Document:

Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CF INDUSTRIES HOLDINGS, INC.

 

2005 EQUITY AND INCENTIVE PLAN

 

Annual Incentive Program

 

 

Effective January 1, 2008

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

	
  Purpose

  	
  3

  
	
   

  	
   

  
	
  Participation Eligibility

  	
  3

  
	
   

  	
   

  
	
  Award Opportunities

  	
  3

  
	
   

  	
   

  
	
  Company Performance Metric & Award Pool

  	
  4

  
	
   

  	
   

  
	
  Determination of Individual Awards

  	
  5

  
	
   

  	
   

  
	
  Payment of Awards

  	
  5

  
	
   

  	
   

  
	
  AIP Awards and Employee Benefits

  	
  6

  
	
   

  	
   

  
	
  Other Provisions

  	
  6

  
	
   

  	
   

  
	
  Exhibit I

  	
  8

  

 

2

 

CF
INDUSTRIES HOLDINGS, INC.

 

2005
EQUITY AND INCENTIVE PLAN

 

Annual
Incentive Program

 

Purpose

 

The
purpose of the Annual Incentive Program (“AIP”), established under the
Company’s 2005 Equity and Incentive Plan, is to support the accomplishment of
the Company’s financial objectives. In doing so the AIP is designed to:

 

·                  Closely align the compensation of AIP
participants with the financial interests and expectations of the Company’s
stockholders.

 

·                  Provide opportunities, when combined with
base salaries, for participants to earn competitive levels of direct cash
compensation in order to attract and retain high-performing management
employees.

 

·                  Define an appropriate portion of management
compensation as being “at risk”, thereby providing enhanced opportunities for
pay for performance.

 

 

Participation
Eligibility

 

Participation
in the AIP is limited to corporate officers and other management positions that
have the ability to contribute meaningfully to the Company’s business results.

 

Participation
in the AIP by non-officers must be approved by the Chairman and Chief Executive
Officer of the Company.  Participation by
the “executive officers,” who are identified as such in the proxy statement,
and by other officers reporting directly to the Chairman and Chief Executive
Officer must be approved by the Compensation Committee of the Board of
Directors.

 

 

Award
Opportunities

 

Each
approved participant is assigned to a specific Target Award Group. A
participant’s assigned Group reflects a combination of his/her position’s
relative responsibility level and competitive compensation level. Each Group
has a target award level stated as a percent of “base earnings,” defined as
payroll earnings received during the program year.  Each year all participants will receive award
agreements that reflect the award opportunity for that specific program year.

 

3

 

The
Target Award level as of January 1, 2008 for each Group is as follows:

 

	
   

  	
   

  	
  Target Award

  
	
  Group

  	
   

  	
  % of Base

  Earnings

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Chairman & CEO

  	
   

  	
  100%

  
	
  2.

  	
  Selected Sr. Vice Presidents and Vice Presidents

  	
   

  	
  60

  
	
  3.

  	
  Selected Sr. Vice Presidents

  	
   

  	
  55

  
	
  4.

  	
  Selected Sr. Vice Presidents

  	
   

  	
  50

  
	
  5.

  	
  Selected Vice Presidents

  	
   

  	
  45

  
	
  6.

  	
  Selected Vice Presidents

  	
   

  	
  40

  
	
  7.

  	
  Selected Vice Presidents & Selected Dirs.

  	
   

  	
  35

  
	
  8.

  	
  Gen. Mgrs. & Selected Dirs.

  	
   

  	
  30

  
	
  9.

  	
  Selected Directors & Mgrs.

  	
   

  	
  24

  
	
  10.

  	
  Selected Directors & Mgrs.

  	
   

  	
  20

  
	
  11.

  	
  Selected Directors & Mgrs.

  	
   

  	
  16

  

 

Company
Performance Metric & Award Pool

 

The
performance metric used to determine the aggregate award pool is Cash Flow
Return on Average Gross Capital Employed (CFROC).  The Company’s performance standard at the
Target level is a CFROC of 19%.  The
definition of CFROC is presented in Exhibit I.

 

The
determination of the aggregate award pool is based upon the following Company
performance schedule:

 

	
  Cash Flow Return on

  Average Gross Capital

  Employed

  	
   

  	
  Aggregate

  Award Pool as a % of

  Target

  
	
  42

  	
  %

  	
   

  	
  (Maximum)

  	
   

  	
  200

  	
  %

  
	
  33

  	
   

  	
   

  	
   

  	
   

  	
  150

  	
   

  
	
  19

  	
   

  	
   

  	
  (Target)

  	
   

  	
  100

  	
   

  
	
  5

  	
   

  	
   

  	
  (Threshold)

  	
   

  	
  50

  	
   

  

 

The
aggregate award pool for performance levels between objectives are determined
proportionately.  In addition, if the
Company’s performance is below Threshold, an award pool equal to 15% of the
target awards at the 100% of target level of all program participants in
aggregate (excluding the executive officers who are named in the summary
compensation table in the proxy statement, referred to as the “named executive
officers”) will be available for distribution based on management
discretion.  In such circumstances, it is
possible that none, some or all of the award pool will be paid to participants.

 

4

 

Determination
of Individual Awards

 

The
determination of actual individual awards from the pool is based on the
following provisions:

 

·                  The Company’s CFROC performance (rounded to
the nearest one-tenth of a whole percent, for example 38.2%) will be used to
determine the percent of target (rounded to the nearest whole percent, for
example 179%) available to participants.

 

·                  The awards for the Chairman and CEO and all
other named executive officers are equal to their respective target awards
multiplied by the percent of target attained by applying the Company’s CFROC
against the performance schedule.  No
awards are granted to these executives if Company performance is below the
Threshold level.

 

·                  The pool of award dollars available for
distribution to all other participants is equal to these participants’ target
awards in aggregate multiplied by the percent of target attained based on
Company performance.  The award for an
individual participant is equal to 85% of the amount determined by multiplying
his/her target award by the percent of target attained based on Company
performance.  The remaining 15% of the
pool is distributed based on management discretion.

 

·                  When Company performance does not meet the
CFROC threshold level, an award pool equal to 15% of the target awards of all
participants, other than the named executive officers, may be distributed on a
discretionary basis.

 

 

Payment of Awards

 

Payment
of approved awards is made no later than March 15 of the calendar year
following completion of the Program Year.

 

Participants,
if eligible, may elect to defer all or a portion of their AIP awards under the
provisions of the Company’s non-qualified deferred compensation plans if such
elections are in place prior to January 1 of the Program year or within 30
days of participation date if participation starts after the first of the
year.  Deferrals are subject to
applicable taxes.

 

Payment
of awards to participants whose employment with the Company terminates is as
follows:

 

·                  Due to Retirement, Disability, Death or Job
Elimination (As defined below)

 

Awards
are pro-rated based on the participant’s base earnings through the date of
termination or disability and are determined and paid out after the close of
the Program Year based on applicable performance for the Program Year.

 

5

 

·                  For Cause (As defined below)

 

Awards
for the current Program Year (the year of termination) and awards not yet paid
out for the previous Program Year are forfeited.

 

·                  For Any Other Reason

 

Awards
for the current Program Year (the year of termination) are forfeited.  Awards for a completed Program Year not yet
paid are paid out after the close of the Program Year if applicable performance
is achieved.

 

“Retirement”
shall mean the Participant’s termination of employment, other than for Cause,
death or Disability, following the attainment by the Participant of at least
age fifty-five.

 

“Disability”
shall have the meaning ascribed to such term in the Participant’s individual
employment, severance or other agreement with the Company or, if the
Participant is not party to such an agreement, “Disability” shall mean
Participant’s inability because of ill health, physical or mental disability,
to perform Participant’s duties for a period of 180 days in any twelve-month
period.

 

“Job
Elimination” shall mean the Participant’s termination of employment resulting
from the Company’s determination that the job held by the participant is
obsolete.

 

“Cause”
shall have the meaning ascribed to such term in the Participant’s individual
employment, severance or other agreement with the Company or, if the
Participant is not party to such an agreement, “Cause” shall mean (i) dishonesty
in the performance of the Participant’s duties, or (ii) the Participant’s
malfeasance or misconduct in connection with the Participant’s duties or (iii) any
act or omission which is injurious to the Company or its Subsidiaries or
affiliates, monetarily or otherwise.

 

Awards
forfeited under the AIP will not be distributed to other participants.

 

 

AIP Awards and Employee Benefits

 

Participants’
AIP awards, whether paid out or deferred, are included in the definition of
Compensation for the purpose of calculating pension benefits for eligible
participants in the CF Industries, Inc. Retirement Income Plan and the CF
Industries, Inc. Supplemental Benefit and Deferral Plan.  AIP awards are not used in the calculation of
any other employee benefits.

 

Other Provisions

 

Benefits
paid to Program participants in the form of salary continuation under CF’s
Short-Term Disability Plan are included in base earnings for the purpose of
determining awards under the AIP.

 

6

 

Any
conflict between the AIP provisions stated in this document and the provisions
stated in the 2005 Equity and Incentive Plan will be governed by the 2005
Equity and Incentive Plan.

 

The
AIP is administered by the Compensation Committee of the Company’s Board of
Directors, or by such person or persons as the Compensation Committee may
delegate to administer the Program.  Such
administrator has the authority to make all necessary or desirable
interpretations under the AIP, which are final and binding on all AIP
participants.

 

The Company may modify or terminate the AIP at any
time. In the event of program termination, the performance results will be
determined from the beginning of the current program year to the effective date
of program termination. Based on these results, any awards earned will be paid
in cash to participants on a pro-rata basis within 45 days after the date of
the program termination.

 

7

 

Exhibit I

 

Definition of Cash Flow Return on Average Gross Capital Employed

 

The
Company Performance Metric for the Annual Incentive Program is Cash Flow Return
on Average Gross Capital Employed (CFROC) defined as follows:

 

	
  CFROC =

  	
  Cash Flow

  
	
  Average Gross Capital Employed

  

 

 

Where:

 

Cash
Flow =

 

Cash
Flow from Operating Activities

Less:  Additions to Property, Plant &
Equipment Net (excluding major capital expenditures)

Less:  Minority Interest in Undistributed Earnings

Less:  Changes in Net Operating Working Capital*

Less:  Increase (Decrease) in Customer Advances

Plus:   Equity in Earnings of Unconsolidated
Affiliates — Net of Taxes

Plus:   Interest Expense

 

Gross Capital Employed =

 

Total Stockholders’ Equity (Book Equity) + Interest
Bearing Debt (Gross Debt)

 

 

Average
Gross Capital Employed =

 

Gross
Capital Employed as of 12/31 for current Program Year, plus Gross Capital
Employed as of 12/31 of previous Program Year divided by 2.

 

 

*Net
Operating Working Capital =

 

Inventories

Plus:  Accounts Receivable and Income Taxes
Receivable

Plus:  Positive Exchange Positions

Plus:  Margin Deposits

Plus:  Prepaid Expenses

Less:  Accounts
Payable, Accrued Expenses, and Accrued Income Taxes (excluding Accruals related
to Asset Retirement Obligations)

Less:
 Negative Exchange Positions

 

The
Company’s CFROC performance will be calculated and rounded to the nearest
one-tenth of a whole percent, for example 16.9%.

 

 

8Exhibit 10.1

 

PROMISSORY NOTE

 

	
  $200,000.00

  	
   

  	
  March 3, 2008

  

 

FOR VALUE RECEIVED, the undersigned, BHG Acquisition
Corp., a Delaware corporation (“Maker” or
the “Company”), whose address is 646
Steamboat Road, Greenwich, Connecticut 06830, hereby unconditionally promises
to pay to the order of Clifton S. Robbins (“Payee”),
at Payee’s office at 646 Steamboat Road, Greenwich, Connecticut 06830, the sum
of $200,000.00, in legal and lawful money of the United States of America.

 

This is a non-interest bearing note.

 

The entire unpaid principal balance of this Note shall
be due and payable upon the earlier of January 31, 2009 or the
consummation of an initial public offering of the Company’s securities.

 

If payment of this Note or any installment of this
Note is not made when due, the entire indebtedness hereunder, at the option of
Payee, shall immediately become due and payable, and Payee shall be entitled to
pursue any or all remedies to which Payee is entitled hereunder, or at law or
in equity.

 

Any provision herein, or in any document securing this
Note, or any other document executed or delivered in connection herewith, or in
any other agreement or commitment, whether written or oral, expressed or
implied, to the contrary notwithstanding, neither Payee nor any holder hereof
shall in any event be entitled to receive or collect, nor shall or may amounts
received hereunder be credited, so that Payee or any holder hereof shall be
paid, as interest, a sum greater than the maximum amount permitted by
applicable law to be charged to the person, partnership, firm or corporation
primarily obligated to pay this Note at the time in question.

 

This Note may be prepaid, in whole or in part, without
penalty.  This Note may not be changed,
amended or modified except in a writing expressly intended for such purpose and
executed by the party against whom enforcement of the change, amendment or
modification is sought.  The loan
evidenced by this Note is made solely for business purposes and is not for
personal, family, household or agricultural purposes.

 

THIS NOTE IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN THE STATE OF NEW YORK.  EXCEPT TO THE EXTENT THAT THE LAWS OF THE
UNITED STATES MAY APPLY TO THE TERMS HEREOF, THE SUBSTANTIVE LAWS OF THE STATE
OF NEW YORK SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE.  IN THE
EVENT OF A DISPUTE INVOLVING THIS NOTE OR ANY OTHER INSTRUMENTS EXECUTED IN
CONNECTION HEREWITH, THE UNDERSIGNED PARTIES IRREVOCABLY AGREE THAT VENUE FOR
SUCH DISPUTE SHALL LIE IN ANY COURT OF COMPETENT JURISDICTION IN NEW YORK.

 

 

Service of any notice by Maker to Payee or by Payee to
Maker, shall be mailed, postage prepaid by certified United States mail, return
receipt requested, at the address for such party set forth in this Note, or at
such subsequent address provided to the other party hereto in the manner set
forth in this paragraph for all notices. 
Any such notice shall be deemed given three (3) days after deposit
thereof in an official depository under the care and custody of the United
States Postal Service.

 

Should the indebtedness represented by this Note or
any part thereof be collected at law or in equity or through any bankruptcy,
receivership, probate or other court proceedings or if this Note is placed in
the hands of attorneys for collection after default, the undersigned and all
endorsers, guarantors and sureties of this Note jointly and severally agree to
pay to the holder of this Note, in addition to the principal and interest due
and payable hereon, reasonable attorneys’ and collection fees.

 

The undersigned and all endorsers, guarantors and
sureties of this Note and all other persons liable or to become liable on this
Note severally waive presentment for payment, demand, notice of demand and of
dishonor and nonpayment of this Note, notice of intention to accelerate the
maturity of this Note, notice of acceleration, protest and notice of protest,
diligence in collecting, and the bringing of suit against any other party, and
agree to all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in part, with or without notice, before
or after maturity.

 

THE UNDERSIGNED HEREBY EXPRESSLY AND UNCONDITIONALLY
WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE PAYEE
ON THIS NOTE, ANY AND EVERY RIGHT IT MAY HAVE TO (I) INJUNCTIVE RELIEF, (II) ANY
OBJECTION BASED UPON FORUM NON CONVENIENS, (III) A TRIAL BY JURY, (IV) INTERPOSE
ANY COUNTERCLAIM THEREIN AND (V) HAVE THE SAME CONSOLIDATED WITH ANY OTHER
OR SEPARATE SUIT, ACTION OR PROCEEDING.

 

Nothing herein contained shall prevent or prohibit the
undersigned from instituting or maintaining a separate action against payee
with respect to any asserted claim.

 

This Note represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties.

 

EXECUTED AND AGREED as of the dated first written
above.

 

	
   

  	
  BHG ACQUISITION CORP.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CLIFTON S. ROBBINS

  
	
   

  	
  Name:

  	
  Clifton S. Robbins

  
	
   

  	
  Title:

  	
  CEO

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