Form of Restricted Stock Award



 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:	 	  


	 	 	President and Chief Executive Officer
		
	By:	 	  


	 	 	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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