Exhibit 10.7


 


CHANGE IN CONTROL SEVERANCE AGREEMENT


 


THIS
AGREEMENT, effective as of August 11, 2005, is made by and between CF
Industries Holdings, Inc., a Delaware corporation (the “Company”), and
David J. Pruett (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.  This
Agreement shall not become effective, and the Term of this Agreement shall not
commence, unless and until the Company’s initial public offering of its common
stock has closed and public trading in its common stock has commenced on the
New York Stock Exchange or NASDAQ.  Once
in effect, the Term shall continue in effect through December 31, 2007; provided,
however, that commencing on January 1, 2007 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
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


 


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immediately prior to the occurrence of the first event or circumstance
constituting Good Reason.


 


6.             Severance Payments.


 


6.1           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”) and Section 6.2, 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 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).  For purposes of
any determination regarding the applicability of the immediately preceding
sentence, any position taken by the Executive shall be presumed to be correct
unless the Company establishes to the Board by clear and convincing evidence
that such position is not correct.


 


(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 two 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 twenty-four (24)
month period immediately following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents life, disability, accident
and health insurance benefits substantially similar to those provided to the Executive
and his dependents immediately prior to the Date of Termination or, if more
favorable to


 


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the
Executive, those provided to the Executive and his 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 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 twenty-four (24) 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.


 


(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 two years
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 twenty-four (24) 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 available and (ii) the date on which benefits described in
subsection (B) of this Section 6.1 terminate.


 


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(E)           The Company shall provide the Executive with outplacement services
suitable to the Executive’s position for a period of two years 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)          Whether or not the Executive becomes entitled
to the Severance Payments, if any of the payments or benefits received or to be
received by the Executive (including any payment or benefits received in
connection with a Change in Control or the Executive’s termination of
employment, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement) (all such payments and benefits, excluding the
Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will
be subject to the Excise Tax, the Company shall pay to the Executive an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, and after taking into account the phase out of itemized
deductions and personal exemptions attributable to the Gross-Up Payment, shall
be equal to the Total Payments.


 


(B)           For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all of the Total Payments shall be treated as “parachute
payments” (within the meaning of section 280G(b)(2) of the Code)
unless, 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”),
such payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of section 280G(b)(4)(A) of the Code,
(ii) all “excess parachute payments” within the meaning of
section 280G(b)(l) of the Code shall be treated as subject to the Excise
Tax unless, in the opinion of Tax Counsel, such excess


 


5





















 


parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4)(B) of the Code) in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.  For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income tax at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of the
Executive’s residence on the Date of Termination (or if there is no Date of
Termination, then the date on which the Gross-Up Payment is calculated for
purposes of this Section 6.2), net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.


 


(C)           In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the Executive shall repay to the Company,
within five (5) business days following the time that the amount of such
reduction in the Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in a reduction in the
Excise Tax and a dollar-for-dollar reduction in the Executive’s taxable income
and wages for purposes of federal, state and local income and employment taxes,
plus interest on the amount of such repayment at 120% of the rate provided in
section 1274(b)(2)(B) of the Code. 
In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder in calculating the Gross-Up Payment (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or additions
payable by the Executive with respect to such excess) within five
(5) business days following the time that the amount of such excess is
finally determined.  The Executive and the
Company shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments.


 


6.3           The payments provided in subsections
(A),(C) and (F) of Section 6.1 hereof and in Section 6.2
hereof shall be made not later than the fifth day following the Date of
Termination (or if there is no Date of Termination, then the date on which the
Gross-Up Payment is calculated for purposes of Section 6.2 hereof); provided,
however, that if the amounts of such payments 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 Executive or, in the
case of payments under Section 6.2 hereof, in accordance with
Section 6.2 hereof, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of such payments
(together with


 


6





















 


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 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).


 


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.


 


6.5           The Executive agrees that prior to and
following the Date of Termination, he shall retain in confidence any
confidential information known to him concerning the Company and its Affiliates
and their respective businesses for as long as such information is not publicly
disclosed.


 


6.6           Notwithstanding anything to the contrary, all
compensation and benefits payable to Executive pursuant to this Section 6
(other than Sections 6.2 and 6.4) are conditioned on receipt by the Company of
an executed release of claims by Executive in the form attached hereto as
Exhibit A and the expiration of any revocation period in such release.


 


7.             Termination Procedures and Compensation
During Dispute.


 


7.1           Notice of Termination. 
After a Change in Control and during the Term, any purported termination
of the Executive’s employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof.  For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the


 


7





















 


affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive’s
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause
(i) or (ii) of the definition of Cause herein, and specifying the
particulars thereof in detail.


 


7.2           Date of Termination. 
“Date of Termination,” with respect to any purported termination of the
Executive’s employment after a Change in Control and during the Term, shall
mean (i) if the Executive’s employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of the
Executive’s duties during such thirty (30) day period), and (ii) if the
Executive’s employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).


 


7.3           Dispute Concerning Termination.  If
within fifteen (15) days after any Notice of Termination is given, or, if
later, prior to the Date of Termination (as determined without regard to this
Section 7.3), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be extended until the earlier of (i) the date on which
the Term ends or (ii) the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final judgment, order
or decree of an arbitrator or a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); provided, however, that the
Date of Termination shall be extended by a notice of dispute given by the
Executive only if such notice is given in good faith and the Executive pursues
the resolution of such dispute with reasonable diligence.


 


7.4           Compensation During Dispute.  If a
purported termination occurs following a Change in Control and during the Term
and the Date of Termination is extended in accordance with Section 7.3
hereof, the Company shall continue to pay the Executive the full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until the
Date of Termination, as determined in accordance with Section 7.3
hereof.  Amounts paid under this
Section 7.4 are in addition to all other amounts due under this Agreement
(other than those due under Section 5.2 hereof) and shall not be offset
against or reduce any other amounts due under this Agreement.


 


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8.             No Mitigation.  The
Company agrees that, if the Executive’s employment with the Company terminates
during the Term, the Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the Executive by the
Company pursuant to Section 6 hereof or Section 7.4 hereof.  Further, except as specifically provided in
Section 6.1(B) hereof, no payment or benefit provided for in this
Agreement shall be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or
otherwise.


 


9.             Successors; Binding Agreement.


 


9.1           In addition to any obligations imposed by law
upon any successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company 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.  Failure of
the Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle
the Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the Executive
were to terminate the Executive’s employment for Good Reason after a Change in
Control, except that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.


 


9.2           This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.  If the Executive shall die
while any amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive) if
the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the executors, personal representatives or administrators of the Executive’s
estate.


 


10.           Notices.  For the purpose of this
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested, postage
prepaid, addressed, if to the Executive, to the address inserted below the
Executive’s signature on the final page hereof and, if to the Company, to
the address set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:


 


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To
the Company:


 


CF
Industries, Inc.


One
Salem Lake Drive


Long
Grove, Illinois 60046


 


Attention:  William G. Eppel


 


11.           Miscellaneous.  No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or of any lack of compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  This Agreement supersedes any other agreements
or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party; provided, however,
that this Agreement shall supersede any agreement setting forth the terms and
conditions of the Executive’s employment with the Company only in the event
that the Executive’s employment with the Company is terminated on or following
a Change in Control, by the Company other than for Cause or by the Executive
for Good Reason.   The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Illinois.  All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. 
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. 
The obligations of the Company and the Executive under this Agreement
which by their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 6
and 7 hereof) shall survive such expiration.


 


12.           Validity.  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.


 


13.           Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.


 


14.           Settlement of Disputes; Arbitration.  14.1
All claims by the Executive for benefits under this Agreement shall be directed
to and determined by the Board and shall be in writing.  Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. 
The


 


10





















 


Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive’s claim has been denied.  Notwithstanding the above,  in the event of any dispute, any decision by
the Board hereunder shall be subject to a de novo review by the arbitrator.


 


14.2         Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Chicago, Illinois in accordance with the rules of the
American Arbitration Association then in effect; provided, however,
that the evidentiary standards set forth in this Agreement shall apply.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. 
Notwithstanding any provision of this Agreement to the contrary, the
Executive shall be entitled to seek specific performance of the Executive’s
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.


 


15.           Definitions.  For purposes of this
Agreement, the following terms shall have the meanings indicated below:


 


(A)          “Affiliate” shall have the meaning set forth
in Rule 12b-2 promulgated under Section 12 of the Exchange Act.


 


(B)           “Auditor” shall have the meaning set forth in
Section 6.2 hereof.


 


(C)           “Base Amount” shall have the meaning set
forth in section 280G(b)(3) of the Code.


 


(D)          “Beneficial Owner” shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.


 


(E)           “Board” shall mean the Board of Directors of
the Company.


 


(F)           “Cause” for termination by the Company of the
Executive’s employment shall mean (i) the willful and continued failure by
the Executive to substantially perform the Executive’s duties with the Company
(other than any such failure resulting from the Executive’s incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Executive pursuant
to Section 7.1 hereof) that has not been cured within 30 days after a
written demand for substantial performance is delivered to the Executive by the
Board, which demand 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 conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise.  For purposes of
clauses (i) and (ii) of this definition, (x) no act, or failure to
act, on the Executive’s part shall be deemed “willful” unless done, or omitted
to be done, by the Executive not in good faith and without reasonable belief
that the Executive’s act, or failure to act, was in


 


11





















 


or not opposed to the best interest of the Company and (y) in the event
of a dispute concerning the application of this provision, no claim by the
Company that Cause exists shall be given effect unless the Company establishes
to the Board by clear and convincing evidence that Cause exists.


 


(G)           “Change in Control” shall mean the first to occur of:


 


(I)            any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of CF Industries
Holdings, Inc. (not
including in the securities beneficially owned by such Person any securities acquired
directly from CF Industries Holdings, Inc. or any of its subsidiaries) representing 25%
or more of the combined voting power of CF Industries
Holdings, Inc.’s then
outstanding securities; or


 


(II)           the following individuals cease for any reason to constitute a majority
of the number of directors then serving on the Board: individuals who, on the
date of the initial public offering, constitute the Board and any new director
(other than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of CF
Industries Holdings, Inc.)
whose appointment or election by the Board or nomination for election by CF
Industries Holdings, Inc.’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously
so approved or recommended; or


 


(III)         there is consummated a merger or consolidation of CF
Industries Holdings, Inc.
or any direct or indirect subsidiary of CF Industries
Holdings, Inc. with any
other corporation, other than a merger or consolidation immediately following
which the individuals who comprise the Board immediately prior thereto
constitute at least a majority of the Board of the entity surviving such merger
or consolidation or, if CF Industries Holdings, Inc. or the entity surviving such merger is then
a subsidiary, the ultimate parent thereof; or


 


(IV)         the stockholders of CF Industries Holdings, Inc. approve a plan of complete liquidation or
dissolution of CF Industries Holdings, Inc. or there is consummated an agreement for the
sale or disposition by CF Industries Holdings, Inc. of all or substantially all of CF
Industries Holdings, Inc.’s
assets, other than (a) a sale or disposition by CF Industries
Holdings, Inc. of all or
substantially all of CF Industries Holdings, Inc.’s assets to an entity, at least 60% of the
combined voting power of the voting securities of which are owned by
stockholders of CF Industries Holdings, Inc. following the completion of such transaction
in substantially the same proportions as their ownership of CF Industries


 


12





















 


Holdings, Inc. immediately prior to such sale or
(b) other than a sale or disposition by CF Industries
Holdings, Inc. of all or
substantially all of CF Industries Holdings, Inc.’s assets immediately following which the
individuals who comprise the Board immediately prior thereto constitute at
least a majority of the board of directors of the entity to which such assets
are sold or disposed or, if such entity is a subsidiary, the ultimate parent
thereof.


 


Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to have occurred
(1) by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of CF Industries Holdings, Inc. immediately prior to such transaction or
series of transactions continue to have substantially
the same proportionate ownership in an entity which owns all or substantially
all of the assets of CF Industries Holdings, Inc. immediately following such transaction or
series of transactions or (2) as a result of the initial public offering
of the Company’s common stock or any transactions or any events contemplated by
such offering.


 


(H)          “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time.


 


(I)            “Company” shall mean CF Industries
Holdings, Inc., as applicable, and except in determining under
Section 15(G) hereof whether or not any Change in Control of the
Company has occurred, shall include any successor to its business and/or assets
which assumes and agrees to perform this Agreement by operation of law, or
otherwise.


 


(J)            “DC Pension Plan” shall mean any
tax-qualified, supplemental or excess defined contribution plan maintained by
the Company and any other defined contribution plan or agreement entered into
between the Executive and the Company which is designed to provide the
executive with supplemental retirement benefits.


 


(K)          “Date of Termination” shall have the meaning
set forth in Section 7.2 hereof.


 


(L)           “Disability” 
shall be deemed the reason for the termination by the Company of the
Executive’s employment, if, as a result of the Executive’s incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of the Executive’s duties with the Company for a period
of six (6) consecutive months, the Company shall have given the Executive
a Notice of Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned to the
full-time performance of the Executive’s duties.


 


13





















 


(M)         “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended from time to time.


 


(N)          “Excise Tax” shall mean any excise tax
imposed under section 4999 of the Code.


 


(O)          “Executive” shall mean the individual named
in the first paragraph of this Agreement.


 


(P)           “Good Reason” for termination by the
Executive of the Executive’s employment shall mean the occurrence (without the
Executive’s express written consent which specifically references this
Agreement) after any Change in Control, or prior to a Change in Control under
the circumstances described in clauses (ii) and (iii) of the second
sentence of Section 6.1 hereof (treating all references in paragraphs (I)
through (VII) below to a “Change in Control” as references to a “Potential
Change in Control”), of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to
act described in paragraph (I), (V), (VI) or (VII) below, such act or failure
to act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:


 


(I)            the assignment to the Executive of any duties
inconsistent with the Executive’s status as an executive officer of the Company
or a substantial adverse alteration in the nature or status of the Executive’s
responsibilities from those in effect immediately prior to the Change in
Control including, without limitation, if the Executive was, immediately prior
to the Change in Control, an executive officer of a public company, the
Executive ceasing to be an executive officer of a public company;


 


(II)           a reduction by the Company in the Executive’s annual base salary as in
effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary reductions similarly affecting all
executives of the Company and all executives of any Person in control of the
Company;


 


(III)         the relocation of the Executive’s principal place of employment to a
location more than 35 miles from the Executive’s principal place of employment
immediately prior to the Change in Control or the Company’s requiring the
Executive to be based anywhere other than such principal place of employment
(or permitted relocation thereof) except for required travel on the Company’s
business to an extent substantially consistent with the Executive’s present
business travel obligations;


 


(IV)         the failure by the Company to pay to the Executive any portion of the
Executive’s current compensation or to pay to the


 


14





















 


Executive
any portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days after the date
demand for payment is made provided such compensation is due;


 


(V)           the failure by the Company to continue in effect any compensation plan
in which the Executive participates immediately prior to the Change in Control
which is material to the Executive’s total compensation unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue the
Executive’s participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount or timing
of payment of benefits provided and the level of the Executive’s participation
relative to other participants, as existed immediately prior to the Change in
Control;


 


(VI)         the failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any of
the Company’s pension, savings, life insurance, medical, health and accident,
or disability plans in which the Executive was participating immediately prior
to the Change in Control (except for across the board changes similarly
affecting all executives of the Company and all executives of any Person in
control of the Company), the taking of any other action by the Company which
would directly or indirectly materially reduce any of such benefits or deprive
the Executive of any material fringe benefit enjoyed by the Executive at the
time of the Change in Control, or the failure by the Company to provide the
Executive with the number of paid vacation days to which the Executive is
entitled with the Company in accordance with the vacation policy applicable to
the Executive in effect at the time of the Change in Control; or


 


(VII)        any purported termination of the Executive’s employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 7.1 hereof; for purposes of this Agreement, no such purported
termination shall be effective.  The
Executive’s right to terminate the Executive’s employment for Good Reason shall
not be affected by the Executive’s incapacity due to physical or mental
illness.


 


The
Executive’s continued employment shall not constitute consent to, or a waiver
of rights with respect to, any act or failure to act constituting Good Reason
hereunder.


 


For
purposes of any determination regarding the existence of Good Reason, any claim
by the Executive that Good Reason exists shall be presumed to be correct unless
the Company establishes to the Board by clear and convincing evidence that Good
Reason does not exist.


 


15





















 


(Q)          “Gross-Up Payment” shall have the meaning set
forth in Section 6.2 hereof.


 


(R)           “Notice of Termination” shall have the
meaning set forth in Section 7.1 hereof.


 


(S)           “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include
(i) CF Industries Holdings, Inc. or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of CF Industries, Inc. or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering
of such securities, or (iv) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.


 


(T)           “Potential Change in Control” shall be deemed
to have occurred if the event set forth in any one of the following paragraphs
shall have occurred:


 


(I)            the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;


 


(II)           the Company or any Person publicly announces an intention to take or to
consider taking actions which, if consummated, would constitute a Change in
Control;


 


(III)         any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 15% or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the Company’s then outstanding securities (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates); or


 


(IV)         the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.


 


(U)          “Retirement” shall be deemed the reason for
the termination by the Executive of the Executive’s employment if such
employment is terminated in accordance with the Company’s retirement policy,
including early retirement, generally applicable to its salaried employees.


 


(V)           “Severance Payments” shall have the meaning
set forth in Section 6.1 hereof.


 


(W)         “Tax Counsel” shall have the meaning set
forth in Section 6.2 hereof.


 


16





















 


(X)          “Term” shall mean the period of time
described in Section 2 hereof (including any extension, continuation or
termination described therein).


 


(Y)           “Total Payments” shall mean those payments so
described in Section 6.2 hereof.


 


17





















 


IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.


 


 


	
   

  	
  CF INDUSTRIES HOLDINGS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen R. Wilson

  	
   

  
	
   

  	
   

  	
  Stephen R. Wilson

  
	
   

  	
   

  	
  President & Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ David J. Pruett

  	
   

  
	
   

  	
   

  	
  David J. Pruett

  



 


18





















 


EXHIBIT A


 


RELEASE


 


(a) 
David J. Pruett (“Executive”) for and in consideration of benefits
provided pursuant to the Change in Control Severance Agreement with CF
Industries Holdings, Inc. (collectively, referred to herein as the “Company”)
entered into August 11, 2005 (the “Severance Agreement”), on behalf
of Executive and Executive’s heirs, executors, administrators, successors and
assigns, voluntarily, knowingly and willingly releases and discharges the
Company and its parents, subsidiaries and affiliates (collectively, the “Company
Group”), together with their respective present and former partners,
officers, directors, employees and agents, and each of their predecessors,
heirs, executors, administrators, successors and assigns, and any and all
employee pension or welfare benefit plans of the Company, including current and
former trustees and administrators of these plans (collectively, the “Company
Releasees”) from any and all charges, complaints, claims, promises,
agreements, controversies, causes of action, demands, damages and liabilities
(“Claims”) of any nature whatsoever, known or unknown, suspected or
unsuspected, which against the Company Releasees, jointly or severally,
Executive or Executive’s heirs, executors, administrators, successors or
assigns ever had or now have by reason
of any matter, cause or thing whatsoever arising from the beginning of time to
the time Executive executes this release (the “Release”).  This Release includes, without limitation,
any Claims arising out of or relating in any way to Executive’s employment or
director relationship with the Company, or the termination thereof, any Claims
arising under any statute or regulation, including but not limited to the Age
Discrimination in Employment Act of 1967, Title VII
of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Americans with Disabilities Act of 1990, the Family and Medical Leave Act of
1993, or the Employee Retirement Income Security Act of 1974, each as amended,
or any other federal, state or local law, regulation, ordinance or common law,
or under any policy, agreement, understanding or promise, written or oral,
formal or informal, between any Company Releasee and Executive.  Executive shall not be entitled to any
recovery, in any action or proceeding that may be commenced on Executive’s
behalf in any way arising out of or relating to the matters released under this
Release.  Notwithstanding the foregoing,
nothing herein shall release any Company Releasee from any Claim based on
(i) Executive’s rights under the Severance Agreement or any other
agreement with the Company (including, but not limited to, any stock option
agreements), (ii) any right or claim that arises after the date Executive
executes this Release, (iii) Executive’s eligibility for indemnification
in accordance with applicable laws or the certificate of incorporation or
by-laws of the Company (or any affiliate or subsidiary) or any applicable
insurance policy, with respect to any liability Executive incurs or incurred as
a director, officer or employee of the Company or any affiliate or subsidiary
(including as a trustee, director or officer of any employee benefit plan) or
(iv) any rights Executive may have to vested benefits under any employee
benefit plan or program.


 


19





















 


(b) 
Executive has been advised to consult with an attorney of Executive’s choice
prior to signing this Release, has done so and enters into this Release freely
and voluntarily.


 


[(c) Executive acknowledges that the Company has enclosed
with this Release information concerning (i) the ages and job titles of
all employees who are eligible to receive severance pay and (ii) the ages
of all employees in the same job classification or organizational unit who are
not eligible to receive severance pay.](1)


 


(d) 
Executive has had at least [twenty-one
(21)]  [forty-five
(45)](2) calendar days to consider the terms of this
Release.  Once Executive has signed this
Release, Executive has seven (7) additional days to revoke Executive’s
consent and may do so by writing to the Company as provided in Section 10
of the Severance Agreement.  Executive’s
Release shall not be effective, and no payments or benefits shall be due under
Section 6 of the Severance Agreement, until the eighth day after Executive
has executed this Release and returned it to the Company, assuming that
Executive has not revoked Executive’s consent to this Release during such time
(the “Revocation Date”).


 


(e) 
In the event that any one or more of the provisions of this Release shall be
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remainder thereof shall not in any way be affected or
impaired thereby.


 


(f) 
This Release shall be governed by the law of the State of Illinois without
reference to its choice of law rules.


 


 


CF INDUSTRIES HOLDINGS, INC.


 


	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  



 


 


Signed as of this      day
of                     .


 


 


	
   

  	
   

  
	
  David J. Pruett

  



 


 










(1)           Note:  this paragraph is to be included only for
applicable group terminations or exit incentive programs.


(2)           Note:  use longer period for applicable group
terminations or exit incentive programs.


 


20





















 


Signed as of this      day
of                     .


 


21