Document:

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

 

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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

 

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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

 

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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

 

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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                     .

 

21Exhibit
10.8

 

NET OPERATING LOSS AGREEMENT

 

dated as of

August 16, 2005

 

by and among

 

CF INDUSTRIES HOLDINGS, INC.

 

CF INDUSTRIES, INC.

 

and

 

EXISTING STOCKHOLDERS OF CF INDUSTRIES, INC.

 

 

Table
of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL
  APPLICATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions.

  	
  1

  
	
  Section 1.2

  	
  Notices

  	
  5

  
	
  Section 1.3

  	
  Effect of
  Headings

  	
  6

  
	
  Section 1.4

  	
  Successors and
  Assigns

  	
  6

  
	
  Section 1.5

  	
  Benefits of
  Agreement

  	
  6

  
	
  Section 1.6

  	
  Governing Law

  	
  6

  
	
  Section 1.7

  	
  Legal Holidays

  	
  6

  
	
  Section 1.8

  	
  Severability
  Clause

  	
  6

  
	
  Section 1.9

  	
  Counterparts

  	
  7

  
	
  Section 1.10

  	
  Effectiveness

  	
  7

  
	
  Section 1.11

  	
  Entire Agreement

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE II NOL RIGHTS

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Payment Procedures.

  	
  7

  
	
  Section 2.2

  	
  Payments to Members.

  	
  9

  
	
  Section 2.3

  	
  Member-Sourced NOL.

  	
  9

  
	
  Section 2.4

  	
  Repayment of
  Amounts

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE III MEMBERS

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Certain Duties
  and Responsibilities.

  	
  10

  
	
  Section 3.2

  	
  Certain Rights of
  the Responsible Member; Actions of the Responsible Member

  	
  12

  
	
  Section 3.3

  	
  Reimbursement and
  Indemnification of the Responsible Member.

  	
  12

  
	
  Section 3.4

  	
  Resignation and
  Removal; Appointment of Successor.

  	
  13

  
	
  Section 3.5

  	
  Acceptance of
  Appointment by Successor

  	
  13

  
	
  Section 3.6

  	
  Final Resolution

  	
  14

  
	
  Section 3.7

  	
  Opt Out

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV COVENANTS

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Prosecution of
  Litigation by the Company; Settlement; Periodic Reports; Expenses.

  	
  15

  
	
  Section 4.2

  	
  Payment of NOL
  Payment Amount and Operations of the Company

  	
  16

  
	
  Section 4.3

  	
  Federal Income
  Tax Treatment

  	
  16

  
	
  Section 4.4

  	
  Transferability

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE V AMENDMENTS

  	
  17

  

 

 

	
  Section 5.1

  	
  Amendments.

  	
  17

  
	
  Section 5.2

  	
  Execution of
  Amendments

  	
  17

  
	
  Section 5.3

  	
  Effect of
  Amendments

  	
  17

  

 

ii

 

NET
OPERATING LOSS AGREEMENT

 

This NET OPERATING LOSS AGREEMENT, dated as of
August 16, 2005 (this “Agreement”), is entered into by and among CF
Industries Holdings, Inc., a Delaware corporation (the “Parent”),
CF Industries, Inc., a Delaware corporation (the “Company”) and the
existing stockholders of the Company before the IPO (as defined below) (each a
“Member”, collectively “Members”).

 

RECITALS:

 

WHEREAS, the Company and the Parent have entered
into an agreement and plan of merger dated as of July 21, 2005, pursuant
to which a wholly-owned subsidiary of Parent will be merged with and into the Company,
with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”);

 

WHEREAS, in connection with the Merger, Parent will
undertake an initial public offering (the “IPO”) of Parent’s common
stock, pursuant to which Parent will become a public company; and

 

WHEREAS, the parties hereto intend that, following
the Merger, the Members may be entitled to receive certain contingent payments
from Parent in the amount and manner hereinafter described.

 

NOW, THEREFORE, for and in consideration of the
premises and the consummation of the transactions referred to above, it is
mutually covenanted and agreed as follows:

 

ARTICLE I

 

DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION

 

Section 1.1             Definitions.

 

(a)           For
all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

 

(i)            the
terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;

 

(ii)           all
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles, and the term “generally accepted accounting principles” means such
accounting principles as are generally accepted in the United States at the
time of any computation;

 

 

(iii)          the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; and

 

(iv)          unless
the context otherwise requires, words describing the singular number shall
include the plural and vice versa, words denoting any gender shall include all
genders and words denoting natural Persons shall include corporations,
partnerships and other Persons and vice versa.

 

(b)           Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Merger Agreement.  The
following additional terms shall have the meanings ascribed to them as follows:

 

“Affiliate” of a Person means a Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person.

 

“Board of Directors” means the board of
directors of the Parent or the Company, as applicable.

 

“Business Day” means any day other than a
Saturday, Sunday or a day on which banking institutions in Chicago, Illinois
are authorized or obligated by law or executive order to remain closed.

 

“Code” means the Internal Revenue Code of
1986, as amended.

 

“Consolidated Group” means any group of
corporations that includes the Company (or any successor to the Company) and
files any United States federal, state or local income tax return on a
combined, consolidated, unitary or affiliated basis.

 

“Determination” means (i) with respect
to the utilization of a Member-Sourced NOL for United States federal income tax
purposes, “Determination” shall mean (A) a decision by the tax court or a
judgment, decree, or other order by any court of competent jurisdiction, which
has become final; (B) a closing agreement made under Section 7121 of
the Code; (C) a final disposition by the Secretary of a claim for refund
or (D) other decisions as described under Section 1313 of the Code
and the regulations thereunder, and (ii) with respect to the utilization
of a Member-Sourced NOL for purposes of any state or local income tax, the
receipt of an Opinion of Counsel that such Member-Sourced NOL can be utilized
to offset taxable income in such state or local jurisdiction.

 

“Excess Payment” has the meaning specified in
Section 2.4

 

“Expenses” means the sum of all direct
expenses incurred after the Merger by any of the Members, the Parent, the
Company, the Company Subsidiaries or any of their respective Affiliates in
order to carry the Member-Sourced NOLs forward to tax years (or portions
thereof) beginning after the Merger, including any fees, expenses or costs
incurred after the Merger (including, without limitation, the cost of the time
of employees of the Parent, the Company, any Company Subsidiary or any of their
Affiliates) in connection with (i) pursuing the Ruling or any

 

2

 

other Litigation or any Determination,
(ii) any tax audit or refund claim to the extent related to the utilization
of Member-Sourced NOLs or (iii) defending any audit, litigation or other
proceeding with respect to the amount and/or existence of the Member-Sourced
NOLs.

 

“Firm Expenses” has the meaning specified in
Section 2.1(d) of this Agreement.

 

“IPO” has the meaning set forth in the
recitals to this Agreement.

 

“Last NOL Payment Date” shall mean the date
determined by the Parent as the date on which the last NOL Payment Amount is to
be made under this Agreement (or the date on which it is determined by a
Majority that no payment of NOL Payment Amount shall be made pursuant to this
Agreement).

 

“Litigation” means pursuing the Ruling or any
litigation that the Parent, the Company or the Company Subsidiaries or any of
their Affiliates may file or assert and any similar future lawsuits, claims or
appeals brought by the Parent, the Company, the Company Subsidiaries or their
Affiliates related to the ability of the Company to utilize Member-Sourced NOL
carryforwards to offset any taxable income of the Company or any Consolidated
Group in any tax year (or portion thereof) beginning after the Merger.

 

“Majority” means the Members who held a
majority of the shares of preferred stock of the Company outstanding
immediately prior to the Merger; provided, however, that in the event that one
or more Members has Opted Out of this Agreement in accordance with
Section 3.7 as of the time of the determination of a Majority, only the
shares of preferred stock owned immediately before the Merger by Members that
have not Opted Out of this Agreement shall be considered to have been
outstanding at such time.

 

“Member-Sourced NOLs” means the net operating
losses (within the meaning of section 172 of the Code or any similar
provision of applicable state or local income tax law) generated by the Company
from business with its members prior to the Merger during the taxable years
when the Company was taxed as a cooperative under subchapter T of the Code and
the regulations thereunder.

 

“NOL Payment Amount” means, for any NOL
Payment Date, the sum of the excess, if any, of (i) the aggregate amount
of United States federal, state and local net income tax liability of the
Company or any Consolidated Group for any tax year (or portion thereof)
beginning after the Merger, calculated without taking into account the
utilization of any Member-Sourced NOLs carried forward from tax years ending on
or before the date of the Merger (the “Without Calculation”), over
(ii) the aggregate amount of United States federal, state and local net
income tax liability of the Company or any Consolidated Group for such tax year
(or portion thereof) beginning after the Merger, calculated on the basis of
utilizing any Member-Sourced NOLs that are available under applicable law
(including, without limitation, the limitations imposed by Sections 382 and 384
of the Code) (the “With Calculation”); provided however, that any tax
attributes of the Company or any Consolidated Group other than Member-Sourced
NOLs (“Other Attributes”) that are treated as utilized to reduce actual current
tax liability under the Without Calculation in any tax year shall be deemed to
be unavailable to the Company or Consolidated Group in making the Without
Calculation in any future year, regardless of whether

 

3

 

such Other Attributes were actually utilized
by the Company or Consolidated Group to reduce tax liability in the prior
year.  “NOL Payment Amount” shall also
include any interest actually received by the Company or a Consolidated Group
with respect to taxes offset by Member-Sourced NOLs.

 

“NOL Payment Date” means any date that any
NOL Payment Amount is paid by the Parent to the Members.

 

“Officer’s Certificate” means a certificate
signed by the President, Chief Financial Officer or General Counsel, in each
case of the Parent or the Company, in his or her capacity as such an officer,
and delivered to the Members.

 

“Opinion of Counsel” means a written opinion
of nationally recognized counsel, which shall be selected by a Majority, and
which opinion and counsel shall be reasonably acceptable to the Company.

 

“Opt-Out” has the meaning specified in
Section 3.7(a).

 

“Opt-Out Notice” has the meaning specified in
Section 3.7(a).

 

“Person” means any individual, corporation,
partnership, joint venture, limited liability company, business trust,
association, joint-stock company, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.

 

“Resolution” has the meaning specified in
Section 2.1(d) of this Agreement. 

 

“Ruling” means a private letter ruling issued
by the United States Internal Revenue Service (the “IRS”)  to the effect that the Member-Sourced NOLs of
the Company can be used to offset the income of the Company (or any
Consolidated Group) for federal income tax purposes after the Merger during tax
years when the Company is not taxed as a cooperative under subchapter T of the
Code.

 

“Settlement Decision” means any decision to
grant consent to the settlement of any aspect or portion of the Litigation or otherwise
to dismiss with prejudice any claim of the Parent, the Company or a Company
Subsidiary in a Litigation (and any other determination specified in
Section 3.1(d) relating to such a decision).

 

“Strategic Decision” means, with respect to
the Litigation, any decision that involves the appeal of any aspect of the case
(whether after a verdict or on a interlocutory basis), the addition of any
claim or party, changing legal counsel or the basis for payment of attorney’s
fees, any admission of liability with respect to any claim against the Company
in the Litigation, or any other proposed decision or determination that in the
opinion of outside counsel representing the Parent, the Company and the Company
Subsidiaries in the Litigation would represent a material change or development
in strategy with respect to the Litigation and result in a substantial
likelihood that the recovery or receipt by the Company and Company Subsidiaries
of any amount of Litigation Proceeds (whether pursuant to a court order at trial
or upon appeal or pursuant to the terms of any settlement agreement) will be
delayed; provided, however, a
Strategic Decision shall not include any action that constitutes (in whole or
in part) a Settlement Decision.

 

4

 

“Subsidiary” when used with respect to any
Person means any corporation or other organization, whether incorporated or
unincorporated, of which such Person directly or indirectly owns or controls at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization, or any organization of which such Person is a general partner.

 

“Transfer” has the meaning specified in
Section 4.4.

 

“Transferee” has the meaning specified in
Section 4.4.

 

“Transferring Member” has the meaning
specified in Section 4.4.

 

Section 1.2             Notices.  Any request, demand,
authorization, direction, notice, consent, or other document provided or
permitted by this Agreement to be made upon, given or furnished to, or filed
with:

 

(a)           The
Company shall be sufficient for every purpose hereunder if in writing and
delivered personally, telecopied or mailed first-class postage prepaid or sent
by a nationally recognized overnight courier to the Company addressed to the
attention of the General Counsel or Chief Financial Officer at One Salem Lake
Drive, Long Grove, IL 60047, fax: (847) 438-0211, phone: (847) 438-9500 or at
any other address previously furnished in writing to the other parties hereto,
with a copy to Brian Duwe, Esq., Skadden, Arps, Slate, Meagher &
Flom LLP, 333 W. Wacker Drive, Suite 2100, Chicago, IL 60606.

 

(b)           CHS
Inc. shall be sufficient for every purpose hereunder if in writing and
delivered personally, telecopied or mailed first-class postage prepaid or sent
by a nationally recognized overnight courier to it addressed to 5500 Cenex
Drive, Inver Grove Heights, Minnesota 55077-1733 or any other address
previously furnished in writing to the parties hereto.

 

(c)           La
Coop fédérée shall be sufficient for every purpose hereunder if in writing and
delivered personally, telecopied or mailed first-class postage prepaid or sent
by a nationally recognized overnight courier to it addressed to 9001 Boulevard
de l’Acadie, Bureau 200, Montreal, Quebec, H4N 3H7 CANADA or any other address
previously furnished in writing to the parties hereto.

 

(d)           GROWMARK, Inc.
shall be sufficient for every purpose hereunder if in writing and delivered
personally, telecopied or mailed first-class postage prepaid or sent by a
nationally recognized overnight courier to it addressed to 1701 Towanda Avenue,
Bloomington, Illinois 61701-9972 or any other address previously furnished in writing
to the parties hereto.

 

(e)           Intermountain
Farmers Association shall be sufficient for every purpose hereunder if in
writing and delivered personally, telecopied or mailed first-class postage
prepaid or sent by a nationally recognized overnight courier to it addressed to
1147 West 2100 South, Salt Lake City, Utah 84119-0168 or any other address
previously furnished in writing to the parties hereto.

 

5

 

(f)            Land
O’Lakes, Inc. shall be sufficient for every purpose hereunder if in
writing and delivered personally, telecopied or mailed first-class postage
prepaid or sent by a nationally recognized overnight courier to it addressed to
4001 Lexington Avenue North, Arden Hills, Minnesota 55126-2998 or any other address
previously furnished in writing to the parties hereto.

 

(g)           MFA
Incorporated shall be sufficient for every purpose hereunder if in writing and
delivered personally, telecopied or mailed first-class postage prepaid or sent
by a nationally recognized overnight courier to it addressed to 201 Ray Young
Drive, Columbia, Missouri 65201-3599 or any other address previously furnished
in writing to the parties hereto.

 

(h)           Southern
States Cooperative, Incorporated shall be sufficient for every purpose hereunder
if in writing and delivered personally, telecopied or mailed first-class
postage prepaid or sent by a nationally recognized overnight courier to it
addressed to 6606 West Broad Street, Richmond, Virginia 23230-1717 or any other
address previously furnished in writing to the parties hereto.

 

(i)            Tennessee
Farmers Cooperative shall be sufficient for every purpose hereunder if in
writing and delivered personally, telecopied or mailed first-class postage
prepaid or sent by a nationally recognized overnight courier to it addressed to
180 Old Nashville Hwy, LaVergne, Tennessee 37086-1983 or any other address
previously furnished in writing to the parties hereto.

 

Section 1.3             Effect of Headings.  The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof.

 

Section 1.4             Successors and Assigns.  All
covenants and agreements in this Agreement by the Company shall bind its
successors and assigns, whether so expressed or not.

 

Section 1.5             Benefits of Agreement. 
Subject to Section 5.6, nothing in this Agreement, express or
implied, shall give to any Person (other than the parties hereto) any benefit
or any legal or equitable right, remedy or claim under this Agreement or under
any covenant or provision herein contained, all such covenants and provisions
being for the sole benefit of the parties hereto.

 

Section 1.6             Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
state of Delaware applicable to contracts executed and performed wholly within
such state without giving effect to the choice of law principles of such state.

 

Section 1.7             Legal Holidays.  In
the event that an NOL Payment Date shall not be a Business Day, then
(notwithstanding any provision of this Agreement to the contrary) any payment
required to be made in respect of the use of Member-Sourced NOLs pursuant to
this Agreement on such date need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the applicable NOL Payment Date.

 

Section 1.8             Severability Clause.  In
case any one or more of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any

 

6

 

respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein.  Upon such determination that any term or other
provision is invalid, illegal or unenforceable, the court or other tribunal
making such determination is authorized and instructed to modify this Agreement
so as to effect the original intent of the parties as closely as possible so
that the transactions and agreements contemplated herein are consummated as
originally contemplated to the fullest extent possible.

 

Section 1.9             Counterparts.  This
Agreement may be signed in any number of counterparts, each of which shall be
deemed to constitute but one and the same instrument.

 

Section 1.10           Effectiveness.  This
Agreement shall be effective from and after the consummation of the
Merger.  This Agreement shall be deemed
terminated and of no force or effect, and the parties hereto shall have no
liability hereunder, if the IPO is terminated prior to the Effective Time.

 

Section 1.11           Entire Agreement.  This
Agreement, the Merger Agreement and the agreements referenced herein and
therein represent the entire understanding of the parties hereto with reference
to the matters contemplated hereby and such documents supersede any and all
prior oral or written agreements regarding such matters.

 

ARTICLE II

 

NOL RIGHTS

 

Section 2.1             Payment Procedures.

 

(a)           As
promptly as practicable but in no event later than 45 days after the Company or
any Consolidated Group or any of their Affiliates realize any actual cash tax
saving as a result of the utilization of any Member-Sourced NOL carryforward in
any tax year (or portion thereof) beginning after the Merger, the Parent shall
deliver to the Members a certificate (the “NOL Certificate”) setting
forth, in each case, in reasonable detail (i) the amount of any
Member-Sourced NOL carried forward by the Company and used by the Company or
any Consolidated Group, if any, (ii) a detailed description of tax savings
enjoyed by the Company or a Consolidated Group, if any, as a result of
utilization of Member-Sourced NOL, (iii) an itemized list of the Expenses
incurred to date, (iv) an itemized list of the Expenses as of the NOL
Payment Date (and not previously included in the computation of the NOL Payment
Amount) that the Company has incurred (whether directly or reimbursed),
(v) the calculation of the NOL Payment Amount, if any, through the date of
the NOL Certificate, (vi) any assumptions (as appropriate or requested)
underlying the determination of any item used in making the necessary
calculations for such calculations, and (vii) any financial or other
documentation (if requested) reasonably necessary to sufficiently support such
calculations.  For purposes of this
Agreement, neither the Company nor any Consolidated Group shall be considered
to have realized any actual cash tax savings from the utilization of a
Member-Sourced NOL prior to (A) the earlier of (i) the receipt of the
Ruling or (ii) a Determination that such Member-Sourced NOLs can be
utilized to offset taxable income of the Company or a Consolidated Group in any
tax year (or portion thereof) beginning after the Merger, and (B) with
respect to any tax year for which a federal or state

 

7

 

income tax return of the Company or Consolidated
Group is due after the receipt of such Ruling or Determination, the earlier of
(i) the due date (taking into account applicable extensions) for such
return or (ii) the date such return is actually filed.

 

(b)           Within
30 days of delivery of the NOL Certificate, each Member shall give written
notice to the Company specifying whether such member agrees or objects (a “Notice
of Agreement” and a “Notice of Objection”, respectively) to the NOL
Certificate and the computation of the NOL Payment Amount.

 

(c)           If
each Member delivers a Notice of Agreement and any NOL Payment Amount is
payable, the Company shall pay such amounts to the Members in accordance with
Section 2.2(a).

 

(d)           As
promptly as practicable following delivery of a Notice of Objection, the
applicable Member shall deliver to the Parent and each other Member a
certificate (an “Objection Certificate”) setting forth in reasonable
detail each of the objections to the calculations, valuations, methodologies,
lists, computations, assumptions and other information (collectively, the “Valuations”)
that the Member has to the applicable NOL Certificate.  If a Majority does not agree with the
Objection Certificate (or any objections within such Objection Certificate),
then the NOL Payment Amount shall be as set forth in the NOL Certificate and
the Parent shall pay such amounts in accordance with Section 2.2(a).  If within ten days of the delivery of the
Objection Certificate, a Majority agrees, in whole or in part, with the
Objection Certificate, the Parent and the Members shall attempt in good faith
to resolve all disagreements regarding the Valuations.  If, after 20 days, Parent and the Members are
unable to resolve any such disagreement, Parent and the Members shall subject
the remaining areas of disagreement regarding the NOL Certificate that are in
dispute to Ernst & Young or any other mutually agreed upon independent
public accounting firm of national standing that shall have expertise in the
valuation of assets and properties (the “Firm”).  The Firm shall be instructed to determine
whether the Valuations set forth in the NOL Certificate that are in dispute are
correct in all material respects.  If the
Firm determines that such Valuations are correct, the NOL Payment Amount shall
be as set forth in the NOL Certificate, and each Member shall be deemed to have
delivered a Notice of Agreement with respect to such NOL Certificate and the
Company shall pay such amounts in accordance with Section 2.2(a).  If the Firm determines that any of the
Valuations set forth in the NOL Certificate are incorrect in any respect
(whether or not material), the Firm’s resulting calculation of the NOL Payment
Amount shall be binding on all parties hereto (the “Resolution”) and the
Parent, upon notice of such Resolution, shall pay such amounts in accordance
with Section 2.2(a).  All costs and
expenses billed by the Firm in connection with the performance of its duties
described herein (“Firm Expenses”) shall be paid by the Members that
agreed with the Objection Certificate giving rise to such costs, in proportion
to such Members’ respective ownership of shares of preferred stock of the
Company immediately prior to the Merger:

 

(e)           If
a Member does not deliver a Notice of Agreement or a Notice of Objection to an
NOL Certificate within the 30-day period described above, the Member shall be
deemed to have delivered a Notice of Agreement with respect to such NOL
Certificate.

 

8

 

(f)            Notwithstanding
the foregoing, the provisions of this Section 2.1 (other than
Section 2.1(f) and the definition of NOL Certificate) shall not apply
to any NOL Certificate received as a result of a Settlement Decision.

 

Section 2.2             Payments to Members.

 

(a)           If
any NOL Payment Amount is determined to be payable in accordance with
Section 2.1 or Section 3.1(e), the Parent shall pay such amount to
the Members in proportion to the number of shares of preferred stock of the
Company owned by such Members immediately prior to the Merger (as set forth on
Schedule A hereto, as may be amended pursuant to Section 3.7 from
time to time) within five (5) Business Days after such determination is
final, accompanied by an Officer’s Certificate stating that the amount paid is
the NOL Payment Amount as determined in accordance with Section 2.1 or
Section 3.1(e), as the case may be.

 

(b)           In
the event that the Company or any Consolidated Group has utilized the
Member-Sourced NOLs in more than one taxable year, then the NOL Payment Amount
with respect to any such resulting tax savings shall be paid with respect to
each such actual use and the procedures described in Section 2.1 and
Section 3.1(e) shall apply to each such actual use of Member-Sourced
NOLs.

 

(c)           The
determination by the Company of any NOL Payment Amount pursuant to the
procedures set forth in Section 2.1, absent a mathematical error, shall be
final and binding on the Company and the Members.

 

(d)           Except
in the specific cases specified in this Agreement, no interest shall accrue on
any amounts payable to the Members.

 

Section 2.3             Member-Sourced NOL.

 

Within 45 days after filing the federal and state
income tax return of the Company for the tax year ending on the Merger date
(and any amended federal income tax return for such year), the Company shall
deliver to each Member a notice of the amount of Member-Sourced NOL
carryforwards reported on such return. 
The Company’s determination of such amount shall be final and binding
upon the Parent, the Company and the Members in the absence of manifest error
and except to the extent that the amount of Member-Sourced NOL is adjusted
through any amended return, tax audit, tax litigation or similar proceeding.

 

Section 2.4             Repayment of Amounts. 
Notwithstanding any other provision of this Agreement, in the event
that, after any amount is paid to the Members in respect of tax savings as a
result of the utilization of Member-Sourced NOL pursuant to this Agreement, the
Company reasonably determines that any such payment was erroneous or exceeded
the amount of tax savings actually realized from the utilization of
Member-Sourced NOL (such as, for example, as a result of an audit or other tax
proceeding pursuant to which it is determined that the Member-Sourced NOLs were
smaller than believed or were subject to limitations on use that were not taken
into account when such payments were made) (“Excess Payments”), each Member
that received an Excess Payment shall repay to the Company the amount of such
Excess Payment, together with interest on such Excess Payment at the
underpayment rate applicable to the Company under Section 6601 of the Code
for the period during which the Member held such

 

9

 

Excess Payment.  Any such repayment shall be made within 30
days after the Company delivers to the affected Members a notice setting forth
in reasonable detail the calculation of the amount of the Excess Payment (and
interest thereon).  Alternatively, in the
Company’s sole and absolute discretion, the Company shall have the right to
offset any Excess Payments owed by a Member to the Company against any amounts
owed by the Company, the Parent or any of their Subsidiaries to such
Member.  The purpose of this
Section 2.4 is to ensure that payments to the Members by the Company
pursuant to this Agreement shall be made only in respect of tax savings that
are actually realized by the Company through utilizing Member-Sourced NOL after
the Merger, and this Section 2.4 shall be interpreted consistent with such
purpose.

 

ARTICLE III

 

MEMBERS

 

Section 3.1             Certain Duties and Responsibilities.

 

(a)           The
Members undertake to perform such duties and only such duties as are
specifically set forth in this Agreement.

 

(b)           The
Members shall bear, in proportion to the number of shares of preferred stock of
the Company owned by such Members immediately prior to the Merger as set forth
on Schedule A (as may be amended from time to time pursuant to Section 3.7),
all of the costs incurred after the Merger in connection with or associated
with the Litigation, including, but not limited to, the Expenses. To the extent
possible, all Expenses shall be incurred and paid directly by the Members (or
the Responsible Member on behalf of the Members). To the extent that Expenses
are incurred by the Parent, the Company or any of their respective
Subsidiaries, (including, without limitation, Expenses constituting
reimbursement for the time of any employee of the Parent, the Company or any of
their respective Subsidiaries) the Parent or the Company shall be reimbursed
promptly for such Expenses by the Members. The Parent or the Company shall bill
each Member for its share of Expenses to be reimbursed by such Member pursuant
to the previous sentence whenever the Parent or the Company determines that the
aggregate amount of unbilled unreimbursed Expenses due from all Members exceeds
$50,000, but in no event less than annually (it being understood that a failure
to timely bill a Member for any unreimbursed Expense shall not in any way
prejudice the Parent’s or the Company’s right to be reimbursed for such
Expense).

 

(c)           The
Members shall have the sole power and duty to direct and supervise all matters
involving the Litigation (including trial strategy and planning and settlement
strategy) on behalf of the Company and any Consolidated Group; provided that all decisions and
determinations with respect to the Litigation (including, without limitation,
any Settlement Decision or Strategic Decision) shall be made in accordance with
this Section 3.1(c).  The Members
shall elect by Majority vote a Member (the “Responsible Member”), who
shall have primary responsibility for the day-to-day direction and supervision
of the Litigation and may, without the approval of any of the Parent, the
Company, the Company Subsidiaries, any of their respective Affiliates, or any
of the other Members, make decisions and determinations in accordance with
Section 3.1(d) hereof with respect to the day-to-day conduct of the
Litigation and such decisions shall be deemed to made on behalf of all of the
Members.  Notwithstanding

 

10

 

the foregoing, the approval of a Majority shall
be required for any Strategic Decision or any Settlement Decision.

 

(d)           In
making any decision or determination with respect to the Litigation (including,
without limitation, any Settlement Decision or Strategic Decision) the
Responsible Member shall act in good faith with a view to maximizing the
present value of the Litigation to the Members. 
Without limiting the generality of the foregoing, in connection with any
Settlement Decision, the Responsible Member shall consider:

 

(i)            the
aggregate amount of Member-Sourced NOLs to be carried forward;

 

(ii)           the
benefit to the Company and any Consolidated Group of any actual tax savings as
a result of such Member-Sourced NOLs carryforward;

 

(iii)          the
discounted present value of any prospective tax-savings.

 

The
discount rate applicable to the value of such prospective tax saving shall be
determined by the applicable Majority and shall give due regard to the
financial and other costs to the Company and the Company Subsidiaries of other
resolution of the Litigation.

 

(e)           In
connection with the approval of any Settlement Decision, the Parent and a
Majority shall jointly determine the amount, or a methodology for determining
the amount, of any Member-Sourced NOLs resulting from the settlement and the
resulting tax saving.  As promptly as
practicable (but in no event later than 30 days after the settlement), the
Parent shall deliver to the Members an NOL Certificate setting forth the
matters described in Section 2.1(a) to date.  Upon receipt of any actual tax savings
resulting from the Member-Sourced NOL carryover, the Parent shall compute the
NOL Payment Amount in a manner consistent with the NOL Certificate and shall
pay the NOL Payment Amount to the Members in accordance with
Section 2.2(a) (accompanied by the Officer Certificate’s setting
forth the NOL Payment Amount). The Parent’s management will make a good faith
effort to comply with the Responsible Member’s request to allow employees of
the Parent to participate in the Litigation activities.

 

(f)            The
Responsible Member shall confer in person or by telephone as frequently as
necessary to keep all Members informed about material developments in the
Litigation, on at least three days’ prior notice.  Such briefings by the Responsible Member
shall include a description of the progress of the Litigation and summarize any
material decisions or determinations that were made without seeking the
approval of the other Members.

 

(g)           The
Responsible Member shall establish procedures for making decisions in an
expedited manner in the case of exigent or emergency circumstances arising in
connection with the Litigation.

 

(h)           The
Responsible Member shall be deemed to be the agent of the Parent and the
Company for all purposes relating to evidentiary privileges, including
attorney-client privileges.

 

11

 

Section 3.2             Certain Rights of the Responsible Member;
Actions of the Responsible Member.  The Responsible Member
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Responsible Member.  In addition:

 

(a)           the
Responsible Member may rely upon and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

 

(b)           whenever
the Responsible Member shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Responsible Member may, in the absence of bad faith or willful misconduct on
its part, rely upon an Officer’s Certificate;

 

(c)           the
Responsible Member may engage and consult with counsel of its selection and the
written advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by them
hereunder in good faith and in reliance thereon;

 

(d)           the
Responsible Member may engage and consult with accounting firms, tax experts,
valuation firms and other experts and third parties that it, in its sole and
absolute discretion, deem appropriate or necessary to enable them to discharge
their duties hereunder; and

 

(e)           the
Responsible Member may request employees of the Parent, the Company, the
Company Subsidiaries, and their Affiliates to respond to discovery requests,
attend and prepare for depositions, prepare for and testify at trial, or take
any other action that the Responsible Members believes is necessary or prudent
in prosecuting the Litigation.

 

Except
as otherwise expressly provided in this Agreement, all decisions of the Members
shall be taken by Majority vote of the Members; provided, however, that the right to engage parties
(including employees of the Parent, the Company, the Company Subsidiaries, or
their Affiliates) to perform services with respect to the day-to-day conduct of
the Litigation shall be made by the Responsible Member.

 

Section 3.3             Reimbursement and Indemnification of the
Responsible Member.

 

(a)           The
Members agree:

 

(i)            except
as otherwise expressly provided herein, to pay to or on behalf of the
Responsible Member, upon the request of the Responsible Member, all reasonable
expenses and disbursements incurred or to be incurred by the Responsible Member
in connection with the discharge of their duties under this Agreement
(including, without limitation, the reasonable compensation and the expenses
and disbursements of their counsel, tax experts, valuation firms and other
experts and third parties as contemplated in Section 3.2); and

 

12

 

(ii)           to
indemnify the Responsible Member and hold him or her harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses and reasonable disbursements of
any kind or nature whatsoever (including, without limitation, the reasonable
compensation and the expenses and disbursements of their counsel, tax experts,
valuation firms and other experts and third parties as contemplated in
Section 3.2) that may be imposed on, asserted against or incurred by them
under this Agreement, and the Responsible Member shall be so indemnified under
this Agreement for his own ordinary or gross negligence, but the Responsible
Member does not have the right to be indemnified under this Agreement for their
own willful misconduct or bad faith.

 

(b)           All
reimbursements and indemnification payments made by the Members to the
Responsible Member pursuant to this Section 3.3 shall be made by the
Members in proportion to the number of shares of preferred stock of the Company
owned by such Members immediately prior to the Merger, as set forth on
Schedule A (as may be amended from time to time pursuant to
Section 3.7).

 

Section 3.4             Resignation and Removal; Appointment of
Successor.

 

(a)           The
Responsible Member may resign at any time by giving written notice thereof to
the Parent and other Members.

 

(b)           A
Majority may remove the Responsible Member at any time by giving written notice
thereof to the Parent and the Responsible Member.

 

(c)           If
the Responsible Member shall resign, be removed or become incapable of acting,
his or her successor shall be appointed by a Majority of the remaining Members.

 

(d)           The
Parent shall give notice of each resignation and each removal of the
Responsible Member and each appointment of a successor Responsible Member to
the other Members.  Each notice shall
include the name and address of the successor Responsible Member.  If the Parent fails to send such notice
within ten days after acceptance of appointment by a successor Responsible
Member, the successor Responsible Member shall cause the notice to be mailed at
the expense of the Parent.

 

Section 3.5             Acceptance of Appointment by Successor. 
Every successor Responsible Member appointed hereunder shall execute,
acknowledge and deliver to the Parent and to the retiring Responsible Member an
instrument accepting such appointment and a counterpart of this Agreement, and
thereupon such successor Responsible Member, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Responsible Member.

 

13

 

Section 3.6             Final Resolution.  On
the Last NOL Payment Date, this Agreement shall terminate; provided, however,
that the provisions of Section 3.3 shall survive the termination of the
Agreement.

 

Section 3.7             Opt Out

 

(a)           A
Member may opt out of the provisions of this Agreement (an “Opt Out”) upon
written notice to the Company and each of other Members (an “Opt Out
Notice”).  A Member’s Opt Out shall be
effective on the date specified by the Member in the Opt Out Notice, which
shall not be earlier than fifteen days after the delivery of the Opt Out
Notice.  Once given, an Opt Out Notice
may be revoked only with the consent of the Company and all of the Members that
have not Opted Out of this Agreement.

 

(b)           If
a Member Opts Out of this Agreement, from and after the effective date of such
Member’s Opt Out:  (i) such Member
shall not be responsible for any Expenses or Firm Expenses incurred on or after
the effective date of the Opt Out (but shall remain liable for its portion of
any Expenses or Firm Expenses incurred prior to such effective date);
(ii) such Member shall not be entitled to receive any payments pursuant to
this Agreement in respect of any tax savings realized by the Company or any
Consolidated Group as a result of the utilization of any Member-Sourced NOL in
any taxable year that ends on or after the effective date of such Member’s Opt
Out Notice (and shall be entitled to receive any payments pursuant to this
Agreement in respect of any actual cash tax savings realized by the Company or
any Consolidated Group as a result of the utilization of any Member-Sourced NOL
in any taxable year that ends prior to the effective date of such Member’s Opt
Out Notice);  and (iii) Schedule A
shall be amended, as of the effective date of each Opt Out Notice, to remove
the Member that has Opted Out, such that (A) any Expenses and Firm
Expenses incurred on or after the effective date of such Opt Out Notice shall
be borne by the Members that did not Opt Out in proportion to the number of
shares of preferred stock of the Company owned by such Members immediately
prior to the Merger, treating any shares of preferred stock owned immediately
before the Merger by a Member that has Opted Out as not being outstanding
immediately prior to the Merger for this purpose and (B) any payments
pursuant to this Agreement in respect of any cash tax savings actually realized
by the Company or any Consolidated Group as a result of the utilization of any
Member-Sourced NOL in any taxable year that ends on or after the effective date
of each Opt Out Notice shall be paid to the Members that did not Opt Out in
proportion to the number of shares of preferred stock of the Company owned by
such Members immediately prior to the Merger. 
Nothing in this Section 3.7 shall relieve any Member that Opts Out
of this Agreement of any of its obligations under Section 2.4  to repay to the Company any Excess Payments
it may have received, without regard to whether the determination that an
Excess Payment was made to such Member occurs before or after such Member has
Opted Out of this Agreement.

 

(c)           For
the avoidance of doubt, in the event that all of the Members Opt Out of this
Agreement, from and after the effective date of the Opt Out Notice of the last
Member to Opt Out, (i) the Company shall control and make all decisions
regarding the prosecution of the Litigation (including, without limitation,
whether to abandon the Litigation) in its sole and absolute discretion,
(ii) the Company shall bear all Expenses incurred after the effective date
of such last Opt Out if the Company chooses to pursue the Litigation, and
(iii) the Company shall be entitled to retain any tax savings realized by
the Company or any Consolidated Group as a

 

14

 

result of the utilization of any Member-Sourced
NOL in any taxable period ending after the effective date of the Opt Out Notice
of the last Member to Opt Out.

 

ARTICLE IV

 

COVENANTS

 

Section 4.1             Prosecution of Litigation by the Company;
Settlement; Periodic Reports; Expenses.

 

(a)           In
each case as directed by the Members pursuant to
Section 3.1(c) hereof, the Company shall cause to prosecute in good
faith the Litigation and/or seek a settlement of the Litigation.

 

(b)           None
of the Parent, the Company, any Company Subsidiary, or their Affiliates shall
make any Settlement Decision without obtaining prior approval from the
applicable Majority as determined in accordance with the last sentence of
Section 3.1(c).

 

(c)           Until
the Litigation has been settled or is final and not subject to further judicial
review (by appeal or otherwise), each of the Parent, the Company, the Company
Subsidiaries, their Affiliates and the Members shall cooperate in order to
ensure that (i) all of the Members receive, by the last Business Day of
each fiscal quarter of the Company, a report describing the status of the
Litigation, which report shall describe, in summary fashion, the total Expenses
incurred through the date of such report, the status of all pending IRS or
court proceedings related to the Litigation, and the status of any settlement
negotiations among the Parent, the Company, the Company Subsidiaries and their
Affiliates and the defendants with respect to the Litigation and
(ii) except as otherwise required by applicable law or court order, all of
the Members are granted access to any and all records, documents, personnel and
any other sources of information that are in the possession, custody or control
of the Parent, the Company and their Affiliates as the Members shall determine
are reasonably necessary or desirable in order to review Settlement Decisions
and Strategic Decisions, if any.  The
Parent, the Company, the Company Subsidiaries, and their Affiliates shall
cooperate with the Members in providing the assistance of any of their officers
and employees and, to the extent that the Parent or the Company, as the case
may be, believes in its reasonable determination that it is required to have
its employees expend efforts in prosecuting the Litigation, the Parent or the
Company shall be entitled to be reimbursed for any reasonable amount of hours
expended in such effort.

 

(d)           None
of the Parent, the Company, or the Company Subsidiaries shall initiate
settlement negotiations or expand settlement negotiations with respect to any
aspect or portion of the Litigation without the prior permission of a Majority
as set forth in the last sentence of Section 3.1(c) and the Parent
and the Company agree that such powers shall vest with the Members as provided
in Section 3.1(c).  No Member shall
initiate settlement negotiations without first informing each other Member of
such settlement negotiations and obtaining consent to pursue such negotiations
from a Majority of Members as determined in the last sentence of
Section 3.1(c).  If one or more
Members are allowed to entertain or initiate settlement negotiations, such
Members shall keep each other Member reasonably informed

 

15

 

regarding the status of such negotiations
(including any expansion of such negotiations) and any Members shall, if such
Members request, be allowed to participate in the settlement negotiations.

 

Section 4.2             Payment of NOL Payment Amount and Operations
of the Company.  The Parent or the Company shall duly and promptly
pay all amounts due in accordance with the terms of this Agreement; provided,
however, that none of the Parent, the Company or any Company Subsidiary shall
be obligated to arrange its affairs in such a manner as to increase the
likelihood that the Member-Sourced NOLs will be utilized by the Company or any
Consolidated Group after the Merger (other than in pursuing the Ruling and any
other Litigation in good faith, as contemplated herein).

 

Section 4.3             Federal Income Tax Treatment.  The
Parent or the Company shall not (and shall cause each of their Affiliates not
to) treat any NOL Payment Amount as payments of interest or compensation
(except as required under the Code and regulations promulgated thereunder) and
the Parent and the Company shall not (and shall not allow any of their
Affiliates to) take any position inconsistent with such treatment (unless
required by a determination that is final after the Parent, the Company or
their Affiliates have defended such matter in good faith).

 

Section 4.4             Transferability.  No
Member shall sell, exchange, transfer or otherwise dispose of any part of its
interest in this Agreement (a “Transfer”) to any other person (a “Transferee”)
unless: a) such Member (the “Transferring Member”) provides the Company and
each other Member with at least 15 days written notice of any proposed Transfer
(which notice shall include a description of the material terms of the proposed
Transfer and shall identify the proposed Transferee); b) such proposed Transfer
and Transferee are approved by a vote of a Majority; c) the proposed Transfer
includes a Transfer of the entire interest of the Transferring Member in this
Agreement, and d) the Transferee delivers a certificate to the Company and the
other Members acknowledging and agreeing to be bound by the terms of this
Agreement.  Solely for purposes of this
Section 4.4, whether a vote constitutes a Majority shall be determined as
if the shares of preferred stock of the Company held by the Transferring Member
were not outstanding immediately prior to the Merger.  Any attempted Transfer by a Member of any
interest in this Agreement that does not comply with the provisions of this
Section 4.4 shall be void and shall be given no effect.  From and after the completion of a Transfer
that does comply with the provisions of this Section 4.4, the Transferee
shall become a substitute Member and the Transferring Member shall no longer be
treated as a Member for purposes of this Agreement; provided, however,  that the Transfer of an interest in this
Agreement in accordance with this Section 4.4 shall not relieve the
Transferring Member of any of its obligations under this Agreement (including,
without limitation, its obligation to pay its share of the Expenses and Firm
Expenses) that accrued prior to the effectiveness of such Transfer to the
extent that such obligations are not fulfilled by the Transferee.

 

16

 

ARTICLE V

 

AMENDMENTS

 

Section 5.1             Amendments.

 

(a)           This
Agreement may not be amended except by an instrument in writing signed by the
Parent, the Company and the Majority.

 

Section 5.2             Execution of Amendments.  In
executing any amendment permitted by this Article, the Members shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement.  The Members
may, but are not obligated to, enter into any such amendment that affects the
Members’ own rights, privileges, covenants or duties under this Agreement or
otherwise.

 

Section 5.3             Effect of Amendments.  Upon
the execution of any amendment under this Article, this Agreement shall be
modified in accordance therewith, such amendment shall form a part of this
Agreement for all purposes and every Person hereto shall be bound thereby.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

17

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers to
be effective as of the day and year first above written.

 

 

	
   

  	
   

  	
  CF INDUSTRIES HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Stephen R. Wilson

  	
   

  
	
   

  	
   

  	
  Name: Stephen R. Wilson

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CF INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Stephen R. Wilson

  	
   

  
	
   

  	
   

  	
  Name: Stephen R. Wilson

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEMBERS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CHS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ John D. Johnson

  	
   

  
	
   

  	
   

  	
  Name: John D. Johnson

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LA COOP FÉDÉRÉE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Ernest Desrosiers

  	
   

  
	
   

  	
   

  	
  Name: Ernest Desrosiers

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GROWMARK, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ William Davission

  	
   

  
	
   

  	
   

  	
  Name: William Davisson

  
	
   

  	
   

  	
  Title: CEO

  

 

 

	
   

  	
   

  	
  INTERMOUNTAIN FARMERS ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Spencer P. Lloyd

  	
   

  
	
   

  	
   

  	
  Name: Spencer P. Lloyd

  
	
   

  	
   

  	
  Title: Senior VP and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LAND O’LAKES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ John E. Gherty

  	
   

  
	
   

  	
   

  	
  Name: John E. Gherty

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MFA INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Don Copenhaver

  	
   

  
	
   

  	
   

  	
  Name: Don Copenhaver

  
	
   

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOUTHERN STATES COOPERATIVE,

  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Thomas R. Scribner

  	
   

  
	
   

  	
   

  	
  Name: Thomas R. Scribner

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TENNESSEE FARMERS COOPERATIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Vernon L. Glover

  	
   

  
	
   

  	
   

  	
  Name: Vernon L. Glover

  
	
   

  	
   

  	
  Title: CEO

  

 

 

Schedule A

Ownership of Preferred Stock of CF Industries
Prior

to the Merger

 

	
   

  	
   

  	
  Preferred

  Shares

  	
   

  
	
  Land O’Lakes

  	
   

  	
  2,792,791

  	
   

  
	
  Southern
  States Cooperative

  	
   

  	
  409,820

  	
   

  
	
  MFA

  	
   

  	
  349,784

  	
   

  
	
  Tennessee
  Farmers Cooperative

  	
   

  	
  303,415

  	
   

  
	
  La Coop
  fédéree

  	
   

  	
  133,029

  	
   

  
	
  Intermountain
  Farmers Association

  	
   

  	
  17,817

  	
   

  
	
  CHS

  	
   

  	
  1,529,945

  	
   

  
	
  Growmark

  	
   

  	
  1,806,417

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  7,343,018

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]