EXHIBIT 10.13
CF
INDUSTRIES HOLDINGS, INC.
CHANGE IN CONTROL SEVERANCE
AGREEMENT
THIS AGREEMENT,
effective as of November 19, 2007, is made by and between CF
Industries Holdings, Inc., a Delaware corporation (the
“Company”), and Richard A. Hoker (the
“Executive”).
WHEREAS, the
Company considers it essential to the best interests of its
stockholders to foster the continued employment of key management
personnel; and
WHEREAS, the Board
recognizes that the possibility of a Change in Control exists and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Board
has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of
the Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
in Control;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein
contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms
. The definitions of capitalized terms used in this Agreement
are provided in the last Section hereof.
2. Term of
Agreement . The Term of this Agreement shall continue
through December 31, 2008; provided , however ,
that commencing on January 1, 2008 and each January 1
thereafter, the Term shall automatically be extended for one
additional year unless, not later than September 30 of the
preceding year, the Company or the Executive shall have given
notice not to extend the Term; and further provided ,
however , that if a Change in Control shall have occurred
during the Term, the Term shall expire no earlier than twenty-four
(24) months beyond the month in which such Change in Control
occurred.
3. Company’s
Covenants Summarized . In order to induce the Executive
to remain in the employ of the Company and in consideration of the
Executive’s covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to pay the
Executive the Severance Payments and the other payments and
benefits described herein. Except as provided in
Section 9.1 hereof, no Severance Payments shall be payable
under this Agreement unless there shall have been (or, under the
terms of the second sentence of Section 6.1 hereof, there
shall be deemed to have been) a termination of the
Executive’s employment with the Company following a Change in
Control and during the Term. This Agreement shall not be
construed as
CF
INDUSTRIES HOLDINGS, INC.
creating an express or
implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall
not have any right to be retained in the employ of the
Company.
4. The
Executive’s Covenants . The Executive agrees that,
subject to the terms and conditions of this Agreement, in the event
of a Potential Change in Control during the Term, the Executive
will remain in the employ of the Company until the earliest of
(i) a date which is six (6) months from the date of such
Potential Change in Control, (ii) the date of a Change in
Control, (iii) the date of termination by the Executive of the
Executive’s employment for Good Reason or by reason of death,
Disability or Retirement, or (iv) the termination by the
Company of the Executive’s employment for any
reason.
5. Compensation Other
Than Severance Payments.
5.1
Following a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive’s
full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the
Executive’s full salary to the Executive at the rate in
effect at the commencement of any such period, together with all
compensation and benefits payable to the Executive under the terms
of any compensation or benefit plan, program or arrangement
maintained by the Company during such period (other than any
disability plan), until the Executive’s employment is
terminated by the Company for Disability.
5.2
If the Executive’s employment shall be terminated for any
reason following a Change in Control and during the Term, the
Company shall pay the Executive’s full salary to the
Executive through the Date of Termination at the rate in effect
immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, together with all
compensation and benefits payable to the Executive through the Date
of Termination under the terms of the Company’s compensation
and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first
occurrence of an event or circumstance constituting Good
Reason.
5.3
If the Executive’s employment shall be terminated for any
reason following a Change in Control and during the Term, the
Company shall pay to the Executive the Executive’s normal
post-termination compensation and benefits as such payments become
due. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company’s
retirement, insurance and other compensation or benefit plans,
programs and arrangements as in effect immediately prior to the
Date of Termination or, if more favorable to the Executive, as in
effect immediately prior to the occurrence of the first event or
circumstance constituting Good Reason.
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INDUSTRIES HOLDINGS, INC.
6. Severance
Payments.
6.1
Subject to Section 6.2 hereof, if the Executive’s
employment is terminated following a Change in Control and during
the Term, other than (A) by the Company for Cause, (B) by
reason of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay the Executive the amounts,
and provide the Executive the benefits, described in this
Section 6.1 (“Severance Payments”), in addition to
any payments and benefits to which the Executive is entitled under
Section 5 hereof. For purposes of this Agreement, the
Executive’s employment shall be deemed to have been
terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason, if (i) the
Executive’s employment is terminated by the Company without
Cause prior to a Change in Control (whether or not a Change in
Control ever occurs) and such termination was at the request or
direction of a Person who has entered into an agreement with the
Company the consummation of which would constitute a Change in
Control, (ii) the Executive terminates his or her employment
for Good Reason prior to a Change in Control (whether or not a
Change in Control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of such
Person, or (iii) the Executive’s employment is
terminated by the Company without Cause or by the Executive for
Good Reason and such termination or the circumstance or event which
constitutes Good Reason is otherwise in connection with or in
anticipation of a Change in Control (whether or not a Change in
Control ever occurs).
(A)
In lieu of any
further salary payments to the Executive for periods subsequent to
the Date of Termination and in lieu of any severance benefit
otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to one times
the sum of (i) the Executive’s base salary as in effect
immediately prior to the Date of Termination or, if higher, in
effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, and (ii) the
Executive’s target annual bonus pursuant to any annual bonus
or incentive plan maintained by the Company in respect of the
fiscal year in which the Date of Termination occurs or, if higher,
the fiscal year in which the first event or circumstance
constituting Good Reason occurs.
(B)
For the twelve month
period immediately following the Date of Termination, the Company
shall arrange to provide the Executive and his or her dependents
life, disability, accident and health insurance benefits
substantially similar to those provided to the Executive and his or
her dependents immediately prior to the Date of Termination or, if
more favorable to the Executive, those provided to the Executive
and his or her dependents immediately prior to the first occurrence
of an event or circumstance constituting Good Reason, at no greater
after tax cost to the Executive than the after tax cost to the
Executive immediately prior to such date or occurrence;
provided , however , that, unless the Executive
consents to a different method, such health insurance benefits
shall be provided through a third-party insurer. Benefits
otherwise
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INDUSTRIES HOLDINGS, INC.
receivable by the Executive
pursuant to this Section 6.1(B) shall be reduced to the
extent benefits of the same type are received by or made available
to the Executive during the twelve month period following the
Executive’s termination of employment (and any such benefits
received by or made available to the Executive shall be reported to
the Company by the Executive); provided , however ,
that the Company shall reimburse the Executive for the excess, if
any, of the after tax cost of such benefits to the Executive over
such cost immediately prior to the Date of Termination or, if more
favorable to the Executive, the first occurrence of an event or
circumstance constituting Good Reason. If the Severance
Payments shall be decreased pursuant to Section 6.2 hereof,
and the Section 6.1(B) benefits which remain payable
after the application of Section 6.2 hereof are thereafter
reduced pursuant to the immediately preceding sentence, the Company
shall, no later than five (5) business days following such
reduction, pay to the Executive the least of (a) the amount of
the decrease made in the Severance Payments pursuant to
Section 6.2 hereof, (b) the amount of the subsequent
reduction in these Section 6.1(B) benefits, or
(c) the maximum amount which can be paid to the Executive
without being, or causing any other payment to be, nondeductible by
reason of section 280G of the Code.
(C)
In addition to the benefits to which the Executive is entitled
under each DC Pension Plan, the Company shall pay the Executive a
lump sum amount, in cash, equal to the sum of (1) the amount
that would have been contributed or allocated to each DC Pension
Plan by the Company on the Executive’s behalf (without regard
to whether such amount would be vested) during the year immediately
following the Date of Termination, determined (x) as if the
Executive made the maximum permissible contributions thereto during
such period, (y) as if the Executive earned compensation
during such period at a rate equal to the Executive’s
compensation (as defined in the DC Pension Plans) during the twelve
(12) months immediately preceding the Date of Termination or, if
higher, during the twelve months immediately prior to the first
occurrence of an event or circumstance constituting Good Reason,
and (z) without regard to any amendment to the DC Pension
Plans made subsequent to a Change in Control and on or prior to the
Date of Termination, which amendment adversely affects in any
manner the computation of benefits thereunder and (2) all
other amounts credited to the Executive’s account under each
DC Pension Plan to the extent such amounts were unvested on the
Date of Termination.
(D)
If the Executive would have become entitled to benefits under the
Company’s post-retirement health care or life insurance
plans, as in effect immediately prior to the Date of Termination
or, if more favorable to the Executive, as in effect immediately
prior to the first occurrence of an event or circumstance
constituting Good Reason, had the Executive’s employment
terminated at any time during the period of twelve months after the
Date of Termination, the Company shall provide such post-retirement
health care or life insurance benefits to the Executive and the
Executive’s dependents commencing on the later of
(i) the date on which such coverage would have first
become
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INDUSTRIES HOLDINGS, INC.
available and (ii) the
date on which benefits described in subsection (B) of this
Section 6.1 terminate. If the operation of this
Section 6.1(D) would result in adverse tax consequences
to the Executive as a result of the Executive’s participation
in the Company’s post-retirement health care or life
insurance plans, the Company shall instead provide substantially
similar benefits and coverage through a third party
insurer.
(E)
The Company shall provide the Executive with outplacement services
suitable to the Executive’s position for a period of one year
or, if earlier, until the first acceptance by the Executive of an
offer of employment.
(F)
Notwithstanding any provision of any annual or long-term incentive
plan to the contrary, the Company shall pay to the Executive a lump
sum amount, in cash, equal to the sum of (i) any unpaid
incentive compensation which has been allocated or awarded to the
Executive for a completed fiscal year or other measuring period
preceding the Date of Termination under any such plan and which, as
of the Date of Termination, is contingent only upon the continued
employment of the Executive to a subsequent date, and (ii) a
pro rata portion to the Date of Termination of the aggregate value
of all contingent incentive compensation awards to the Executive
for all then uncompleted periods under any such plan, calculated as
to each such award by multiplying the award that the Executive
would have earned on the last day of the performance award period,
assuming the achievement, at the target level (or, if greater,
based on actual results to Date of Termination), of the individual
and corporate performance goals established with respect to such
award, by the fraction obtained by dividing the number of full
months and any fractional portion of a month during such
performance award period through the Date of Termination by the
total number of months contained in such performance award
period.
6.2
(A)
Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the
Executive (including any payment or benefit received in connection
with a Change in Control or the termination of the
Executive’s employment, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement) (all such
payments and benefits, including the Severance Payments, being
hereinafter referred to as the “Total Payments”) would
not be deductible (in whole or part), by the Company, an affiliate
or Person making such payment or providing such benefit as a result
of section 280G of the Code, then, to the extent necessary to make
such portion of the Total Payments deductible (and after taking
into account any reduction in the Total Payments provided by reason
of section 280G of the Code in such other plan, arrangement or
agreement), the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other Severance Payments shall
thereafter be reduced (if necessary, to zero); provided ,
however , that the
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INDUSTRIES HOLDINGS, INC.
Executive may elect to have
the noncash Severance Payments reduced (or eliminated) prior to any
reduction of the cash Severance Payments.
(B)
For purposes of this limitation, (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have
waived at such time and in such manner as not to constitute a
“payment” within the meaning of section 280G(b) of
the Code shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of
tax counsel (“Tax Counsel”) reasonably acceptable to
the Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Company’s
independent auditor (the “Auditor”), does not
constitute a “parachute payment” within the meaning of
section 280G(b)(2) of the Code, including by reason of section
280G(b)(4)(A) of the Code, (iii) the Severance Payments
shall be reduced only to the extent necessary so that the Total
Payments (other than those referred to in clauses (i) or (ii))
in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section
280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions by reason of section 280G of the Code,
in the opinion of Tax Counsel, and (iv) the value of any
noncash benefit or any deferred payment or benefit included in the
Total Payments shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the
Code.
(C)
If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms
of this Section 6.2, the Total Payments paid to or for the
Executive’s benefit are in an amount that would result in any
portion of such Total Payments being subject to the Excise Tax,
then, if such repayment would result in (i) no portion of the
remaining Total Payments being subject to the Excise Tax and
(ii) a dollar-for-dollar reduction in the Executive’s
taxable income and wages for purposes of federal, state and local
income and employment taxes, the Executive shall have an obligation
to pay the Company upon demand an amount equal to the sum of
(i) the excess of the Total Payments paid to or for the
Executive’s benefit over the Total Payments that could have
been paid to or for the Executive’s benefit without any
portion of such Total Payments being subject to the Excise Tax; and
(ii) interest on the amount set forth in clause (i) of
this sentence at the rate provided in section 1274(b)(2)(B) of
the Code from the date of the Executive’s receipt of such
excess until the date of such payment.
6.3
The payments provided in subsections (A), (C) and (F) of
Section 6.1 hereof shall be made not later than the fifth day
following the date upon which the revocation period for the release
described in Section 6.6 expires; provided ,
however , that if the amounts of such payments, and the
limitation on such payments set forth in Section 6.2 hereof,
cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments to which the Executive is clearly entitled and shall pay
the remainder of such payments (together with interest on the
unpaid remainder (or on all such payments to the extent the Company
fails to make such payments when due) at 120% of the rate provided
in section 1274(b)(2)(B) of the Code) as soon as
the
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INDUSTRIES HOLDINGS, INC.
amount thereof can be
determined but in no event later than the thirtieth (30th) day
after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
the Company to the Executive, payable on the fifth (5th) business
day after demand by the Company (together with interest at 120% of
the rate provided in section 1274(b)(2)(B) of the Code).
At the time that payments are made under this Agreement, the
Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and
the basis for such calculations including, without limitation, any
opinions or other advice the Company has received from Tax Counsel,
the Auditor or other advisors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement)
. In the event necessary to comply with the provisions of
Section 409A of the Code and the guidance issued thereunder,
(a) reimbursements to Executive as a result of the operation
of Section 6.1(B) hereof shall be made not later than the
end of the calendar year following the year in which the
reimbursable expense is incurred and (b) if Executive is a
“specified employee” (within the meaning of
Section 409A(a)(2)(B)(i) of the Code), any reimbursements
to Executive as a result of the operation of 6.1(B) hereof
with respect to a reimbursable event within the first six months
following the Date of Termination shall be made as soon as
practicable following the date which is six months and one day
following the Date of Termination (subject to clause (a) of
this sentence).
6.4
The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any
issue hereunder relating to the termination of the
Executive’s employment, in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder. Such payments shall be
made within five (5) business days after delivery of the
Executive’s written requests for payment accompanied with
such evidence of fees and expenses incurred as the Company
reasonably may require. The Executive’s reimbursement
rights described in this Section 6.4 shall remain in effect
for the Executive’s lifetime, provided, that, in order for
the Executive to be entitled to reimbursement hereunder, the
Executive must submit the written reimbursement request described
above within 180 days following the date upon which the applicable
expense is incurred.
6.5
The Executive agrees that prior to and following the Date of
Termination, he or she shall retain in confidence any confidential
information known to him or her concerning the Company and its
Affiliates and their respe
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