RETIREMENT AND CONSULTING AGREEMENT
This Retirement and Consulting Agreement ("Agreement") made and entered
into this 26th day of April, 2001, by and between XXXXXX X. XXXXX, hereinafter
referred to as "Executive", and TERRA INDUSTRIES INC., a Maryland corporation
having offices at 000 Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxx 00000, which, including
its subsidiary and affiliate companies, is hereinafter referred to as "Company"
or "Terra".
WHEREAS, the parties agree that Executive will retire from active
employment with Terra as set forth below; and
WHEREAS, the parties desire that the Executive provide certain consulting
services during the term of this Agreement; and
WHEREAS, the parties desire that Executive be provided certain payments and
other benefits in connection with such retirement and as consideration for such
consulting services.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Retirement; Employment Termination
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Executive agrees to retire effective April 26, 2001 and hereby resigns
as President and Chief Executive Officer of Terra as of such date.
Executive agrees to serve as a director of the Company and as
Vice-Chairman of the Board of Directors for a one-year period commencing on
the date of the annual meeting of shareholders of the Company on April 26,
2001. Executive also agrees to serve as Chairman of the Board of Directors
of Terra Nitrogen Corporation for a one year period. Executive's membership
and offices on these Boards of Directors may be extended by mutual
agreement.
2. Payments/Benefits
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a. Consulting Payments. As consideration for Executive's consulting
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services described in Section 4 hereof, the Company shall pay
Executive $550,000 in four equal quarterly installments on August
1, 2001, November 1, 2001, February 1, 2002, and May 1, 2002. The
Company shall also pay Executive $550,000 per year for the
balance of the consulting period, such payments to be made on
June 1, 2002, June 1, 2003, June 1, 2004, and June 1, 2005.
b. Retirement Benefits. Executive agrees to elect joint and survivor
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benefits under the Retirement Plan of Terra Industries Inc. (the
"Qualified Plan") and under the Terra Industries Inc. Excess
Benefit Plan (the "SERP") commencing May 1, 2004. The Company
agrees to pay Executive, and his surviving spouse in the case of
his death,
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during each month in which payments are made to either of them
pursuant to the Company's Qualified Plan and SERP, an amount
equal to $30,000 less the sum of the payments payable from these
two plans during that month.
c. Health Insurance Benefits. Executive shall be provided with
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medical and dental insurance benefits (subject to Executive's
payment of any contribution to the cost of such benefits required
from employees of the Company generally) at substantially the
level provided to Executive prior to the retirement effective
date until May 1, 2004. After that date Executive shall qualify
for the Company's retiree medical and dental benefits program
based on credited service of 17.8 years.
d. Life and Other Insurance Benefits. Executive shall be provided
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with insurance coverage under the Company's Basic and Optional
Life Insurance Plans, Accidental Death and Dismemberment Plan,
and Short- and Long-Term Disability Plans (subject to Executive's
payment of any contribution to the cost of such insurance
coverage required from employees of the Company generally) at
substantially the levels provided to Executive prior to
retirement until May 1, 2004.
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e. Restricted Stock and Stock Options. Executive's
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previously-granted stock options and restricted stock shall
continue to vest according to their terms for a period of 12
months after the effective date of his retirement, at which time
all outstanding but unvested restricted stock and stock options
shall immediately vest. All of Executive's stock options shall be
exercisable until May 1, 2003.
f. Reimbursement of Office Expenses. The Company agrees to reimburse
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the Executive up to $65,000 for the cost of secretarial services
and office space at a location other than Terra Centre for a
three-year period until May 1, 2004.
3. Executive Retention Agreement
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Upon execution of this Agreement by Executive and Company, the
parties' Executive Retention Agreement dated December 31, 1998 shall
terminate and be null and void. Executive acknowledges that no change of
control or other event has occurred to trigger a payment of benefits to
Executive under the Executive Retention Agreement or any other agreement or
benefit plan. However, the Company agrees to reimburse Executive on a
grossed-up basis in the event any excise tax becomes payable by him under
Section 4999 of the Internal Revenue Code with respect to any payments made
hereunder.
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4. Consulting Services
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Executive Agrees to provide consulting services to the Company for a
five-year period commencing on April 26, 2001, the effective date of his
retirement. Executive shall consult with the Company with respect to
strategic issues, capital structure, mergers and acquisitions, and other
issues as requested by the Company's Board of Directors and the President
and Chief Executive Officer. Terra shall pay all reasonable and documented
travel or related expenses incurred by Executive in connection with the
provision of such services. The consulting period may be terminated by
either party effective May 1, 2004. In the event of such termination, the
Company shall pay the Executive $1,100,000 in a lump sum on June 1, 2004 in
satisfaction of all remaining consulting fee payments hereunder.
5. Executive Covenants
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a. Confidentiality. Executive acknowledges that during his
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employment with Terra he has seen, worked with, and had access to
information relating to employees employed by Terra and its
subsidiaries, and other information relating to Terra's business
not available to the general public ("Confidential Information").
Executive agrees that he shall not disclose any Confidential
Information to any third party or
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use or disclose the Confidential Information or his knowledge
thereof in working for future clients or employers. The term
"Confidential Information" shall include only information
relating specifically to Terra's products, business or employees
not available to the general public and shall not include
general, publicly-available information. Executive certifies that
upon termination of his consultancy with Terra he will take no
papers, records or documents of any kind containing or referring
to Confidential Information.
b. Nondisclosure. Neither Executive nor the Company shall disclose
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the existence of this Agreement or its terms to anyone except (i)
those outside advisors of Executive and Company which have a need
to know such information for tax or other planning purposes or
(ii) as is necessary for the enforcement of this Agreement or
(iii) as required by law.
c. Release. In consideration for the promises made by the parties
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and the payments to be made by Terra under this Agreement, the
sufficiency of which is hereby acknowledged, Executive, with the
intention of binding himself, his heirs, executors and assigns,
hereby releases and forever discharges Terra and any entity
related to Terra, as well as its or their predecessors,
successors and assigns,
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officers, directors, attorneys, agents, representatives, and
employees, past, present and future, individually and
collectively, from any and all claims, demands, causes of actions
or liabilities, which Executive ever had, or now has, or may have
upon or by reason of any matter, cause or thing whatsoever,
whether known or unknown, suspected or unsuspected, arising out
of or in any way connected with his employment and/or the
termination thereof. Without limiting the generality of the
foregoing, this release applies to any right which Executive has
or may have to commence or maintain a charge or action alleging
discrimination under any federal, state or local statute (whether
before a court or an administrative agency), including the Age
Discrimination in Employment Act of 1967, Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act of 1990,
and the Employee Retirement Income Security Act of 1974, and any
right which Executive has or may have to commence or maintain a
claim or action alleging wrongful termination, breach or
contract, defamation, commission of tort, or any combination
thereof, whether based in law or in equity. Executive agrees not
to make, assert or maintain any charge, claim, demand or action
which would be covered by
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this release. If Executive breaches this provision, he agrees to
indemnify Terra against all liability, costs and expenses,
including reasonable attorneys' fees, related to such breach.
6. ADEA Waiver and Full Understanding of Terms
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Executive acknowledges that this Agreement includes a waiver of any
rights and claims arising under the Age Discrimination in Employment Act of
1967. Executive understands he is not waiving rights or claims that may
arise after the date this Agreement is executed. Executive acknowledges
that the consideration he is receiving in exchange for his waiver of the
rights and claims specified herein exceeds anything of value to which he
already is entitled. Executive acknowledges that he was advised to consult
with an attorney prior to executing this Agreement. Executive acknowledges
that he has entered into this Agreement knowingly and voluntarily with full
understanding of its terms and after having had the opportunity to seek and
receive advice and counsel from his attorney. Executive acknowledges that
he was given a period of at least twenty-one (21) days within which to
consider this Agreement and has waived said period. Executive understands
that he may revoke this Agreement during the seven (7) days following the
execution of this Agreement and that the Agreement shall not become
effective or enforceable until that seven (7) day revocation period has
expired.
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7. Withholding
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Notwithstanding any other provision hereof, the Company may, to the
extent required by law, withhold applicable federal, state and local income
and other taxes from any payments due to Executive hereunder.
8. Memberships/Company Assets
--------------------------
Executive will relinquish any corporate-paid memberships, except where
pre-paid, held in his name at the effective day of his retirement.
Executive will also return to the Company any Company-owned assets in his
possession at the end of the consulting period described in this Agreement.
9. Applicable Law
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa applicable to contracts made and to be
performed therein.
10. Arbitration
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Any dispute or controversy between the Company and the Executive,
whether arising out of or relating to this Agreement or otherwise, shall be
settled by arbitration administered in Sioux City, Iowa in accordance with
the Commercial Arbitration Rules of the American
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Arbitration Association then in effect, and judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction. The
Company shall pay the cost of any arbitration conducted hereunder.
11. Attorney Fees
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The Company shall reimburse the Executive for any reasonable attorney
fees incurred by him in connection with his pursuing or defending (or
preparing to pursue or defend), whether in arbitration or litigation, any
claim or dispute involving the interpretation and performance of this
Agreement.
12. Successors.
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The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, expressly,
absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken
place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor or assign to its business and/or
assets as aforesaid which executes and delivers the agreement provided for
in this Section 12 or which becomes bound by all
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the terms and provisions of this Agreement by operation of law or
otherwise.
13. Entire Agreement
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This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and, except as expressly provided
herein, supersedes all other agreements concerning employment termination
between the Company and Executive. This Agreement may be changed only by a
written agreement executed by the Company and Executive.
* * *
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WHEREFORE, the parties have executed this Agreement on the 26th day of
April, 2001.
EXECUTIVE: TERRA INDUSTRIES INC:
/s/ X. X. Xxxxx /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxx By:
4/26/01 4/26/01
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Date Date
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