AMENDED AND RESTATED GENERAL AND ADMINISTRATIVE SERVICES AGREEMENT REGARDING SERVICES BY TERRA INDUSTRIES INC.
Exhibit 10.1
AMENDED AND RESTATED GENERAL AND ADMINISTRATIVE
SERVICES AGREEMENT REGARDING
SERVICES BY TERRA INDUSTRIES INC.
SERVICES AGREEMENT REGARDING
SERVICES BY TERRA INDUSTRIES INC.
THIS AMENDED AND RESTATED GENERAL AND ADMINISTRATIVE SERVICES AGREEMENT (the “Agreement”) is
entered into on October 23, 2007 (the “Effective Date”) by and between TERRA INDUSTRIES INC., a
Maryland corporation (“Terra”), TERRA NITROGEN CORPORATION, a Delaware corporation (the “Prior
General Partner”) and TERRA NITROGEN GP INC., a Delaware corporation (the “General Partner”).
WHEREAS, Terra and the Prior General Partner were parties to that certain General and
Administrative Services Agreement Regarding Services By Terra Industries Inc., dated as of January
1, 1995 (the “Terra Services Agreement”).
WHEREAS, Terra and the Prior General Partner were parties to that certain General and
Administrative Services Agreement Regarding Services By the Prior General Partner, dated as of
January 1, 1995 (the “TNC Services Agreement”).
WHEREAS, in connection with the Restructuring, Terra, the General Partner and the Prior
General Partner entered into, as of September 1, 2005, the First Amendment to the General and
Administrative Services Agreement Regarding Services By Terra Industries Inc., such that the
General Partner would become a party to the Terra Services Agreement.
WHEREAS, in connection with the Restructuring, Terra, the General Partner and the Prior
General Partner entered into, as of September 1, 2005, the First Amendment to the General and
Administrative Services Agreement Regarding Services By Terra Nitrogen Corporation, such that the
General Partner would become a party to the TNC Services Agreement.
If to Terra:
|
Terra Industries Inc. | |
Terra Centre | ||
000 Xxxxxx Xxxxxx | ||
X.X. Xxx 0000 | ||
Xxxxx Xxxx, Xxxx 00000-0000 | ||
Attention: General Counsel | ||
Telecopier: (000) 000-0000 | ||
If to the General Partner:
|
Terra Nitrogen GP Inc. | |
c/o Terra Industries Inc. | ||
Terra Centre | ||
000 Xxxxxx Xxxxxx | ||
X.X. Xxx 0000 | ||
Xxxxx Xxxx, Xxxx 00000-0000 | ||
Attention: General Counsel | ||
Telecopier: (000) 000-0000 | ||
If to the Prior General Partner:
|
Terra Nitrogen Corporation | |
c/o Terra Industries Inc. | ||
Terra Centre | ||
000 Xxxxxx Xxxxxx | ||
X.X. Xxx 0000 | ||
Xxxxx Xxxx, Xxxx 00000-0000 | ||
Attention: General Counsel | ||
Telecopier: (000) 000-0000 |
Notice given by personal delivery, mail or overnight courier shall be effective upon actual
receipt by the person to whom addressed. Notice given by telecopier shall be effective upon actual
receipt if received during the recipient’s normal business hours, or at the beginning or the
recipient’s next business day after receipt if not received during normal business hours. Any
party may change any address to which Notice is to be given to it by giving Notice as provided
above of such change of address.
TERRA INDUSTRIES INC. |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | President and CEO | |||
TERRA NITROGEN GP INC. |
||||
By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
Name: | Xxxxxx X. Xxxxxxxxx | |||
Title: | Vice President and Chief Accounting Officer | |||
TERRA NITROGEN CORPORATION |
||||
By: | /s/ Xxxx X. Xxxx | |||
Name: | Xxxx X. Xxxx | |||
Title: | Vice President, General Counsel and Corporate Secretary | |||
EXHIBIT A
TERRA INDUSTRIES INC.
EXPENSE ALLOCATION
EXPENSE ALLOCATION
General
Terra Industries Inc. (“Terra”) shall incur or pay the selling, general and administrative expenses
relating to Terra’s nitrogen and methanol operations, as well as the operations of the
Partnerships, and allocate such expenses as described below.
Allocation Overview
1. Selling, general and administrative expenses incurred or paid by Terra that are specifically
identifiable to the Partnership shall be charged directly to the Partnership. These direct expenses
include, but are not limited to, board of director fees, filing fees, costs associated with K-1
administration and other similar direct expense items. Selling, general and administrative expenses
that are specifically identifiable as non-Partnership related expenses shall not be included in the
selling expense allocation.
2. Selling expenses incurred or paid by Terra (other than the direct charges described in paragraph
1 above) shall be allocated between the Partnership and Terra based on the one-factor formula
described below. Selling expenses are generally categorized as relating to the following
departments — Operating Administration, Ag Sales, Industrial Sales, Customer Service, Distribution
and Supply. These department names may change from time to time.
3. General and administrative expenses incurred or paid by Terra (other than the direct charges
described in paragraph 1 above) pertaining to Terra’s nitrogen operations shall be allocated
between the Partnership and Terra based upon a three-factor formula described below. General and
administrative expenses are generally categorized as relating to the following departments —
Executive, Legal, Human Resources, Financial Services, Information Systems and Office Services.
These department names may change from time to time.
One-Factor Allocation Formula
The one-factor formula referenced in the allocation process described above uses total revenues as
the sole factor. A sample allocation formula is presented here for illustration purposes:
Partnership | Terra | Total | ||||||||||
Total revenue dollars (millions) |
$ | 500 | $ | 1250 | $ | 1750 | ||||||
% to total |
29 | % | 71 | % | 100 | % |
Three-Factor Allocation Formula
The three-factor formula referenced in the allocation process described above uses (1) headcount,
(2) total revenues, and (3) net book value of property, plant and equipment as the allocation
factors. Each allocation factor receives an equal weighting in calculating the allocation
percentage for the various entities. A sample allocation formula is presented here for illustration
purposes:
Partnership | Terra | Total | ||||||||||
Headcount |
100 | 400 | 500 | |||||||||
% to total |
20 | % | 80 | % | 100 | % | ||||||
Total revenue dollars (millions) |
$ | 500 | $ | 1250 | $ | 1750 | ||||||
% to total |
29 | % | 71 | % | 100 | % | ||||||
Net book value — PPE (millions) |
$ | 75 | $ | 450 | $ | 525 | ||||||
% to total |
14 | % | 86 | % | 100 | % | ||||||
Allocation factor |
21 | % | 79 | % | 100 | % | ||||||
(sum of %’s divided by 3) |