Exhibit 10.1.17
EXECUTIVE RETENTION AGREEMENT
AGREEMENT made and effective this ___ day of December, 1998 by and
between Terra Industries Inc., its subsidiaries and affiliates (the "Company")
and Xxxxxxx X. Xxxxxx, Xx. (the "Executive").
The Company has determined that both the Executive's performance and
the Company's ability to retain Executive as Chairman of the Board will be
significantly enhanced if Executive is provided with fair and reasonable
protection from the risks of a termination following a change in control of the
Company. Accordingly, the Company and Executive agree as follows:
1. Defined Terms.
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Unless otherwise indicated, capitalized terms used in this Agreement
shall have the meanings set forth in Schedule A.
2. Effective Date; Term.
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This Agreement shall be effective on the date hereof and shall remain
in effect until the Company terminates this Agreement by giving Executive at
least one (1) year advance written notice of termination. Notwithstanding the
foregoing, this Agreement shall, if in effect on the date of a Change of
Control, remain in effect for at least two (2) years following such Change of
Control, and such additional time as may be necessary to give effect to the
terms of the Agreement.
3. Change of Control Benefits.
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If Executive's position with the Company is terminated at any time
within the two (2) years following a Change of Control by the Company without
Cause, or by Executive for Good Reason (the effective date of any such
termination hereafter referred to as the "Termination Date"), Executive shall be
entitled to the benefits provided hereunder. If Executive's position with the
Company is terminated prior to a Change of Control at the request of any party
acquiring control of the Company, Executive's Termination Date shall be deemed
to have occurred immediately following the Change of Control, and the Executive
shall be entitled to the benefits provided herein.
(a) Payment. Company shall pay to Executive within ten (10) days of
termination five hundred thousand dollars ($500,000) in a lump sum.
(b) Payment of Accrued But Unpaid Amounts. Within seven (7) business
days after the Termination Date, Company shall pay Executive any unpaid
portion of compensation previously earned by Executive.
4. Mitigation.
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Executive shall not be required to seek other employment after
termination and any compensation earned from other employment shall not reduce
the amounts otherwise payable under this Agreement.
5. Taxes.
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In the event that the aggregate of all payments or benefits made or
provided to the Executive under this Agreement and under all other programs and
arrangements of the Company (the "Aggregate Payment") is determined to
constitute an "excess parachute payment," as such term is defined in Section
280G(b) of the Internal Revenue Code, the Company shall pay to the Executive
prior to the time any excise tax imposed by Section 4999 of the Internal Revenue
Code ("Excise Tax") is payable with respect to such Aggregate Payment, an
additional amount which, after the imposition of all income and excise taxes
thereon, is equal to the Excise Tax on the Aggregate Payment. The determination
of whether the Aggregate Payment constitutes an excess parachute payment and, if
so, the amount to be provided to the Executive and the time of payment pursuant
to this Section 5 shall be made by Deloitte & Touche or such other nationally
recognized public accounting firm selected by the Company (the "Auditor").
Notwithstanding the foregoing, in the event that the amount of the Executive's
Excise Tax liability is subsequently determined to be greater than the Excise
Tax liability with respect to which any initial payment to the Executive under
this Section 5 has been made, the company shall pay to the Executive an
additional amount (grossed up for all taxes), with respect to such additional
Excise Tax (and any interest and penalties thereon) at the time and in the
amount reasonably determined by the Auditor. Similarly, if the amount of the
Executive's Excise Tax liability is subsequently determined to be less than the
Excise Tax liability with respect to which any prior payment to the Executive
has been made under this paragraph 5, the Executive shall refund to the Company
the excess amount received, promptly after the Executive has received any
corresponding refund. The Executive and the Company shall cooperate with each
other in connection with any proceeding or claim relating to the existence or
amount of liability for Excise Tax, and all expenses incurred by the Executive
in connection therewith shall be paid by the Company promptly upon notice of
demand from the Executive.
6. Termination for Cause.
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Nothing in this Agreement shall be construed to prevent the Company
from terminating Executive's position for Cause. If Executive is terminated for
Cause, Company shall have no obligation to make any payments under this
Agreement, except for payment of compensation that may otherwise be payable.
7. Indemnification; Director's and Officer's Liability Insurance.
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Executive shall, after the Termination Date, retain all rights to
indemnification under applicable law or under the Company's Articles of
Incorporation or By-Laws, as they
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may be amended or restated from time to time. In addition, the Company shall
maintain Director's and Officer's liability insurance on behalf of Executive, at
the level in effect immediately prior to the Termination Date, for the two (2)
year period following the Termination Date, and throughout the period of any
applicable statute of limitations.
8. Executive Covenants.
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(a) Confidential Information. During the twelve (12) month period
following the Termination Date, Executive shall not disclose to any person,
or use to the significant disadvantage of any of the Company, any non-
public information relating to business plans, marketing plans, customers
or employees of the Company other than information the disclosure of which
cannot reasonably be expected to adversely affect the business of the
Company ("Confidential Information"), provided that nothing contained in
this Section 8 shall prevent Executive from being employed by, or serving
with, a competitor of the Company or utilizing Executive's general skills,
experience, and knowledge, including those developed while serving the
Company.
(b) Nondisclosure. Executive shall not disclose the existence of
this agreement or its terms to anyone except (i) those outside advisors of
Executive 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 protection and benefits
provided for under this Agreement, Executive hereby agrees to execute a
release substantially in the form of Schedule B.
9. Disputes.
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Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Sioux City, Iowa in
accordance with the Rules of the American Arbitration Association then in
effect. At the election of the Executive the arbitrators shall be a panel
consisting of Xxxxxx Xxxxx, Xxxxx Xxxxxxxx and Xxxxxxx Xxxxx, or such person or
persons selected by the American Arbitration Association in accordance with its
rules. Judgment may be entered on an arbitrator's award relating to this
Agreement in any court having jurisdiction.
10. Costs of Proceedings.
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The Company shall pay all costs and expenses, including attorneys'
fees and disbursements, at least monthly, of Executive in connection with any
legal proceeding (including arbitration), whether or not instituted by the
Company or Executive, relating to the interpretation or enforcement of any
provision of this Agreement, except that if Executive instituted the proceeding
and the judge, arbitrator or other individual presiding over the proceeding
affirmatively finds that Executive instituted the proceeding in bad faith,
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Executive shall pay all costs and expenses, including attorney's fees and
disbursements, of Executive.
11. Assignment.
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Except as otherwise provided herein, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Company and Executive
and their respective heirs, legal representatives, successors and assigns. If
the Company shall be merged into or consolidated with another entity, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the entity surviving such merger or resulting from such consolidation. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company, by agreement in form and substance satisfactory to
Executive, to expressly 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 had taken place. The provisions of this paragraph 11 shall
continue to apply to each successive employer of Executive hereunder in the
event of any merger, consolidation or transfer of assets of a successor
employer.
12. 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.
13. Entire Agreement.
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This Agreement constitutes the entire agreement between the parties
and, except as expressly provided herein, supersedes all other prior agreements
concerning the effect of a Change of Control on the relationship between the
Company and Executive. This Agreement may be changed only by a written agreement
executed by the Company and Executive.
* * *
The parties have executed this Agreement on the ___ day of December, 1998.
EXECUTIVE: TERRA INDUSTRIES INC:
_________________________ By:___________________________
Xxxxxxx X. Xxxxxx, Xx.
Its: ________________________
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Schedule A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms, when capitalized, have the meaning indicated:
"Cause" shall mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive
by the Board of Directors of the Company or any successor to the Company
(the "Board") which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. The
termination of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above and specifying
the particulars thereof in detail.
"Change of Control" shall mean any one of the following:
(i) any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereafter the "Exchange Act") or group of
persons acting in concert (other than Minorco, a company incorporated under
the laws of Luxembourg as a societe anonyme, and its affiliates or a group
consisting solely of such persons) acquires beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission
promulgated under the Exchange Act) of the outstanding securities of the
Company in an amount having, or convertible into securities having 25% or
more of the ordinary voting power for the election of directors of the
Company;
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(ii) during a period of not more than 24 months, a majority of the
Board of Directors of the Company ceases to consist of the existing
membership or successors nominated by the existing membership or their
similar successors;
(iii) shareholder approval of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 60% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation; or
(iv) shareholder approval of either (A) a complete liquidation or
dissolution of the Company or (B) a sale or other disposition of all or
substantially all of the assets of the Company, or a transaction having a
similar effect.
"Change of Control" shall not in any event mean any transaction which
results from the sale of part or all of the interests of Minorco and its
affiliates to the Company or a transaction in which the officers of the Company
acquire voting securities of the Company which represent more than 5% of the
combined voting power of the voting securities of the Company (such percentage
to be determined on a fully diluted basis, assuming the exercise of any stock
options granted such management in connection with the transaction).
"Good Reason" shall mean any of the following actions, without
Executive's express prior written approval, other than due to Executive's
permanent disability;
(1) any diminution in Executive's titles, duties, responsibilities or
status from the positions, duties, responsibilities or status existing
immediately prior to a Change of Control.
(2) the removal of Executive from, or any failure to re-elect
Executive to, any of the offices Executive held immediately prior to a
Change of Control;
(3) the failure of the Company to pay Executive any compensation when
due;
(4) any reduction of Executive's annual compensation;
For these purposes, permanent disability shall mean Executive's
inability, by reason of any physical or mental impairment, to substantially
perform regular duties which inability is reasonably contemplated to continue
for at least one (1) year from its incurrence.
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Schedule B
SAMPLE
GENERAL RELEASE
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For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the undersigned, with the intention of binding
himself/herself, his/her heirs, executors, administrators and assigns, does
hereby release and forever discharge Terra Industries Inc., a Maryland
corporation ("Company"), and its present and former officers, directors,
executives, agents, employees, affiliated companies, subsidiaries, successors,
predecessors and assigns (collectively the "Released Parties"), from any and all
claims, actions, causes of action, demands, rights, damages, debts, accounts,
suits, expenses, attorneys' fees and liabilities of whatever kind or nature in
law, equity, or otherwise, whether now known or unknown, which the undersigned
now has, owns or holds, or has at any time heretofore had, owned or held against
any Released Party, arising out of or in any way connected with the
undersigned's service relationship with the Company, its subsidiaries,
predecessors or affiliated entities, or the termination thereof, including
without limitation, any claim for severance, unpaid compensation, breach of
contract, wrongful discharge, impairment of economic opportunity, intentional
infliction of emotional harm or other tort or employment discrimination under
any applicable federal, state or local statute, provision, order or regulation
including but not limited to, any claim under Title VII of the Civil Rights Act
("Title VII"), the federal Age Discrimination in Employment Act ("ADEA") and any
similar or analogous state statute, excepting only (i) those obligations of the
Company under that certain Executive Retention Agreement between the Company and
the undersigned effective December ___, 1998 (the "Agreement"), pursuant to
which this General Release is being executed and delivered, and (ii) any rights
to indemnification the undersigned may have under applicable corporate law, the
by-laws or certificate of incorporation of any Released Party or as an insured
under any D & O or liability insurance policy now or previously in force.
The undersigned understands that by releasing discrimination claims
against the Released Parties, the undersigned also forever releases and
discharges any rights he may have to file or recover in a lawsuit he may bring
himself/herself on the same claims and also any right that he may have to any
relief that he might otherwise be entitled to as a result of any proceedings
instituted by the Equal Employment Opportunity Commission or any other
comparable enforcement authority or by the representative(s) of any class to
which it is alleged the undersigned may belong.
The undersigned acknowledges and agrees that neither the Agreement nor
this General Release is to be construed in any way as an admission of any
liability whatsoever by any Released Party under Title VII, ADEA, or any other
federal or state statute or the principles of common law, any such liability
having been expressly denied.
The undersigned further declares and represents that he has carefully
read and fully understands the terms of this General Release and the Agreement,
that he has been advised and had the opportunity to seek the advice and
assistance of counsel with
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regard to this General Release and the Agreement, that he may take up to and
including forty-five (45) days from receipt of this General Release, to consider
whether to sign this General Release, that he may revoke this General Release
within seven (7) calendar days after signing it by delivering to Company, at its
Sioux City, Iowa offices, written notification of revocation, and that he
knowingly and voluntarily, of his/her own free will, without any duress, being
fully informed and after due deliberate action, accepts the terms of and signs
the same as his/her own free act.
Dated: Signature:
_____________________________ __________________________
Xxxxxxx X. Xxxxxx, Xx.
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