Contract
Exhibit 10.1.31
Tier One Agreement
Tier One Agreement
AMENDMENT NUMBER ONE (the “Amendment”), dated as of [•],
between Terra Industries Inc., a Maryland corporation (the
“Company”), and [NAME] (the “Executive”), to the
Employment Severance Agreement (the “Employment Severance
Agreement”), dated as of October 5, 2006, between the Company and the
Executive.
WHEREAS the Company and the Executive wish to amend the Employment Severance Agreement in
order to address the requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. Amendment to Section 4(b)(iii). Section 4(b)(iii) shall be deemed to
have been deleted and the following clause shall be deemed to have been inserted in its
place:
“(iii) For purposes of this Agreement, “Good Reason” means (A) during the period prior
to a Change in Control and during the period following the second anniversary thereof (each such
period, a “Non-CIC Period”), the occurrence of any of the events or circumstances set forth
in clauses (1) and (2) below and (B) during the two-year period following a Change in Control (the
“CIC Period”), the occurrence of any of the events or circumstances set forth in clauses
(1) through (8) below, in each such case during the Term, without the Executive’s express prior
written consent and other than as a result of the Executive’s Permanent Disability:
(1) the failure of the Company to pay the Executive any compensation when due (other than an
inadvertent failure that is remedied within ten business days after receipt of notice thereof given
by the Executive);
(2) delivery by the Company or any Subsidiary of a notice to the Executive of the intent to
terminate the Executive’s employment for any reason, other than for Cause or Permanent Disability,
in each case in accordance with this Agreement, regardless of whether such termination is intended
to become effective during or after the Term;
(3) a reduction of the Executive’s Base Salary by 10% or more from the level in effect
immediately prior to the Change in Control;
(4) the change of the Executive’s principal place of employment to a location more than 50
miles from Executive’s principal place of employment immediately prior to the change;
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(5) an reduction in the Executive’s Target Bonus by 10% or more from the level in effect
immediately prior to the Change in Control;
(6) any material diminution in the Executive’s titles, duties, responsibilities or status
from the positions, duties, responsibilities or status existing immediately prior to the Change in
Control;
(7) the removal of the Executive from, or any failure to re-elect the Executive to, any of
the offices the Executive held immediately prior to the Change in Control; or
(8) any material reduction in Executive’s retirement, insurance or fringe benefits from the
levels in effect immediately prior to the Change in Control.
A termination of employment by the Executive for Good Reason for purposes of this Agreement shall
be effectuated by giving the Company written notice (“Notice of Termination for Good
Reason”), not later than 90 days following the occurrence of the circumstance that constitutes
Good Reason, setting forth in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive
relied. The Company shall be entitled, during the 30-day period following receipt of a Notice of
Termination for Good Reason, to cure the circumstances that gave rise to Good Reason, provided that
the Company shall be entitled to waive its right to cure or reduce the cure period by delivery of
written notice to that effect to the Executive (such 30-day or shorter period, the “Cure
Period”). If, during the Cure Period, such circumstance is remedied, the Executive will not
be permitted to terminate employment for Good Reason as a result of such circumstance. If, at the
end of the Cure Period, the circumstance that constitutes Good Reason has not been remedied, the
Executive will be entitled to terminate employment for Good Reason during the 30-day period that
follows the end of the Cure Period. If the Executive does not terminate employment during such
30-day period, the Executive will not be permitted to terminate employment for Good Reason as a
result of such event. If the Company disputes the existence of Good Reason, the Company shall have
the burden of proof to establish that Good Reason does not exist or that the circumstances that
gave rise to Good Reason have been cured.”
SECTION 2. Amendment to Section 4(c)(ii). The following sentence shall be deemed to
have been added to the end of Section 4(c)(ii):
“Notwithstanding the foregoing, the lump-sum payment described in this Section 4(c)(ii) shall
be paid, if at all, not later than the 74th day following the Termination Date.”
SECTION 3. Amendment to Section 4(d)(ii). The following sentence shall be deemed to
have been added to the end of Section 4(d)(ii):
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“Notwithstanding the foregoing, the lump-sum payment described in this Section 4(d)(ii) shall
be paid, if at all, not later than the 74th day following the Termination Date.”
SECTION 4. Amendment to Section 4(e)(ii). Section 4(e)(ii) shall be deemed to have
been deleted and the following paragraph shall be deemed to have been inserted in its place:
“(ii) Commencing on the Termination Date and ending on the second anniversary thereof or, if
earlier, the date on which the Executive becomes employed by a new employer, the Company shall, at
its expense (subject to the Executive’s payment of the normal premium, if any, then in effect at
the time of payment for employees generally), provide the Executive with medical and dental
benefits at the level provided to the Company’s active employees during such period;
provided, however, that if the Executive becomes employed by a new employer that
maintains a major medical plan that either (A) does not cover the Executive with respect to a
preexisting condition which was covered under the Company’s major medical plan, or (B) does not
cover the Executive for a designated waiting period, the Executive’s coverage under the Company’s
major medical plan shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the earlier of the end of the
applicable period of noncoverage under the new employer’s plan or the second anniversary of the
Termination Date. Notwithstanding the foregoing, in the event that the Release Effective Date does
not occur on or prior to the 74th day following the Termination Date, the Executive shall forfeit
all future rights to receive medical and dental benefits at the level provided to the Company’s
active employees and shall be required to reimburse the Company for the portion of the premiums (or
premium equivalents) paid on the Executive’s behalf by the Company following the Termination Date.
Except as specifically permitted by Section 409A of the Code and the regulations thereunder as in
effect from time to time (collectively, hereinafter, “Section 409A”), the medical and
dental benefits provided to the Executive during any calendar year will not affect the medical and
dental benefits to be provided to the Executive in any other calendar year. Nothing contained
herein shall adversely affect the Executive’s rights under COBRA.”
SECTION 5. Amendment to Section 5. The following new Section 5(e) shall be deemed to
have been added to the end of Section 5:
“(e) Any 280G Gross-Up Payment that the Executive becomes entitled to pursuant to this Section
5 will be paid to the Executive (or to the applicable taxing authority on the Executive’s behalf)
not later than the last day of the calendar year after the calendar year in which the applicable
Excise Tax is paid.”
SECTION 6. Amendment to Section 13. Section 13 shall be deemed to have been deleted
and the following clause shall be deemed to have been inserted in its place:
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“SECTION 13. Section 409A of the Code. (a) It is intended that the provisions of
this Agreement comply with Section 409A, and all provisions of this Agreement shall be construed
and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under
Section 409A.
(b) Neither the Executive nor any of the Executive’s creditors or beneficiaries shall have the
right to subject any deferred compensation (within the meaning of Section 409A) payable under this
Agreement or under any other plan, policy, arrangement or agreement of or with the Company or any
of its Affiliates (this Agreement and such other plans, policies, arrangements and agreements, the
“Company Plans”) to any anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred
compensation (within the meaning of Section 409A) payable to the Executive or for the Executive’s
benefit under any Company Plan may not be reduced by, or offset against, any amount owing by the
Executive to the Company or any of its Affiliates.
(c) If, at the time of the Executive’s separation from service (within the meaning of Section
409A), (i) the Executive shall be a specified employee (within the meaning of Section 409A and
using the identification methodology selected by the Company from time to time) and (ii) the
Company shall make a good faith determination that an amount payable under a Company Plan
constitutes deferred compensation (within the meaning of Section 409A) the payment of which is
required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to
avoid taxes or penalties under Section 409A, then the Company (or its Affiliate, as applicable)
shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such
amount and pay it, without interest, on the first business day after such six-month period.
(d) Notwithstanding any provision of this Agreement or any Company Plan to the contrary, in
light of the uncertainty with respect to the proper application of Section 409A, the Company
reserves the right to make amendments to any Company Plan as the Company deems necessary or
desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, except as
provided in Section 5, the Executive shall be solely responsible and liable for the satisfaction of
all taxes and penalties that may be imposed on the Executive or for the Executive’s account in
connection with any Company Plan (including any taxes and penalties under Section 409A), and
neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise
hold the Executive harmless from any or all of such taxes or penalties.”
SECTION 7. Governing Law; Construction. This Amendment shall be deemed to be made in
the State of Iowa, and the validity, interpretation, construction and performance of this Amendment
in all respects shall be governed by the laws of the State of Iowa without regard to its principles
of conflicts of law. No provision of this Amendment or any related document shall be construed
against or interpreted to the disadvantage of any party hereto by any court or other governmental
or judicial authority by reason of such party’s having or being deemed to have structured or
drafted such provision.
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SECTION 8. Effect of Amendment. Except as expressly set forth herein, this Amendment
shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect
the rights and remedies of the parties to the Employment Severance Agreement, and shall not alter,
modify, amend or in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Employment Severance Agreement, all of which shall continue in full
force and effect. This Amendment shall apply and be effective only with respect to the provisions
of the Employment Severance Agreement specifically referred to herein. After the date hereof, any
reference to the Employment Severance Agreement shall mean the Employment Severance Agreement as
modified hereby.
SECTION 9. Counterparts. This Amendment may be executed in one or more counterparts
(including via facsimile), each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party.
IN WITNESS WHEREOF, this Amendment has been executed by the parties as of the date first
written above.
| TERRA INDUSTRIES INC., | ||||||
| by | ||||||
| Name: | ||||||
| Title: | ||||||
| EXECUTIVE, | ||||||
| [NAME] | ||||||
