Exhibit 10.9

 

RESTRICTED SHARE AWARD

 

Date of Award:

Number of Shares Awarded:

 

Dear :

 

We are pleased to inform you that as an executive Terra Industries Inc.
(“Terra”) or a Subsidiary thereof, you have been awarded, under the Stock
Incentive Plan of 2002 (the “Plan”), the number of Terra Common Shares set forth
above, subject to certain restrictions, terms and conditions set forth in this
letter and in the Plan. The restricted Common Shares issued to you are referred
to in this letter as the “Restricted Shares.”

 

1. From the date hereof until the restrictions on the Restricted Shares
terminate (the “Restriction Period”), the Restricted Shares shall not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed; provided,
however, that any of the Restricted Shares may be exchanged for any other Common
Shares that are similarly restricted.

 

2. The Restriction Period shall terminate at the following times:

 

a. The Restriction Period shall terminate with respect to one hundred percent
(100%) of the Restricted Shares on the day any one of the following occurs
within three (3) years of the Date of Award: (i) any person or group of persons
acting in concert (other than Anglo American plc, and its affiliates or a group
consisting solely of such persons (the “Anglo American Affiliates”)) acquires
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission promulgated under the Securities Exchange Act of 1934) of
the outstanding securities (the “Voting Shares”) of Terra in an amount having,
or convertible into securities having, 25% or more of the ordinary voting power
for the election of directors of Terra, provided that this 25% beneficial
ownership trigger shall apply only when the Anglo American Affiliates no longer
own 50% or more of the Voting Shares; (ii) during a period of not more than 24
months, a majority of the Board of Directors of Terra ceases to consist of the
existing membership or successors nominated by the existing membership or their
similar successors; (iii) all or substantially all of the individuals and
entities who were the beneficial owners of Terra’s outstanding securities
entitled to vote do not own more than 60% of such securities in substantially
the same proportions following a shareholder approved reorganization, merger, or
consolidation; or (iv) shareholder approval of either (A) a complete liquidation
or dissolution of Terra or (B) a sale or other disposition of all or
substantially all of the assets of Terra, or a transaction having a similar
effect.

 

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b. The Restriction Period shall terminate with respect to one hundred percent
(100%) of the Restricted Shares on the business day following the third
anniversary of the Date of Award.

 

Terra shall retain possession of the Restricted Shares until the later to occur
of the termination of the Restriction Period and the termination of the security
interest described in Section 6 of this letter.

 

3. If your Terra employment terminates during the term of this agreement, all
Restricted Shares subject to the Restriction Period shall automatically be
forfeited by you and reconveyed to the Corporation, except as follows:

 

a. If your employment terminates by reason of death, the Restricted Shares shall
continue to be eligible for vesting pursuant to Section 2 for a period of one
year from the date of death (provided that such vesting must occur, if at all,
on or before the third anniversary hereof).

 

b. If your employment terminates by reason of Total Disability, the Restricted
Shares shall continue to be eligible for vesting pursuant to Section 2 (provided
that such vesting must occur, if at all, on or before the third anniversary
hereof).

 

c. In cases of special circumstances the Compensation Committee may, in its sole
discretion when it finds that a waiver would be in the best interests of Terra,
extend the period for vesting or terminate the Restriction Period with respect
to all or a portion of your Restricted Shares.

 

4. This award shall not be effective unless you sign a copy of this letter and
deliver it to the Corporate Secretary of the Corporation, Terra Centre, 600
Fourth Street, Sioux City, Iowa 51101, before 4:30 p.m. central time on
August 22, 2004. If the Corporate Secretary does not have your properly executed
copy of this letter before such time, then, anything in this letter to the
contrary notwithstanding, this award shall terminate and be of no effect. Your
signing and delivering a copy of this letter shall evidence your acceptance of
the Restricted Shares upon the terms and conditions of this Award. Attached is a
copy of your Stock Certificate and Stock Power. Your execution of the stock
power will permit Terra to enforce the security interest described in Section 6
of this letter or reconvey the Restricted Shares to Terra in the event the Award
is forfeited.

 

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5. Except as set forth in this letter, upon the issuance of the Restricted
Shares you shall have all of the rights of a stockholder, including the right to
vote the Restricted Shares and the right to receive dividends thereon. The
certificates for any Restricted Shares shall bear an appropriate legend reciting
the terms, conditions and restrictions applicable thereto, and shall be subject
to appropriate stop-transfer orders. Terra shall issue your Restricted Shares
promptly after its Corporate Secretary receives the documents set forth in
Section 4, the Restricted Shares have been listed (or authorized for listing
upon official notice of issuance) upon each stock exchange upon which Terra’s
Common Shares are listed and there has been compliance with such laws and
regulations as Terra may deem applicable. Terra agrees to use its best efforts
to effect such listing and compliance.

 

6. You hereby agree to pay to Terra, or otherwise make arrangements satisfactory
to Terra regarding payment of, any federal, state or local taxes required or
authorized by law to be withheld with respect to the award of the Restricted
Shares or the termination of the Restriction Period (the “Withholding Taxes”).
Terra shall have, to the extent permitted by law, the right to deduct from any
payment of any kind otherwise due to the Employee, any Withholding Taxes and to
condition the delivery of the Restricted Shares after the termination of the
Restriction Period on the payment to Terra of the Withholding Taxes. You hereby
grant to Terra a security interest in the Restricted Shares to secure the
reconveyance of the Restricted Shares to the Corporation upon any forfeiture and
to ensure adequate provision for the Withholding Taxes. Terra shall release its
security interest in respect of any Restricted Shares on which (i) the
Restriction Period has terminated and (ii) all Withholding Taxes have been paid.
In lieu of the payment of such amounts in cash, you may pay all or a portion of
the Withholding Taxes by having Terra withhold a portion of the Common Shares
otherwise to be delivered upon vesting of the Restricted Shares.

 

7. Terra may, in its sole discretion, at any time or from time to time, in lieu
of the delivery of all or any portion of your Restricted Shares, pay to you cash
equal to the Fair Market Value (as defined in the Stock Incentive Plan of 2002)
of such shares on the day the Restriction Period terminates.

 

8. If any distribution is made to the holders of Restricted Shares other than a
cash dividend and new, different, or additional shares or other securities of
Terra or of another company are received by the holders of the Restricted
Shares, or if any recapitalization or reclassification, split-up or
consolidation of the Restricted Shares shall be effected, or, if in connection
with a merger or consolidation of Terra or a sale by Terra of all or a part of
its assets, the Restricted Shares are exchanged for a different number or class
of shares of stock or other securities of Terra or for shares of stock or other
securities of any other company, then any such other securities shall be subject
to similar restrictions as the Restricted Shares, and the number and class of
Restricted Shares, and the restrictions, terms and other conditions applicable
to any such other securities shall be equitably determined by the Committee.

 

9. Nothing in this Agreement shall confer upon the Employee any right to
continue in the employ of the Corporation or a Subsidiary, or affect the right
of the Corporation or of any Subsidiary to terminate the employment of the
Employee, with or without cause.

 

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These Restricted Shares are awarded pursuant to the Plan and are subject to its
terms. Capitalized terms used in this letter have the same meanings as defined
in the Plan. A copy of the Plan is being furnished to you with this letter and
also is available on request from the Corporate Secretary of the Corporation.

 

Very truly yours, TERRA INDUSTRIES INC. By:  

 

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    President and Chief Executive Officer By:  

 

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    Vice President, General Counsel     and Corporate Secretary

 

I hereby agree to the terms and conditions set forth above and acknowledge
receipt of the Stock Incentive Plan of 2002 and the Prospectus covering shares
issued under that Plan.

 

Signature of Employee

 

 

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