and the lowest price per share for which any one share of Common Stock of the Company is issuable upon the exercise of any such Common Stock Equivalent is less than the Fair Market Value of the Common Stock at the time of the granting of such 2 Common Stock Equivalent, then all of such shares of Common Stock will be deemed to have been issued and sold by the Company for such price per share (other than pursuant to antidilutive adjustments to the Options). For purposes of this paragraph, the "lowest price per share for which any one share is issuable" will be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share upon the exercise of the Common Stock Equivalent (whether by conversion, exchange or otherwise) or other similar indication of the price per share as of the time of granting (such as the floor value for stock appreciation rights). No further adjustment of the Subject Shares will be made upon the actual issue of such shares of Common Stock or upon the exercise of any right under the Common Stock Equivalents. (ii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase price provided for in any Common Stock Equivalent (other than Permitted Stock), the additional consideration, if any, payable upon the issue, conversion or exchange of any Common Stock Equivalent, or the rate at which any Common Stock Equivalent is convertible into or exchangeable for shares of Common Stock changes at any time, the Subject Shares in effect at the time of such change will be readjusted to the Subject Shares which would have been in effect at such time had such Common Stock Equivalent still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. (iii) TREATMENT OF EXPIRED AND UNEXERCISED COMMON STOCK EQUIVALENTS. Upon the expiration of any Common Stock Equivalent or the termination of any right to convert or exchange any Common Stock Equivalent without the exercise of such Common Stock Equivalent, the Subject Shares then in effect will be adjusted to the Subject Shares which would have been in effect at the time of such expiration or termination had such Common Stock Equivalent, to the extent outstanding immediately prior to such expiration or termination, never been issued. (iv) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock or Common Stock Equivalents (other than Permitted Stock) are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company. In case any Common Stock or Common Stock Equivalents (other than Permitted Stock) are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair market value of such consideration. In case any Common Stock or Common Stock Equivalents (other than Permitted Stock) are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of such portion of the net assets and business of the nonsurviving entity as is attributable to such Common Stock or Common Stock Equivalents, as the case may be. (v) INTEGRATED TRANSACTIONS. In case any Common Stock Equivalent (other than Permitted Stock) is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Common Stock Equivalent by the parties thereto, the Common Stock Equivalent will be deemed to have been issued without consideration. (vi) RECORD DATE. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock or Common Stock Equivalents or (B) to subscribe for or purchase Common Stock or Common Stock Equivalents, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding Common Stock into a greater 3 number of shares of Common Stock, the Subject Shares in effect immediately prior to such subdivision will be proportionately increased. If the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock, the Subject Shares in effect immediately prior to such combination will be proportionately decreased. (d) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another person or entity or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Optionees holding Options representing a majority of the Subject Shares issuable under all Options then outstanding) to insure that each of the Optionees will thereafter have the right to acquire in lieu of the Subject Shares immediately theretofore acquirable and receivable upon the exercise of such Optionee's Option, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the Subject Shares immediately theretofore acquirable and receivable upon exercise of such Optionee's Option had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to the Optionees holding Options representing a majority of the Subject Shares issuable under all Options then outstanding) with respect to such Optionees' rights and interests to insure that the provisions of this Section 4 will thereafter be applicable to the Options (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the option price to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the Subject Shares, if the value so reflected is less than the option price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the corporation purchasing such assets assumes by written instrument (in form and substance satisfactory to the Optionees), the obligation to deliver to each such Optionee such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Optionee may be entitled to acquire. (e) NOTICES. (i) Immediately upon any adjustment of the Subject Shares, the Company will give written notice thereof to the Optionee, setting forth in reasonable detail and certifying the calculation of such adjustment. (ii) The Company will give written notice to the Optionee at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, dissolution or liquidation. (iii) The Company will also give written notice to the Optionees at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place. (f) LIQUIDATING DIVIDENDS. If the Company declares or pays a dividend or makes a distribution upon the Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in accordance with generally accepted accounting principles) except for a dividend payable in Common Stock (a "Liquidating Dividend"), then the Company will pay to each Optionee at the time of payment thereof the Liquidating Dividend which would have been paid to such Optionee on the Common Stock had the Options been fully exercised immediately prior to the date on which a record is taken for such Liquidating Dividend, or, if no record is taken, the date as of which the record holders of Common Stock entitled to such dividends are to be determined. 4 (g) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or readjustment of the option price for the number of shares of Common Stock or other securities issuable upon exercise of the Options, if the Option is then exercisable pursuant to this Section 4, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered Optionee at the Optionee's address as shown in the Company's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or deemed to be received by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (ii) the option price at the time in effect, (iii) the number of additional shares of Common Stock, and (iv) the type and amount, if any, of other property which at the time would be received upon exercise of Options. (h) CERTAIN DEFINITIONS. As used in this Section 4, the following terms shall have the meanings ascribed to them: (i) "Common Stock Equivalent" means any option, warrant, right or similar security exercisable into, exchangeable for, or convertible to Common Stock or the economic equivalent value of Common Stock, other than any Permitted Stock. (ii) "Control Basis" means the valuation of securities by determining on an aggregate basis the fair market value of all securities of such type on the basis of the securities being sold in the aggregate to a third party buyer in an arm's length transaction with conveyance of control, without discount for minority interests, illiquidity or restrictions on transfer, and then dividing such amount by the number of all securities of such type on a Fully-Diluted Basis. (v) "fair market value" means (a) as to securities regularly traded in the organized securities markets, the average of the Closing Price for the security in question for the thirty (30) trading days immediately preceding the date of determination; and (b) as to all securities not regularly traded in the securities markets and other property, the fair market value of such securities, on a Control Basis, or property as of the date of the delivery of a notice from a Optionee necessitating the determination of fair market value (unless some other date of valuation is provided herein) as determined in good faith by the Board (provided that any such determination by the Board shall be subject to the same rights of dispute and resolution on the part of the Optionee as set forth in Section 1(b) hereof). Notwithstanding the foregoing, the Fair Market Value of any shares of Common Stock shall be as determined in accordance with Section 1(b). (vi) "Fully-Diluted Basis" when used means including as outstanding all Common Stock and Common Stock Equivalents including, without limitation, the Common Stock issuable upon exercise of Options. (vii) "Permitted Stock" shall include all shares of Common Stock or Common Stock Equivalents issued or issuable on or prior to the date of this Option. 5. NOTICES. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. Each notice shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to it at its principal office, attention of the Secretary. Each Optionee or other person or persons then entitled to exercise the Option shall be addressed to the Optionee at the Optionee's address set forth below the Optionee's signature. Anyone to whom a notice may be given under this Option may designate a new address by notice to that effect. 6. BENEFITS OF OPTION. All obligations imposed upon the Company and all rights granted to the Optionee under this Option shall be binding upon the Company's successors. All obligations imposed upon the Optionee and all 5 rights granted to the Company under this Option shall be binding upon the Optionee's successors or assignees. This Option shall be the sole and exclusive source of any and all rights which the Optionee, and successors or assignees of Optionee, may have in respect to any options for purchase of shares of Common Stock granted hereunder. 7. TRANSFER OF OPTION. (a) OPTION REGISTER. The Company will maintain a register (the "Option Register") containing the names and addresses of the Optionee or Optionees. Any Optionee of this Option or any portion thereof may change his or her address as shown on the Option Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Optionee may be delivered or given by mail to such Optionee as shown on the Option Register and at the address shown on the Option Register. Until this Option is transferred on the Option Register of the Company, the Company may treat the holder as shown on the Option Register as the absolute owner of this Option for all purposes, notwithstanding any notice to the contrary. (b) OPTION AGENT. The Company may, by written notice to the Optionee, appoint an agent for the purpose of maintaining the Option Register referred to in Section 7(a) above, issuing the Common Stock or other securities then issuable upon the exercise of this Option, exchanging this Option, replacing this Option, or any or all of the foregoing. Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, shall be made at the office of such agent. (c) TRANSFERABILITY AND NON-NEGOTIABILITY OF OPTION. This Option may not be transferred or assigned, in whole or in part, without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company's outside counsel, if such are requested by the Company) and without the prior written consent of the Company (which consent shall not be unreasonably withheld or delayed) except that the Optionee may assign its rights hereunder in whole or in part, to (i) any entity or person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Optionee (an "Affiliate") or (ii) any director, officer, employee, representative or agent of Optionee or any of its Affiliates. Subject to the provisions of this Option, title to this Option may be transferred by endorsement and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery. (d) EXCHANGE OF OPTION UPON A TRANSFER. On surrender of this Option for exchange, properly endorsed and subject to the provisions of this Option with respect to compliance with the Securities Act of 1933, as amended (the "Act"), and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the Optionee a new Option or Options of like tenor, in the name of the Optionee or as the Optionee (on payment by the Optionee of any applicable transfer taxes) may direct, for the number of shares of Common Stock issuable upon exercise hereof. (e) COMPLIANCE WITH SECURITIES LAWS. (i) The Optionee of this Option, by acceptance hereof, acknowledges that this Option and the shares of Common Stock to be issued upon exercise hereof or conversion thereof are being acquired solely for the Optionee's own account and not as a nominee for any other party, and for investment, and that the Optionee will not offer, sell or otherwise dispose of this Option or any shares of Common Stock to be issued upon exercise hereof or conversion thereof except under circumstances that will not result in a violation of the Act or any state securities laws. Upon exercise of this Option, the Optionee shall, if requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the shares of Common Stock so purchased are being acquired solely for the Optionee's own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale. 6 (ii) This Option and all shares of Common Stock issued upon exercise hereof or conversion thereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS. The Company may place an appropriate stop transfer order with the Company's transfer agent with respect to the shares of Common Stock represented by such certificates. 8. REPLACEMENT OF OPTION. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Option and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Option, the Company at its expense shall execute and deliver, in lieu of this Option, a new option of like tenor and amount. 9. AMENDMENTS. (a) Any term of this Option may be amended only with the written consent of the Board and the Optionee. (b) No waivers of, or exceptions to, any term, condition or provision of this Option, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. 10. GOVERNING LAW. This Option shall be governed by and construed in accordance with the laws of the State of Colorado (without giving effect to the choice of law principles thereof). [SIGNATURE PAGE FOLLOWS] 7 IN WITNESS WHEREOF, the Company and the Optionee have caused this Option to be executed as of March 18, 2000. OPTIONEE: FOREST OIL CORPORATION RENTECH, INC. By:/s/ David H. Keyte By:/s/ Dennis L. Yakobson ---------------------------------- --------------------------------- David H. Keyte, Executive Dennis L. Yakobson, Vice President President 1600 Broadway, Suite 2200 Denver, Colorado 80202 RENTECH, INC. NOTICE OF EXERCISE OF STOCK OPTION ISSUED To: Rentech, Inc. 1331 17th Street, Suite 720 Denver, CO 80202 I hereby exercise my Option dated ______________________________ to purchase ____________________ shares of $.01 par value common stock of the Company at the option exercise price of $_______________ per share. Enclosed is a certified or cashier's check in the total amount of $_______________, or payment in such other form as the Company has specified and agreed to accept, which is described at the bottom of this notice. I represent to you that I am acquiring said shares for investment purposes and not with a view to any distribution thereof. I understand that my stock certificate may bear an appropriate legend restricting the transfer of my shares and that a stop transfer order may be placed with the Company's transfer agent with respect to such shares. I request that my shares be issued in the name of: _______________________________________________________________________________ (Print your name in the form in which you wish to have the shares registered) _______________________________________________________________________________ (Social Security Number) _______________________________________________________________________________ (Street and Number) _______________________________________________________________________________ (City) (State) (Zip Code) Optionee: Dated: ________________, 20____. _______________________________________ Signature: By:_____________________________ Authorized Agent -----END PRIVACY-ENHANCED MESSAGE-----