Exhibit 10.1
INDEMNITY AGREEMENT
     This Indemnification Agreement (“Agreement”) is made as of July 1, 2006 by
and between Terra Industries Inc., a Maryland corporation, and «Name»
(“Indemnitee”).
RECITALS
     WHEREAS, highly competent persons have become more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation;
     WHEREAS, the Articles of Restatement (the “Charter”) and Amended and
Restated Bylaws (the “Bylaws”) of the Company require indemnification of the
officers and directors of the Company, and Indemnitee may also be entitled to
indemnification pursuant to the Maryland General Corporation Law (“MGCL”);
     WHEREAS, the Board of Directors of the Company (the “Board”) has determined
that, in order to attract and retain qualified individuals, the Company will
attempt to maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving the Company and its subsidiaries from
certain liabilities;
     WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons;
     WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company’s stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the future;
     WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they
will not be so indemnified;
     WHEREAS, this Agreement is a supplement to and in furtherance of the
Charter and Bylaws of the Company and any resolutions adopted pursuant thereto
and any liability insurance, and shall not be deemed a substitute therefor, nor
to diminish or abrogate any rights of Indemnitee thereunder;
     WHEREAS, Indemnitee does not regard the protection available under the
Company’s Charter, Bylaws and insurance as adequate in the present
circumstances, and may not be willing to serve as an officer or director without
adequate protection, and the Company desires Indemnitee to serve in such
capacity, Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that he be
so indemnified;

 

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     NOW, THEREFORE, in consideration of the promises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
     1. Services to the Company. Indemnitee will serve or continue to serve, at
the will of the Company, as an officer, director or key employee of the Company
for so long as Indemnitee is duly elected or appointed or until Indemnitee
tenders his resignation; however, this Agreement shall not impose any obligation
on Indemnitee or the Company to continue Indemnitee’s service to the Company
beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.
     2. Definitions. As used in this Agreement
     (a) A “Change in Control” shall be deemed to occur upon the earliest to
occur after the date of this Agreement of any of the following events:

  (i)   The acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act of 1934) of 20% or more
of either (A) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of this definition; or     (ii)   Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or     (iii)   Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another

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      entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or     (iv)   Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.

     (b) “Company” means Terra Industries Inc. and its successors, and shall
include, in the case of any merger or consolidation, in addition to the
resulting corporation and surviving corporation, any constituent corporation
(including any constituent of a constituent) absorbed in such consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, trustees, fiduciaries
or agents, so that if Indemnitee is or was a director, officer, employee,
trustee, fiduciary or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee, trustee, fiduciary or agent of another corporation, partnership, joint
venture, trust, employee benefit program or other enterprise, Indemnitee shall
stand in the same position under the provisions of this Agreement with respect
to the resulting or surviving corporation as Indemnitee would have with respect
to such constituent corporation if its separate existence had continued.

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     (c) “Corporate Status” describes the status of a person who is or was a
director, officer, employee, agent, trustee or fiduciary of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise which such person is or was serving at the request of the
Company.
     (d) “Disinterested Director” means a director of the Company who is not and
was not a party to the Proceeding in respect of which indemnification is sought
by Indemnitee.
     (e) “Enterprise” means the Company and any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise of which
Indemnitee is or was serving at the request of the Company as a director,
officer, employee, agent, trustee or fiduciary.
     (f) “Expenses” means all retainers, court costs, transcript costs, fees of
experts, witness fees, private investigators, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, fax transmission
charges, secretarial services, delivery service fees, reasonable attorneys’
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise participating
in, a Proceeding or in connection with seeking indemnification under this
Agreement. Expenses also shall include Expenses incurred in connection with any
appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.
     (g) “Independent Counsel” means a law firm, or a member of a law firm, that
is experienced in matters of relevant corporation law and neither presently is,
nor in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement.
     (h) “Losses” means all loss, liability, judgments, damages, amounts paid in
settlement, fines, penalties, interest, assessments, other charges or, with
respect to an employee benefit plan, excise taxes or penalties assessed with
respect thereto.
     (i) References to “other enterprise” shall include employee benefit plans;
references to “fines” shall include any excise tax assessed with respect to any
employee benefit plan; references to “serving at the request of the Company”
shall include any service as a director, officer, employee, trustee, fiduciary
or agent of the Company which imposes duties on, or involves services by, such
director, officer, employee, trustee,

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fiduciary or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner not opposed to the best interests of the Company and not in “bad faith”
as referred to under applicable law.
     (j) “Person” means an individual, entity, partnership, limited liability
company, corporation, association, joint stock company, trust, joint venture,
unincorporated organization, and a governmental entity or any department agency
or political subdivision thereof.
     (k) The term “Proceeding” shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, including any and all appeals, whether brought in the
right of the Company or otherwise and whether of a civil, criminal,
administrative or investigative nature and whether formal or informal, in which
Indemnitee was, is or will be involved as a party or otherwise by reason of or
relating to the fact that Indemnitee is or was a director, officer, employee,
agent, trustee or fiduciary of the Company, by reason of or relating to any
action taken by him or of any action on his part while acting as director,
officer, employee, agent, trustee or fiduciary of the Company, or by reason of
the fact that he is or was serving at the request of the Company as a director,
officer, employee, agent, trustee or fiduciary of another Enterprise, in each
case whether or not serving in such capacity at the time any Loss or Expense is
incurred for which indemnification, reimbursement, or advancement of Expenses
can be provided under this Agreement, including one initiated by an Indemnitee
to enforce his rights under this Agreement.
     (l) For purposes of Sections 3 and 4, the meaning of the phrase “to the
fullest extent permitted by law” shall include, but not be limited to:

  A.   to the fullest extent permitted by Section 2-418 of the MGCL or any
section that replaces or succeeds Section 2-418 with respect to such matters of
the MGCL, and     B.   to the fullest extent authorized or permitted by any
amendments to or replacements of the MGCL adopted after the date of this
Agreement that increase the extent to which a corporation may indemnify its
officers, directors, employees, agents, trustees, fiduciaries and other persons
acting or serving at the Company’s request.

     3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was
or is, or was or is threatened to be made, a party to or a witness or
participant in any Proceeding, other than a Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 3,
Indemnitee shall be indemnified against all Expenses and Losses to the fullest
extent permitted by law.

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     4. Indemnity in Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of this Section 4
if Indemnitee was or is, or was or is threatened to be made, a party to or a
participant in any Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified against all Expenses and Losses actually and reasonably incurred or
suffered by him or on his behalf in connection with such Proceeding or any
claim, issue or matter therein to the fullest extent permitted by law. No
indemnification for Expenses or Losses shall be made under this Section 4 in
respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged by a court to be liable to the Company, unless and only to the
extent that a court of appropriate jurisdiction shall determine upon application
that, despite the adjudication of liability but in view of all the relevant
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification, but any such indemnification shall be limited to Expenses.
     5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee was or is a party to (or a participant in) and is
successful, on the merits or otherwise, in defense of any Proceeding or in
defense of any claim, issue or matter therein, in whole or in part, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him in connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection with each successfully resolved claim, issue
or matter and any claim, issue or matter related to any claim, issue, or matter
on which the Indemnitee was successful. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
     6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.
     7. Exclusions. Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity in connection
with any claim made against Indemnitee:
     (a) for which payment has actually been made to or on behalf of Indemnitee
under any insurance policy or other indemnity provision, except with respect to
any excess beyond the amount paid under any insurance policy or other indemnity
provision; or
     (b) for an accounting of profits made from the purchase and sale (or sale
and purchase) by Indemnitee of securities of the Company within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provisions of state statutory law or common law; or

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     (c) in connection with any Proceeding (or any part of any Proceeding)
initiated or brought voluntarily by Indemnitee prior to a Change of Control
against the Company or its directors, officers, employees or other indemnitees,
unless (i) the Board of the Company authorized the Proceeding (or any part of
any Proceeding) prior to its initiation, or (ii) the Company provides
indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.
     8. Advances of Expenses. Notwithstanding any provision of this Agreement to
the contrary, the Company shall advance the Expenses reasonably incurred by
Indemnitee in connection with any Proceeding for which indemnification is or may
be available pursuant to this Agreement within 20 days after the receipt by the
Company of a statement or statements requesting such advances from time to time,
whether prior to or after final disposition of any Proceeding. Advances shall be
unsecured and interest free. Advances shall be made to the fullest extent
permitted by applicable law and without requiring a preliminary determination of
Indemnitee’s ultimate entitlement to indemnification under the other provisions
of this Agreement. Advances shall include any and all Expenses incurred pursuing
an action to enforce this right of advancement, including Expenses incurred
preparing and forwarding statements to the Company to support the advances
claimed. The Indemnitee shall qualify for advances solely upon the execution and
delivery to the Company of (a) a written affirmation by Indemnitee of
Indemnitee’s good faith belief that the standard of conduct necessary for
indemnification by the Company as authorized by law and by this Agreement has
been met and (b) a written undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that such standard of
conduct has not been met.
     9. Selection of Counsel. In the event the Company is obligated under
Section 8 hereof to pay, and pays the Expenses of any Proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such Proceeding, with counsel approved by Indemnitee, which approval shall
not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same Proceeding,
provided that (i) Indemnitee shall have the right to employ his counsel in any
such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
or (C) the Company shall not, in fact, have employed counsel approved by the
Indemnitee to assume the defense of such Proceeding, then the fees and expenses
of Indemnitee’s counsel shall be at the expense of the Company.
     10. Procedure for Notification and Defense of Claim.
     (a) Indemnitee shall, as a condition precedent to his right to be
indemnified under this Agreement, give the Company notice in writing as soon as
practicable of any claim made against Indemmitee for which indemnification will
or could be sought under this Agreement; provided, however, that a delay in
giving such notice shall not deprive Indemnitee of any right to be indemnified
under this Agreement unless, and then only to the extent that, such delay is
materially prejudicial to the defense of such claim. The

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omission to notify the Company will not relieve the Company from any liability
for indemnification which it may have to Indemnitee otherwise under this
Agreement. The Secretary of the Company shall, promptly upon receipt of such a
request for indemnification, advise the Board in writing that Indemnitee has
requested indemnification.
     (b) The Company will be entitled to participate in any Proceeding at its
own expense.
     11. Procedure Upon Application for Indemnification.
     (a) Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 10(a), a determination, if required by applicable law,
with respect to Indemnitee’s entitlement thereto shall be made in the specific
case: (i) if a Change in Control shall have occurred, by Independent Counsel in
a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of Disinterested Directors,
(B) if such a quorum cannot be obtained then by a majority vote of a committee
of the Board consisting solely of Disinterested Directors designated by a
majority vote of the Board in which directors who are parties to the Proceeding
in respect of which indemnification is sought may participate, (C) if a quorum
of the Board consisting of Disinterested Directors is not obtainable, and if a
majority vote of a committee of the Board consisting solely of Disinterested
Directors is not obtainable, or, even if obtainable such quorum of Disinterested
Directors, or such committee, by a majority vote so directs, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee or (D) if so directed by a majority of the members of the Board, by
the stockholders of the Company; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten
(10) days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee’s
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
     (b) In the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent
Counsel shall be selected as provided in this Section 11(b). If a Change in
Control shall not have occurred, the Independent Counsel shall be selected by
the Board or a committee of the Board consisting solely of Disinterested
Directors, by the vote required by applicable law for the selection of
Independent Counsel, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
in Control shall have occurred, the Independent Counsel shall be selected by

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Indemnitee (unless Indemnitee shall request that such selection be made by the
Board, in which event the preceding sentence shall apply), subject to approval
by the Board, or a committee thereof consisting solely of Disinterested
Directors, by the vote required by applicable law for the selection of
Independent Counsel, and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. Any such
approval by the Board or a committee thereof consisting solely of Disinterested
Directors, will not be unreasonably withheld and by such approval the Board or
committee shall be deemed to have joined in such selection. In either event,
Indemnitee or the Company, as the case may be, may, within ten (10) days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection;
provided, however, that such objection may be asserted only on the ground that
the Independent Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 2 of this Agreement, and the
objection shall set forth with particularity the factual basis for such
assertion. Absent a proper and timely objection, the person so selected (and, if
a Change in Control shall have occurred, approved by the Board or a committee
thereof consisting solely of Disinterested Directors) shall act as Independent
Counsel. If such written objection is so made and substantiated, the Independent
Counsel so selected may not serve as Independent Counsel unless and until such
objection is withdrawn or a court has determined that such objection is without
merit. If, within twenty (20) days after submission by Indemnitee of a written
request for indemnification pursuant to Section 10(a) hereof, no Independent
Counsel shall have been selected (and, if a Change in Control shall have
occurred, approved by the Board or a committee thereof consisting solely of
Disinterested Directors) and not objected to, either the Company or Indemnitee
may petition a court of competent jurisdiction for resolution of any failure by
the Board or a committee thereof to approve Indemnitee’s selection of
Independent Counsel after a Change in Control shall have occurred, or any
objection which shall have been made by the Company or Indemnitee to the other’s
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court
shall designate, and the person with respect to whom all failures to approve and
objections are so resolved or the person so appointed shall act as Independent
Counsel under Section 11(a) hereof. Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
     12. Presumptions and Effect of Certain Proceedings.
     (a) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption. Neither the failure of the
Company (including by its directors or independent legal counsel) to have made a
determination prior to the commencement of any action pursuant to this Agreement
that indemnification is proper in the circumstances because Indemnitee has

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met the applicable standard of conduct, nor an actual determination by the
Company (including by its directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct.
     (b) If the person, persons or entity empowered or selected under Section 11
of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within sixty (60) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a reasonable
time, not to exceed an additional thirty (30) days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided, further, that
the foregoing provisions of this Section 12(b) shall not apply if the
determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 11(a) of this Agreement.
     (c) Termination. The termination of any proceeding by judgment, order or
settlement does not create a presumption that Indemnitee did not meet the
requisite standard of conduct required under applicable law for indemnification.
     (d) Actions of Others. The knowledge and/or actions, or failure to act, of
any director, officer, agent, trustee, fiduciary or employee of the Enterprise
shall not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.
     13. Remedies of Indemnitee.
     (a) In the event that (i) a determination is made pursuant to Section 11 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8
of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 11(a) of this Agreement within sixty
(60) days after receipt by the Company of the request for indemnification, or
(iv) payment of indemnification is not made pursuant to Section 3, 4, 5, 6 or
the last sentence of Section 11(a) of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, or, if a determination is
required by law, within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an
adjudication (or, in the case of clause (i), to seek an adjudication) in an
appropriate court of the State of Maryland or in any other court of competent
jurisdiction of his entitlement to such indemnification or advancement of
Expenses; provided, that nothing contained in this Section 13 shall be deemed to
limit Indemnitee’s rights under Section 12(b). Alternatively, Indemnitee, at his
option, may seek an award in binding arbitration to be

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conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. The Company shall not oppose Indemnitee’s
right to seek any such adjudication or award in arbitration.
     (b) In the event that a determination shall have been made pursuant to
Section 11(a) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 13 shall be conducted in all respects as a de novo trial or
arbitration on the merits, and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 13 the Company shall have the burden of proving
Indemnitee is not entitled to indemnification or advancement of Expenses, as the
case may be.
     (c) If a determination shall have been made pursuant to Section 11(a) of
this Agreement that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee
of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the request
for indemnification or (ii) a prohibition of such indemnification under
applicable law.
     (d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 13 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement. The Company
shall indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after receipt by the Company of a
written request therefore) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action brought by Indemnitee for
indemnification or advance of Expenses from the Company under this Agreement,
under the Company’s Charter and Bylaws as in effect from time to time or under
any directors’ and officers’ liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses or insurance recovery,
as the case may be.
     14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
     (a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the Charter,
Bylaws, any agreement, a vote of stockholders or a resolution of directors, or
otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereto shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in Maryland law, whether by statute or judicial decision, permits
greater indemnification or advancement of Expenses than would be afforded
currently under the Charter, Bylaws and this Agreement, it is the intent of the

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parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right and
remedy shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other right or remedy.
     (b) The Company shall, from time to time, make the good faith determination
whether or not it is practicable for the Company to obtain and maintain a policy
or policies of insurance with reputable insurance companies providing the
directors, officers, employees, trustees, fiduciaries and agents of the Company
with coverage for losses from wrongful acts, or to ensure the Company’s
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. To the extent that
the Company maintains an insurance policy or policies providing liability
insurance for directors, officers, employees, trustees, fiduciaries and agents
of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee, trustee, fiduciary or agent
under such policy or policies. If, at the time of the receipt of a notice of a
claim pursuant to the terms hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
     (c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee against other persons or entities, and Indemnitee shall execute all
papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.
     (d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or for which advancement is provided
hereunder) hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise.
     (e) The Company’s obligation to indemnify or advance Expenses hereunder to
Indemnitee who is or was serving at the request of the Company as a director,
officer, employee, trustee, fiduciary or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from

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such other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise.
     15. Settlement. (a) The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding by the Indemnitee effected without the Company’s prior written
consent.
     (b) The Company shall not, without the prior written consent of Indemnitee,
consent to the entry of any judgment against Indemnitee or enter into any
settlement or compromise which (i) includes an admission of fault of Indemnitee,
any non-monetary remedy affecting or obligation of Indemnitee, or monetary Loss
for which Indemnitee is not indemnified hereunder or (ii) with respect to any
Proceeding with respect to which Indemnitee may be or is made a party, witness
or participant or may be or is otherwise entitled to seek indemnification
hereunder, does not include, as an unconditional term thereof, the full release
of Indemnitee from all liability in respect of such Proceeding, which release
shall be in form and substance reasonably satisfactory to Indemnitee.
     (c) Neither the Company nor Indemnitee shall unreasonably withhold its
consent to any proposed settlement.
     16. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a director or officer of the Company or as a
director, officer, employee, trustee, fiduciary or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which Indemnitee served at the request of the Company or (b) one
(1) year after the final termination of any Proceeding, including any and all
appeals, then pending in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 13 of this Agreement relating
thereto.
     17. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his heirs, executors and administrators.
     18. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to give
the maximum effect to the intent of the parties hereto; and (c) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

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     19. Enforcement.
     (a) The Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on it hereby in order to induce
Indemnitee to serve as a director or officer of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving as a
director or officer of the Company.
     (b) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral, written and implied, between the parties
hereto with respect to the subject matter hereof.
     20. Effectiveness of Agreement. This Agreement shall be effective as of the
date set forth on the first page and may apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee, trustee, fiduciary or other agent of the Company, or was
serving at the request of the Company as a director, officer, employee, trustee,
fiduciary or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, at the time such act or omission
occurred.
     21. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions of this Agreement nor shall
any waiver constitute a continuing waiver.
     22. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any Proceeding or matter
which may be subject to indemnification or advancement of Expenses covered
hereunder. The failure of Indemnitee to so notify the Company shall not relieve
the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise.
     23. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
(a) if delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (b) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
     (a) If to Indemnitee, at the address indicated on the signature page of
this Agreement, or such other address as Indemnitee shall provide to the
Company.
     (b) If to the Company to
Terra Industries Inc.
600 Fourth Street
Sioux City, IA 51101
Attention: General Counsel

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or to any other address as may have been furnished to Indemnitee by the Company.
     24. Contribution. To the fullest extent permissible under applicable law,
if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
Losses and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all of the circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Company and Indemnitee as a
result of the event(s) and/or transaction(s) giving cause to such Proceeding;
and/or (ii) the relative fault of the Company (and its directors, officers,
employees, trustees, fiduciaries and agents) and Indemnitee in connection with
such event(s) and/or transaction(s).
     25. Applicable Law and Consent to Jurisdiction. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Maryland.
     26. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced to evidence the existence of this Agreement.
     27. Miscellaneous. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate. The headings of the paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof. The
term including shall mean including without limitation.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the day and year first above written.

                TERRA INDUSTRIES INC.
 
INDEMNITEE
 
       
 
       
By:
      By:    
 
        Name:
Address:
 
  Name:       «Name»
Address:

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