Document:

Form of Terra Lock-Up Letter dated 12/13/2004

  
 Exhibit 10.2

  
 EXECUTION COPY 
  
 TERRA INDUSTRIES INC. 
  
 REGISTRATION RIGHTS AGREEMENT 
  
 December 13, 2004 
  
 The Purchasers set out on Schedule 1 hereto 
  
 Ladies and Gentlemen: 
  
 Taurus Investments S.A., a corporation organized under the laws of the Grand Duchy of Luxembourg (the “Seller”), proposes to sell to the
purchasers listed on Schedule 1 hereto (the “Purchasers”) up to an aggregate of 25,060,725 common shares, without par value (the “Shares”), of Terra Industries Inc., a corporation organized under the laws of Maryland (the
“Company”), upon the terms set forth in the Purchase Agreement among the Purchasers and the Seller dated December 13, 2004 (the “Purchase Agreement”). For good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Company agrees for the benefit of the Purchasers and the benefit of the holders (including the Purchasers) from time to time of the Shares (each a “Holder” and, collectively, the “Holders”), as follows:

  
 1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following meanings: 
  
 “Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. 
  
 “Affiliate” shall have the meaning specified in Rule 405 under the Act and the terms “controlling” and “controlled” shall
have meanings correlative thereto. 
  
 “Business Day”
shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. 
  
 “Closing Date” shall mean the date of the sale of the Shares under
the Purchase Agreement. 
  
 “Commission” shall mean the
Securities and Exchange Commission. 
  
 “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. 
  
 “Holder” shall have the meaning set forth in the preamble hereto. 
  
 “Lazard” shall have the meaning set forth in Section 3(a)(i) hereof. 
  

 “Losses” shall have the meaning set forth in Section 5(d) hereof. 
  
 “Majority Holders” shall mean, on any date, Holders of a majority
of the Shares registered under the Shelf Registration Statement. 
  
 “NASD Rules” shall mean the Conduct Rules and the By-Laws of the National Association of Securities Dealers, Inc. 
  
 “Notice and Questionnaire” shall mean a written notice delivered to the Company substantially in the form attached as Schedule 2 to this
Agreement. 
  
 “Notice Holder” shall mean, on any date,
any Purchaser who holds Registrable Securities and any Holder of Registrable Securities that has delivered a Notice and Questionnaire to the Company on or prior to such date. 
  
 “Prospectus” shall mean a prospectus included in the Shelf Registration Statement (including, without limitation,
a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Shares covered by the Shelf Registration Statement, and all amendments and supplements thereto, including any and all exhibits thereto and any information incorporated by reference therein. 
  
 “Purchase Agreement” shall have the meaning set forth in the
preamble hereto. 
  
 “Purchasers” shall have the meaning
set forth in the preamble hereto. 
  
 “Registrable
Securities” shall mean Shares other than those that have been (i) registered under the Shelf Registration Statement and disposed of in accordance therewith or (ii) distributed to the public pursuant to Rule 144 under the Act or any successor
rule or regulation thereto that may be adopted by the Commission. 
  
 “Shelf Registration Period” shall have the meaning set forth in Section 2(c) hereof. 
  
 “Shelf Registration Statement” shall mean a “shelf” registration statement of the Company pursuant to the provisions of Section 2
hereof which covers some or all of the Shares on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 
  
 “Suspension Notice” shall have the meaning specified in Section 3(i)(i) hereof 
  

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 2. Shelf Registration. (a) The Company shall use its reasonable best efforts to file with the
Commission within 10 Business Days after the Closing Date, a Shelf Registration Statement providing for the registration of, and the sale on a continuous or delayed basis (and not on an underwritten basis) by the Holders of, all of the Registrable
Securities, from time to time in accordance with the methods of distribution elected by such Holders, pursuant to Rule 415 under the Act or any similar rule that may be adopted by the Commission. 
  
 (b) The Company shall use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Act no later than 90 days after the Closing Date. 
  
 (c) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as
required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for a period (the “Shelf Registration Period”) from the date the Shelf Registration Statement is declared effective by the Commission until
the earlier of (i) the second anniversary of the Closing Date or (ii) the date upon which there are no Registrable Securities outstanding. The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration
Statement effective during the Shelf Registration Period if it voluntarily takes any action that would result in Holders of Registrable Securities not being able to offer and sell such Shares at any time during the Shelf Registration Period, unless
such action is (x) required by applicable law, including the acquisition or divestiture of assets, or (y) permitted by Section 3(i) hereof. 
  
 (d) The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date
of the Shelf Registration Statement or such amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Act; and (ii) not to contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. 
  
 (e) Each Holder agrees to deliver a Notice and Questionnaire to the Company
at least three Business Days prior to any distribution by it of Registrable Securities under the Shelf Registration Statement. From and after the date the Shelf Registration Statement is declared effective, the Company shall, as promptly as is
practicable after the date a Notice and Questionnaire is delivered, and in any event within five Business Days after such date, (i) if required by applicable law, file with the Commission a post-effective amendment to the Shelf Registration
Statement or prepare and, if required by applicable law, file a supplement to the related Prospectus or a amendment or supplement to any document incorporated therein by reference or file any other required document so that the Holder delivering
such Notice and Questionnaire is named as a selling Holder in the Shelf Registration Statement and the related Prospectus and so that such Holder is permitted to deliver such Prospectus to purchasers of the Registrable Securities in accordance with
applicable law and, if the 

  

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Company shall file a post-effective amendment to the Shelf Registration Statement, use reasonable best efforts to cause such post-effective amendment to be
declared effective under the Act as promptly as is practicable, provided, that the Company shall only be obligated to file a supplement or amendment to the Shelf Registration Statement once per calendar quarter to name additional Notice Holders as
Selling Security Holders; (ii) provide such Holder with copies of any documents filed pursuant to Section 2(e)(i) above; and (iii) notify such Holder as promptly as practicable after the effectiveness under the Act of any post-effective amendment
filed pursuant to Section 2(e)(i) above, provided, that if such Notice and Questionnaire is delivered during a period when a Suspension Notice is in effect, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of such period in accordance with Section 3(i) hereof. Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any
Holder that is not a Notice Holder as a selling holder in the Shelf Registration Statement or related Prospectus; provided, however, that any Holder that becomes a Notice Holder pursuant to the provisions of this Section 2(e) (whether or not such
Holder was a Notice Holder at the time the Shelf Registration Statement was declared effective) shall be named as a selling Holder in the Shelf Registration Statement or related Prospectus in accordance with the requirements of this Section 2(e).

  
 3. Registration Procedures. The following provisions
shall apply in connection with the Shelf Registration Statement. 
  
 (a) The Company shall: 
  
 (i) furnish
to the Lazard Frères & Co. LLC (“Lazard”) and the Purchasers and to counsel for the Notice Holders, not less than five Business Days prior to the filing thereof with the Commission, a copy of the Shelf Registration Statement and
each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein (including all documents incorporated by reference therein after the initial filing) and shall use its commercially reasonable efforts to reflect in
each such document, when so filed with the Commission, such comments as the Majority Holders reasonably propose; and 
  
 (ii) include information regarding the Notice Holders and the methods of distribution they have elected for their Registrable Securities
provided to the Company in Notices and Questionnaires as necessary to permit such distribution by the methods specified therein. 
  
 (b) The Company shall ensure that: 
  
 (i) the Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement
thereto complies in all material respects with the Act; and 
  

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 (ii) the Shelf Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 
  
 (c) The Company shall advise Lazard and the Notice Holders and confirm such advice by notice in writing (which notice
pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension): 
  
 (i) when the Shelf Registration Statement and any amendment thereto has been filed with the Commission and
when the Shelf Registration Statement or any post-effective amendment thereto has become effective; 
  
 (ii) of any request by the Commission for any amendment or supplement to the Shelf Registration Statement or the Prospectus or for
additional information; 
  
 (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the institution or threatening of any proceeding for that purpose; 
  
 (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification
of the Shares included therein for sale in any jurisdiction or the institution or threatening of any proceeding for such purpose; and 
  
 (v) of the happening of any event that requires any change in the Shelf Registration Statement or the Prospectus so that, as of such date,
they (A) do not contain any untrue statement of a material fact and (B) do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances
under which they were made) not misleading. 
  
 (d) The Company
shall use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of the Shelf Registration Statement or the qualification of the securities therein for sale in any jurisdiction and, if issued, to obtain as soon
as possible the withdrawal thereof. 
  
 (e) The Company shall
furnish to each Notice Holder, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if a Notice Holder so requests in writing,
all exhibits thereto (including exhibits incorporated by reference therein). 
  
 (f) During the Shelf Registration Period, the Company shall promptly deliver to each Purchaser, each Notice Holder, and any sales or placement agents acting on their behalf, without charge, as many copies of the
Prospectus (including the 

  

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preliminary Prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as any such person may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the foregoing in connection with the offering and sale of the Shares. 
  
 (g) Prior to any offering of Shares pursuant to the Shelf Registration Statement, the Company shall arrange for the
qualification of the Shares for sale under the laws of such jurisdictions as any Notice Holder shall reasonably request and shall maintain such qualification in effect so long as required; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than suits arising out of any offering pursuant to the Shelf Registration Statement in any
jurisdiction where it is not then so subject. 
  
 (h) Upon the
occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Company shall promptly (or within the time period provided for by Section 3(i) hereof, if applicable) prepare a post-effective amendment to the Shelf Registration
Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to Purchasers of the securities included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
  
 (i) (i) The Company may at any time furnish to the Notice Holders a
certificate signed by its chairman of the board, president, chief executive officer, chief financial officer or general counsel (a “Suspension Notice”) stating that in his or her good faith judgment following consultation with the
Company’s outside securities counsel, the filing of an amendment or supplement to the Shelf Registration or a document incorporated by reference therein is necessary in order to ensure that the Shelf Registration conforms in all material
respects to the requirements of the Act and does not contain an untrue statement or a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Except to the extent
required by law, each Notice Holder shall keep confidential and not disclose the fact that it has received a Suspension Notice. The Company agrees that any such Suspension Notice shall provide only that a suspension is in effect and shall not
include any material non-public information regarding the cause for the issuance of such Suspension Notice. Upon receipt of a Suspension Notice, each Notice Holder receiving such notice shall immediately cease selling Registrable Securities pursuant
to the Shelf Registration and shall discontinue use of any prospectus contained in the Shelf Registration until such Notice Holder has received written notice from the Company pursuant to Section 3(i)(iv) that the Suspension Notice is no longer in
effect. 
  
 (ii) If at any time prior to the
initial filing of a Shelf Registration the Company shall furnish a Suspension Notice to the Notice Holders pursuant to Section 3(i)(i), the Company may postpone the filing (but not the preparation) of the 

  

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Shelf Registration for not more than 45 days upon prior notice of such postponement to the Holders; provided, however, that the Company shall not be
permitted to postpone registration pursuant to this clause (i)(ii) more than once. 
  
 (iii) Following the effectiveness of the Shelf Registration, the Company shall be obligated to deliver to the Notice Holders a Suspension
Notice immediately upon discovery by the Company of any condition of the type specified in Section 3(i)(i). The Company shall use commercially reasonably efforts to supplement and amend, if necessary, as promptly as practicable the Shelf
Registration such that the Shelf Registration, as amended or supplemented, conforms in all material respects to the requirements of the Securities Act and does not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company shall not be obligated to supplement or amend the Shelf Registration if the board of directors of the Company determines in
good faith following consultation with the Company’s outside securities counsel that the Company has pending or in process a material transaction, the disclosure of which would materially and adversely affect the Company or the market for its
securities, or the Company has undisclosed material information that the Company has a bona fide business purpose for preserving as confidential and which in each case would be required by the securities laws to be disclosed in the Shelf
Registration; provided, further, that (i) the Company shall be entitled to exercise such right pursuant to the foregoing proviso no more than twice in any period of 12 consecutive months and for not more than 90 days in any period of 12 consecutive
months and for no more than 45 days in any three-month period and (ii) the Company shall not be entitled to exercise such right during the 60 days following the effective date of the Shelf Registration. 
  
 (iv) The Company shall be obligated to promptly notify the
Notice Holders in writing once (A) the Shelf Registration has been supplemented or amended, including by the filing of a document incorporated therein by reference, in a manner that has corrected the condition that was the subject of such Suspension
Notice or (B) the Suspension Notice is otherwise no longer in effect due to the cessation of the condition that was the subject of such Suspension Notice. 
  
 (j) The Company shall comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders an
earnings statement satisfying the provisions of Section 11 (a) of the Act within the time period contemplated by Rule 158 and in any event no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Shelf Registration Statement. 
  
 (k) The Company may require each Holder of Registrable Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Shares as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement. The Company may exclude from the Shelf Registration Statement the 

  

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Shares of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. 
  
 (l) The Company shall: 
  
 (i) make reasonably available for inspection by each Holder
and any attorney, accountant or other agent retained by such Holder all relevant financial and other records and pertinent corporate documents of the Company and its subsidiaries; 
  
 (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all
relevant information reasonably requested by such Holder or any such attorney, accountant or agent in connection with any the Shelf Registration Statement as is customary for similar due diligence examinations; and 
  
 (iii) deliver such documents and certificates as may be
reasonably requested by the Majority Holders. 
  
 (m) The Company
shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Shares to be covered by the Shelf Registration Statement. 
  
 4. Registration Expenses. The Company shall bear all of its expenses incurred in connection with the performance of
the Company’s obligations under this Agreement, including, without limitation, filing fees with the Commission and in connection with any state securities and blue sky qualifications, legal and accounting fees and printer costs, and shall not
bear any separate expenses of the Purchasers or any Holders in connection with the matters covered by this Agreement, except as provided in Section 5 hereof. 
  
 5. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Holder, each Purchaser, the directors, officers,
employees, Affiliates and agents of each such Holder or Purchaser and each person who controls any Holder and Purchaser against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any preliminary Prospectus or the Prospectus, in
the light of the circumstances under which they were made) not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with 

  

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investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the party claiming indemnification or the Holder or Purchaser with whom such person is affiliated specifically for inclusion therein. This indemnity agreement shall be in addition to any liability that the
Company may otherwise have. 
  
 (b) Each Holder of Shares covered
by the Shelf Registration Statement (including each Purchaser that is a Holder, in such capacity) severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Shelf
Registration Statement and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to each such Holder, but only with reference to written
information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement shall be acknowledged by each Notice Holder that
is not a Purchaser in such Notice Holder’s Notice and Questionnaire and shall be in addition to any liability that any such Notice Holder may otherwise have. 
  
 (c) Promptly after receipt by an indemnified party under this Section 5 or notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party in writing of the commencement thereof, but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii)
will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel
(including local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel, other than local counsel if not appointed by the indemnifying party, retained by the indemnified party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel (including local counsel) to represent the indemnified party in an action, the indemnified party shall have the right
to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of one such separate counsel for all indemnified parties if the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of interest; the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the 

  

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indemnifying party; the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action; or the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of
such claim, action, suit or proceeding. The Company shall not be liable under this Section 5 for a settlement of any claim affected without its written prior consent, which shall not be unreasonably withheld. 
  
 (d) In the event that the indemnity provided in paragraph (a) or (b) of this
Section 5 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending loss, claim, liability, damage or action) (collectively “Losses”) to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Shelf Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information provided by the indemnifying party, on the
one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5, each person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Shelf Registration Statement and each director of the Company 

  

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shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). 
  
 (e) The provisions of this Section 5 shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the Company or any of the indemnified persons referred to in this Section 5, and shall survive the sale by a Holder of securities covered by the Shelf Registration Statement.

  
 6. Lock Up. Each Holder will not at any time prior to
February 15, 2005, without the Company’s prior written consent, directly or indirectly, sell any Registrable Securities, other than in a sale that is exempt from the registration requirements of the Act. In addition, each Holder will not, prior
to January 15, 2005, without the Company’s prior written consent, directly or indirectly, establish a put equivalent position with respect to the Registrable Securities held by such Holder. 
  
 7. Representations and Warranties. The Company hereby represents and
warrants to the Holders that: 
  
 (a) This
Agreement constitutes a valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms, except insofar as enforcement may be limited by insolvency or similar laws affecting the enforcement of
creditors’ rights in general, and except as enforceability may be limited by public policy or general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 
  
 (b) As of the date of this Agreement, the Company meets the
registrant eligibility requirements of General Instruction I.A. of Form S-3 under the Securities Act. 
  
 (c) The Company has not entered into, and agrees not to enter into, any agreement with respect to its securities that conflicts with the
provisions hereof or would be inconsistent with the terms hereof. 
  
 8. Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders; provided, however, that no such amendment, modification, supplement, waiver or consent shall be effective as to any Holder, if the effect thereof on such Holder would be more adverse than the effect on other Holders,
without the written consent of such Holder, and no amendment of this proviso shall be effective without the written consent of all Holders. 
  
 9. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery: 
  
 (a) if to a Holder other than a Purchaser, at the most current address given by such holder to the Company in a Notice and Questionnaire; 
  
 (b) if to the Purchasers, initially at the addresses set forth in Schedule 1 hereto; 
  
 (c) if to Lazard, initially at 30 Rockefeller Plaza, New
York, NY 10020, facsimile 212-332-0670; and 
  
 (d) if to the Company, initially at: 
  
 Terra
Industries Inc. 
 600 Fourth Street 
 Sioux City, Iowa 51101 
 Facsimile: 712-233-5586 
 Attention: General Counsel, with a copy to the 
 Chief Financial Officer 
  

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 All such notices and communications shall be deemed to have been duly given when received. 
  
 The Purchasers, Lazard or the Company by notice to the other parties may
designate additional or different addresses for subsequent notices or communications. 
  
 10. Remedies. Each Holder will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason
of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate. 
  
 11. Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective
successors and assigns, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Registrable Securities, and the indemnified persons referred to in Section 5 hereof. The Company hereby agrees
to extend the benefits of this Agreement to any Holder, and any Holder may specifically enforce the provisions of this Agreement as if an original party hereto. 
  

12. Counterparts. This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together
shall constitute one and the same agreement. 
  
 13.
Headings. The section headings used herein are for convenience only and shall not affect the construction hereof. 
  
 14. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement. 
  
 15. Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 
  
 If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company and the several Purchasers. 
  

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	 Very truly yours,

	
	Terra Industries Inc.
		
	 By
	 	 
	 	 	 Name: Francis G. Meyer

	 	 	 Title: Chief Financial Officer

  

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 The foregoing Agreement is hereby confirmed and accepted as of the date first above written. 
  

			
	 PURCHASER:
                                    

		
	 By:
	 	 
	 Name:

	 Title:

  

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 Schedule 1 
  
 Purchasers 
  

			
	 Name and Address

	 	 Number of Shares

  

 -15- 

  
 SCHEDULE 2 

 
 FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE 

 
 The undersigned beneficial holder of common shares, without par value (the
“Registrable Securities”) of Terra Industries Inc. (the “Company”) understands that the Company has filed or intends to file with the Securities and Exchange Commission a registration statement on Form S-3 (the “Shelf
Registration Statement”) for the registration of the resale under Rule 415 of the Securities Act of 1933 (the “Securities Act”), of the Registrable Securities in accordance with the terms of the Registration Rights Agreement, dated as
of December 13, 2004 (the “Registration Rights Agreement”), between the Company and the purchasers of the Registrable Securities. A copy of the Registration Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Registration Rights Agreement. 
  
 Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of
any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a prospectus to purchasers of
Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions, as described below). Beneficial owners are encouraged to complete and
deliver this Notice and Questionnaire prior to the effectiveness of the Shelf Registration Statement so that such beneficial owners may be named as selling securityholders in the related prospectus at the time of effectiveness. 
  
 Certain legal consequences arise from being named as a selling securityholder
in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named
as a selling securityholder in the Shelf Registration Statement and the related prospectus. 
  
 Notice 
  
 The undersigned
beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3
(unless otherwise specified under Item 3) pursuant to the Shelf Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands and agrees that it will be bound by the terms and conditions of this Notice
and Questionnaire and the Registration Rights Agreement. 
  

 -16- 

  
 QUESTIONNAIRE 
  

	1.	Information Regarding Selling Securityholder 

  

	 	(a)	Full legal name of Selling Securityholder: 

  
 ___________________________________________________________________________________________________ 
  

	 	(b)	Full legal name of registered holder (if not the same as (a) above) through which Registrable Securities listed in Item (3) below are held: 

 ___________________________________________________________________________________________________ 
  

	 	(c)	Is the Selling Securityholder an SEC-reporting company? If not, list below the individual or individuals who exercise the voting and/or dispositive power with respect to the Common
Shares. 

 ___________________________________________________________________________________________________ 
  
 ___________________________________________________________________________________________________ 
  

	 	(d)	Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act? 

  

	 	•	Yes. 

  

	 	•	No. 

	 	(e)	If your response to Item l(d) above is no, are you an “affiliate” of a broker-dealer registered pursuant to Section 15 of the Exchange Act? 

  

	 	•	Yes. 

  

	 	•	No. 

  
 For purposes of this Item 1(e), an “affiliate” of a registered broker-dealer shall include any company that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is
under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its affiliates. 
  

 -17- 

	 	(f)	Full legal name of person through which you hold the Registrable Securities—(i.e., name of your broker or the DTC participant, if applicable, through which your Registrable
Securities are held): 

  

			
	 Name of broker:_____________________________________________________________________________________

	
	 DTC No:___________________________________________________________________________________________

	
	 Contact person:______________________________________________________________________________________

	
	 Telephone No:_______________________________________________________________________________________

  

	2.	Address for Notices to Selling Securityholder 

  

			
	 Mailing Address:_____________________________________________________________________________________

	
	 Telephone (including area
code):________________________________________________________________________

	
	 Fax (including area
code):______________________________________________________________________________

	
	 Contact person:______________________________________________________________________________________

  

	3.	Beneficial Ownership of Registrable Securities 

  

	 	(a)	Number of Common Shares beneficially owned: 

  
 ___________________________________________________________________________________________________ 
  

	 	(b)	CUSIP No.(s). of such Registrable Securities beneficially owned: 

  
 ___________________________________________________________________________________________________ 
  

	4.	Beneficial Ownership of the Company’s Securities by the Selling Securityholder 

  
 Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of
the Company other than the Registrable Securities listed above in Item (3) (“Other Securities”). 
  

	 	(a)	Type and amount of Other Securities beneficially owned by the Selling Securityholder: 

  
 ___________________________________________________________________________________________________ 
  

	 	(b)	CUSIP No(s). of such Other Securities beneficially owned: 

  
 ___________________________________________________________________________________________________ 
  

	5.	Relationship with the Company 

  

	 	(a)	Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had
any other material relationship with the Company (or its predecessors or affiliates) during the past three years. 

  
 State any exceptions
here:                                       
                                        
          
  

	 	(b)	If the Selling Securityholder is a registered broker-dealer or an affiliate of a registered broker/dealer (See Items l(d) and l(c)), except as set forth below, (i) neither the
undersigned nor any of its affiliates has purchased the Registrable Securities other than in the ordinary course of business, and (ii) at the time of the purchase of the Registrable Securities to be registered, there was no agreement or
understanding, written or otherwise, with any person to distribute any such Registrable Securities. 

  
 State any exceptions
here:                                       
                                        
          
  

 -18- 

	6.	Plan of Distribution 

  
 Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3)
pursuant to the Shelf Registration Statement only as follows (if at all). Such Registrable Securities may be sold from time to time directly by the undersigned or, alternatively, through, broker-dealers or agents. If the Registrable Securities are
sold through broker-dealers or agents, the Selling Securityholder will be responsible for underwriting discounts or commissions or agent’s commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve block transactions): 
  

	 	•	on any national securities exchange or quotation service on which the Registrable Securities may be 

  

	 	•	listed or quoted at the time of sale; 

  

	 	•	in the over-the-counter market; 

  

	 	•	in transactions otherwise than on such exchanges or services or in the over-the-counter market; or 

  

	 	•	through the writing of options. 

  
 In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in
turn engage in short sales of the Registrable Securities and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities. 
  
 State any exceptions
here:                                       
                                        
          
  

 -19- 

 Note: In no event will such method(s) of distribution take the form of an underwritten offering of
the Registrable Securities without the prior agreement of the Company. 
  
 Instructions for Delivery of Questionnaire 
  
 Please return the completed and executed Questionnaire to Terra Industries Inc. at: 
  
 Terra Centre 
 600 Fourth Street 
 Post Office Box 6000 
 Sioux City, Iowa
51102-6000 
 Attention: Investor Relations, with a copy to General Counsel 
 Fax: (712) 277-7364 
  
 Acknowledgments 
  
 The undersigned acknowledges that it understands its obligation to comply with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Shelf Registration Statement. The
undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions. 
  
 The Selling Securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein. Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the Selling Securityholders against certain liabilities. 
  
 In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein (to the extent such information is required by law to
be in the Registration Statement) that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at
the address set forth above. 
  
 By signing below, the undersigned
consents to the disclosure of the information contained herein in its answers to items (1) through (6) and the inclusion of such information in the Shelf Registration Statement and the related Prospectus. The undersigned understands that such
information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related Prospectus. 
  

 -20- 

 Once this Notice and Questionnaire is executed by the undersigned and received by the Company, the terms
of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the
Company and the undersigned with respect to the Registrable Securities beneficially owned by the undersigned and listed in Item (3) above. This Notice and Questionnaire shall be governed in all respects by the laws of the State of New York.

  
 IN WITNESS WHEREOF, the undersigned, by authority duly given,
has caused this Questionnaire to be executed and delivered either in person or by its duly authorized agent. 
  

			
	 Please Fill in Name:

	 
		
	By:	 	 

			
	 Name:
	 	 
	 Title:
	 	 
	 Date:
	 	 

  

 -21-Severance Agreement by and between the Registrant and Tayloe Stansbury

 Exhibit 10.36 
  
 SEVERANCE AGREEMENT 
  
 THIS AGREEMENT is entered into as of August 26, 2004, by and between TAYLOE STANSBURY (the “Employee”) and
ARIBA, INC., a Delaware corporation (including any successor that becomes bound by this Agreement, the “Company”). 
  

	 	1.	 	TERMINATION BENEFITS WITHIN 12 MONTHS AFTER A CHANGE IN CONTROL. 

  
 (a) Qualifying Terminations. This Section 1 shall apply if: 
  
 (i) The Company terminates the Employee’s employment with the Company for a reason other than Cause or
Permanent Disability within 12 months after a Change in Control (as such terms are defined below); or 
  
 (ii) The Employee resigns for Good Reason (as defined below) within 12 months after a Change in Control. 
  
 (b) Severance Payment. If this Section 1 applies, then the Employee
shall be entitled to receive a severance payment from the Company. The amount of such payment shall be equal to 150% of the sum of (i) the Employee’s base salary at the annual rate in effect when his employment terminates plus (ii) the
Employee’s annual target bonus for the fiscal year in which his employment terminates. Such payment shall be made in a lump sum in cash on the date the Employee’s employment terminates under Subsection (a)(i) above or not later than the
date three business days after his employment terminates under Subsection (a)(ii) above. 
  
 (c) Acceleration of Vesting. If this Section 1 applies, then all of the Equity held by the Employee at the time of the termination of his employment shall become fully and unconditionally vested, fully
exercisable and fully transferable (except for transfer restrictions imposed by law). 
  
 (d) Extension of Option Exercise Period. If this Section 1 applies, then all of the Options held by the Employee at the time of the termination of his employment shall remain exercisable until the earlier of
(i) the date 18 months after the termination of the Employee’s employment or (ii) the date such Options would have expired if the Employee’s employment had not terminated. 
  
 (e) Definition of “Board.” For purposes of this Agreement, “Board” shall mean the Board of
Directors of the Company. 
  
 (f) Definition of
“Cause.” For purposes of this Section 1 only, “Cause” shall mean any intentional misconduct that materially injures the Company and its subsidiaries, taken as a whole, or has a material adverse effect on the business
or affairs of the Company and its subsidiaries, taken as a whole. 

 (g) Definition of “Change in Control.” For purposes of this Section 1 only, a
“Change in Control” shall be determined as follows: 
  
 (i) The consummation of a merger or consolidation of the Company, or any subsidiary of the Company, with or into another entity or any other corporate reorganization, if immediately after such transaction the
Ownership Percentage (as defined below) of persons who were not stockholders of the Company immediately before such transaction is 30% or more; provided, however, that if such percentage is less than 50%, a majority of the Incumbent Directors may
determine prior to the consummation of such transaction that a Change of Control has not occurred after considering all relevant factors; 
  
 (ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets; 
  
 (iii) A change in the composition of the Board, as a result
of which fewer than two-thirds of the incumbent directors are directors who either (A) had been directors of the Company on the date hereof (the “original directors”) or (B) were elected, or nominated for election, to the Board with the
approval of at least a majority of the sum of (I) the original directors who were still in office at the time of the election or nomination and (II) the directors whose election or nomination was previously so approved (collectively, the
“Incumbent Directors”); or 
  
 (iv) Any
transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of securities of the Company
representing at least 25% of the total voting power represented by the Company’s then outstanding voting securities. 
  
 For purposes of this Subsection (g), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall
exclude (A) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a parent or subsidiary of the Company and (B) a corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the common stock of the Company. 
  
 For purposes of Paragraph (i) above, the term “Ownership Percentage” means the percentage of the voting power of the outstanding securities of (A) the continuing or surviving entity and (B) any direct or
indirect parent corporation of such continuing or surviving entity. 
  
 For
purposes of the proviso in Paragraph (i) above, the factors to be considered by the Board in determining that a Change in Control has not occurred shall include, without limitation: 
  
 (A) The Ownership Percentage; 
  
 (B) Whether there is a change in the composition of the Board
of Directors of the Company or the continuing or surviving entity; 
  

 2 

 (C) Whether there is a change in the management of the Company or the continuing or
surviving entity; 
  
 (D) The extent of the
anticipated change in the business, operations or assets of the Company or the continuing or surviving entity; 
  
 (E) The level of severance benefits available to comparable management at any entity other than the Company resulting from any transaction
specified in Paragraphs (i) through (iv) above; and 
  
 (F) Whether treating the transaction as a Change in Control for purposes of this Agreement is necessary or desirable for purposes of achieving the business objectives of the transaction specified in Paragraphs (i) through (iv) above.

  
 A transaction shall not constitute a Change in Control if its sole purpose is
to change the State of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction. 
  
 (h) Definition of “Equity.” For purposes of this
Agreement, “Equity” shall mean (i) all shares of the capital stock of the Company (“Stock”), (ii) all options and other rights to purchase shares of Stock, (iii) all stock units, performance units or phantom shares whose value is
measured by the value of shares of Stock and (iv) all stock appreciation rights whose value is measured by increases in the value of shares of Stock. 
  
 (i) Definition of “Good Reason.” For purposes of this Section 1 only, “Good Reason” shall mean (i) a reduction in the
Employee’s level of compensation (including base salary, fringe benefits and participation in bonus or incentive programs) or (ii) a relocation of his place of employment by more than 50 miles, provided and only if such reduction or relocation
is effected by the Company without his consent. 
  
 (j)
Definition of “Options.” For purposes of this Agreement, “Options” shall mean (i) all options and other rights to purchase shares of Stock and (ii) all stock appreciation rights whose value is measured by increases
in the value of shares of Stock. 
  
 (k) Definition of
“Permanent Disability.” For purposes of this Agreement, “Permanent Disability” shall mean that the Employee, at the time notice is given, has failed to perform the duties of his position with the Company for a period
of not less than 180 consecutive days (or such longer period as may be required by law) as the result of his incapacity due to physical or mental injury, disability or illness. 
  

	 	2.	 	TERMINATION BENEFITS BEFORE, OR MORE THAN 12 MONTHS AFTER, A CHANGE IN CONTROL. 

  
 (a) Qualifying Terminations. This Section 2 shall only apply if: 
  
 (i) Section 1 does not apply; 
  

 3 

 (ii) The Company terminates the Employee’s employment with the Company for a reason
other than Cause or Permanent Disability; and 
  
 (iii) Either (A) the Employee and the Company have executed a reciprocal general release, in the form attached hereto as Exhibit A, of all known and unknown claims that they may then have against each other (the “Release”)
and have agreed not to prosecute any legal action or other proceeding based on such claims or (B) the Company (at its sole discretion) has determined to waive the requirement of a reciprocal general release. 
  
 The foregoing notwithstanding, the Employee and the Company shall not be required to release
any claims that they may have against each other arising under (i) the Indemnification Agreement dated April 30, 2003, between the Employee and the Company or (ii) any rights to indemnification, advancement of expenses or repayment arising under the
Company’s Amended and Restated Certificate of Incorporation, the Company’s Amended and Restated Bylaws or the indemnification provisions of applicable State statutes, in each case as currently in effect or as subsequently amended.

  
 (b) Severance Pay. If this Section 2 applies, then the
Employee shall be entitled to receive severance payments from the Company for a period of 12 months following the termination of his employment (the “Continuation Period”). Such severance payments shall be made in accordance with the
Company’s standard payroll procedures. The annual rate of such severance payments shall be equal to the sum of (i) the Employee’s base salary at the annual rate in effect when his employment terminates plus (ii) the Employee’s annual
target bonus for the fiscal year in which his employment terminates. In addition to any other remedies that may be available to the Company, severance payments shall cease immediately if the Employee fails to comply with the covenants set forth in
Section 3 below. 
  
 (c) Acceleration of Vesting. If this
Section 2 applies, then: 
  
 (i) The vested
portion of all restricted shares of Stock held by the Employee at the time of the termination of his employment shall at all times thereafter be determined by adding 12 months to his actual period of service with the Company. 
  
 (ii) The Employee shall continue to vest in the Equity held
by him at the time of the termination of his employment (other than restricted shares of Stock) during the Continuation Period, subject to his compliance with the covenants set forth in Section 3 below. The monthly rate of vesting during the
Continuation Period shall be the same as prior to the termination of the Employee’s employment. 
  
 (d) Extension of Option Exercise Period. If this Section 2 applies, and if the termination of the Employee’s employment is effective after
December 31, 2005, then all of the Options held by the Employee at the time of the termination of his employment shall remain exercisable until the earlier of: 
  

 4 

 (i) The later of (A) the date 12 months after the termination of the Employee’s
employment or (B) with respect to any increment of such Options that becomes exercisable later than nine months after the termination of the Employee’s employment, the date three months after such increment becomes exercisable; or 

 
 (ii) The date such Options would have expired if the
Employee’s employment had not terminated. 
  
 (e)
Definition of “Cause.” For purposes of this Section 2 only, “Cause” shall mean: 
  
 (i) Any gross negligence or intentional misconduct that materially injures the Company and its subsidiaries, taken as a whole, or has a
material adverse effect on the business or affairs of the Company and its subsidiaries, taken as a whole; 
  
 (ii) Any unauthorized use or disclosure by the Employee of the Company’s confidential information or trade secrets resulting from
gross negligence that materially injures the Company and its subsidiaries, taken as a whole, or has a material adverse effect on the business or affairs of the Company and its subsidiaries, taken as a whole; 
  
 (iii) A failure by the Employee to comply with the
Company’s written policies or rules that materially injures the Company and its subsidiaries, taken as a whole, or has a material adverse affect on the business or affairs of the Company and its subsidiaries, taken as a whole, provided that the
Board shall have given the Employee notice of such failure and an opportunity to cure such failure, if curable; or 
  
 (iv) The Employee’s conviction of, or plea “guilty” or “no contest” to, a felony under the laws of the United
States or any State thereof. 
  
 With respect to acts or omissions
described in Paragraphs (i) and (iii) above, “Cause” shall only be deemed to exist following written notice to the Employee from the Company and his failure to cure such acts or omissions within 30 days of receipt of such written notice.

  

	 	3.	 	COVENANTS. 

  
 (a) Non-Solicitation. During his employment with the Company and, if Section 2 applies, during the Continuation Period, the Employee shall not
directly or indirectly, personally or through others, solicit or attempt to solicit the employment of any employee of the Company or any of the Company’s affiliates, whether on the Employee’s own behalf or on behalf of any other person or
entity. The term “employment” for purposes of this Subsection (a) means to enter into an arrangement for services as a full-time or part-time employee, independent contractor, agent or otherwise. The Employee and the Company agree that
this provision is reasonably enforced as to any geographic area in which the Company conducts its business. 
  

 5 

 (b) Non-Competition. The Employee agrees that, during his employment with the Company and during
the Continuation Period (if any), he shall not: 
  
 (i) Directly or indirectly, individually or in conjunction with others, engage in activities that compete with the Company or work for any entity that is part of the Company’s Market; 
  
 (ii) Solicit, serve, contract with or otherwise engage any
existing or prospective customer, client or account of the Company on behalf of any entity that is part of the Company’s Market; or 
  
 (iii) Cause or attempt to cause any existing or prospective customer, client or account of the Company to divert from, terminate, limit or
in any manner modify, or fail to enter into, any actual or potential business relationship with the Company. The Employee and the Company agree that this provision is reasonably enforced with reference to any geographic area in which the Company
maintains any such relationship. 
  
 For purposes of this Subsection (b), the
Company’s “Market” shall mean (i) all companies that derive their revenue primarily from e-procurement and/or spend management software sales or sales of software or services aiding companies in sourcing and/or spend management
activities and (ii) those companies set forth on Exhibit B attached hereto. The Employee and the Company agree that the Company’s Market is global in scope. 
  
 (c) Cooperation and Non-Disparagement. The Employee agrees that, during the Continuation Period, he shall cooperate
with and assist the Company in every reasonable respect in facilitating the transition of his duties to his successor; provided that the Employee shall not be required to devote more than 20 hours per month to providing such assistance and
cooperation. The Employee further agrees that, during the Continuation Period, he shall not in any way or by any means disparage the Company, the members of the Board or the Company’s officers and employees. 
  
 (d) Disclosure. The Employee agrees that, during the Continuation
Period, he shall inform any new employer or other person or entity with whom the Employee enters into a business relationship, before accepting employment or entering into a business relationship, of the existence of this Section 3. 
  
 (e) Construction. If any provision set forth in this Section 3 is not
enforceable under the laws of the State in which the Employee is employed following the termination of his employment with the Company, nothing in this Agreement shall prohibit the Employee from engaging in such lawful conduct; provided, however,
that if the Employee elects to do so, his rights to any of the benefits set forth in Section 2 shall terminate immediately. 
  

	 	4.	 	PARACHUTE PAYMENTS. 

  
 (a) Parachute Gross-Up Payment. If it is determined that any cash payment of any type to the Employee or for his benefit by the Company, any of its
affiliates, any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of section 280G of the Internal Revenue 
  

 6 

 Code of 1986, as amended (the “Code”), and the regulations thereunder) or any affiliate of such person, whether
paid or payable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise
tax and any such interest or penalties are collectively referred to as the “Excise Tax”), then the Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount calculated to ensure that after
the Employee pays all taxes (and any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments. For purposes of this Section 4, the Excise Tax and any related gross-up benefits shall be determined based on cash compensation, before consideration of the taxable compensation (if any) related to the Employee’s Equity and
arising from this Agreement. 
  
 (b) Determination by
Accountant. All determinations and calculations required to be made under this Section 4 shall be made by an independent accounting firm selected by the Employee from among the largest five accounting firms in the United States (the
“Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, to the
Employee and the Company within five business days after the Employee or the Company made a request (if the Employee reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Employee, it shall furnish the Employee with a written statement that it has concluded that no Excise Tax is payable (including the reasons therefor) and that the Employee has substantial authority not to report any
Excise Tax on his federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to the Employee within five business days after the Determination has been delivered to him or the Company. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee, absent manifest error. 
  
 (c) Over- and Underpayments. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments not made by the Company should have been made (“Underpayment”) or that Gross-Up Payments will have been made by the Company that should not have been made (“Overpayment”). In either event, the Accounting Firm shall
determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the Company shall promptly pay the amount of such Underpayment to the Employee or for his benefit. In the case of an Overpayment, the Employee
shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise
reasonably cooperate with the Company to correct such Overpayment, provided, however, that (i) the Employee shall in no event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that the Employee
has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Subsection (a) above, which is to make the Employee whole, on an after-tax basis,
from the application of the Excise Tax, it being understood that the correction of an Overpayment may result in the Employee’s repaying to the Company an amount that is less than the Overpayment. 
  

 7 

 (d) Limitation on Parachute Payments. Any other provision of this Section 4 notwithstanding, if
the Excise Tax could be avoided by reducing the Total Payments by $25,000 or less, then the Total Payments shall be reduced to the extent necessary to avoid the Excise Tax and no Gross-Up Payment shall be made. If the Accounting Firm determines that
the Total Payments are to be reduced under the preceding sentence, then the Company shall promptly give the Employee notice to that effect and a copy of the detailed calculation thereof. The Employee may then elect, in his sole discretion, which and
how much of the Total Payments are to be eliminated or reduced (as long as after such election no Excise Tax shall be payable), and the Employee shall advise the Company in writing of his election within 10 days of receipt of notice. If the Employee
makes no such election within such 10-day period, then the Company may elect which and how much of the Total Payments are to be eliminated or reduced (as long as after such election no Excise Tax shall be payable), and it shall notify the Employee
promptly of such election. 
  

	 	5.	 	EMPLOYMENT AT WILL. 

  
 The Employee’s employment with the Company shall be “at will,” meaning that either the Employee or the Company shall be entitled to
terminate the Employee’s employment at any time and for any reason, with or without Cause. Any contrary representations that may have been made to the Employee shall be superseded by this Agreement. This Agreement shall constitute the full and
complete agreement between the Employee and the Company on the “at will” nature of the Employee’s employment, which may only be changed in an express written agreement signed by the Employee and a duly authorized officer of the
Company. 
  

	 	6.	 	SUCCESSORS. 

  
 (a) Company’s Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, reorganization, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. For all purposes under this Agreement, the term “Company” shall include any successor to the
Company’s business and/or assets that becomes bound by this Agreement. 
  
 (b) Employee’s Successors. This Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. 
  

	 	7.	 	ARBITRATION. 

  
 (a) Scope of Arbitration Requirement. The parties hereby waive their rights to a trial before a judge or jury and agree to arbitrate before a
neutral arbitrator any and all claims or disputes arising out of this Agreement or the Release and any and all claims arising from or relating to the Employee’s employment with the Company, including (but not limited to) claims against any
current or former employee, director or agent of the Company, claims of wrongful termination, retaliation, discrimination, harassment, breach of contract, breach of the covenant of good faith and fair dealing, defamation, invasion of privacy, fraud,
misrepresentation, constructive discharge or failure to provide a leave of absence, claims regarding commissions, stock options or bonuses, infliction of emotional distress or unfair business practices, or any tort or tort-like causes of action.

  

 8 

 (b) Exceptions. The foregoing notwithstanding, the following are the only claims that may be
resolved in any appropriate forum (including courts of law) as required by applicable laws then in effect: (i) claims concerning workers’ compensation benefits; and (ii) claims concerning unemployment insurance. 
  
 (c) Procedure. The arbitrator’s decision shall be written and
shall include the findings of fact and law that support the decision. The arbitrator’s decision shall be final and binding on both parties, except to the extent applicable law allows for judicial review of arbitration awards. The arbitrator may
award any remedies that would otherwise be available to the parties if they were to bring the dispute in court. The arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association; provided, however, that the arbitrator shall allow the discovery authorized by the California Arbitration Act or the discovery that the arbitrator deems necessary for the parties to vindicate their respective claims or
defenses. The arbitration shall take place in Santa Clara County or, at the Employee’s option, the county in which the Employee primarily worked with the Company at the time when the arbitrable dispute or claim first arose. 
  
 (d) Costs. The parties shall share the costs of arbitration equally,
except that the Company shall bear the cost of the arbitrator’s fee and any other type of expense or cost that the Employee would not be required to bear if he were to bring the dispute or claim in court. Both the Company and the Employee shall
be responsible for their own attorneys’ fees, and the arbitrator may not award attorneys’ fees unless a statute or contract at issue specifically authorizes such an award. 
  

	 	8.	 	MISCELLANEOUS PROVISIONS. 

  
 (a) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him at the home address that he most recently communicated
to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. 
  
 (b) Entire Agreement. This Agreement supersedes and replaces any prior
agreements, representations or understandings, whether written, oral or implied, between the Employee and the Company with respect to the subject matter hereof. 
  

(c) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by
the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. 
  
 (d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be
withheld by law. 
  

 9 

 (e) Choice of Law and Severability. This Agreement is executed by the parties in the State of
California and shall be interpreted in accordance with the laws of such State (except their provisions governing the choice of law). If any provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any jurisdiction by
reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be stricken and the remainder of this Agreement shall continue in full force and effect. Should there ever occur any conflict between any provision contained in this Agreement and any
present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, then the latter shall prevail, but the provision of this Agreement affected thereby shall be curtailed and limited only to the
extent necessary to bring it into compliance with applicable law. All the other terms and provisions of this Agreement shall continue in full force and effect without impairment or limitation. 
  
 (f) No Assignment. This Agreement and all rights and obligations of
the Employee hereunder are personal to the Employee and may not be transferred or assigned by the Employee at any time; provided that Employee may assign his rights hereunder pursuant to any property settlement resulting from the dissolution of his
marriage on the condition that such rights shall be conditioned upon Employee’s performance of his obligations hereunder as if no such assignment had occurred. The Company may assign its rights under this Agreement to any entity that assumes
the Company’s obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company’s assets to such entity. 
  
 (g) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. 
  
 IN WITNESS
WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. 
  

	
	
	/s/    H. Tayloe Stansbury        
	 

			
	ARIBA, INC.
		
	By	 	/s/    Robert M. Calderoni        
		
	Title:	 	CEO

  

 10 

 EXHIBIT A 
 FORM OF RELEASE 
  
 ARIBA, INC. 
 807 11th Avenue 
 Sunnyvale, CA 94089 
  
                          , 20     
  
 Mr. Tayloe Stansbury 
  
 Dear Tayloe: 
  
 This letter (the “Agreement”) confirms the agreement between you and Ariba, Inc. (the “Company”) regarding the termination of your
employment with the Company. 
  
 1. Termination Date. Your
employment with the Company will terminate on                          , 20     (the
“Termination Date”). 
  
 2. Effective Date and
Rescission. You have up to 21 days after you received this Agreement to review it. You are advised to consult an attorney of your own choosing (at your own expense) before signing this Agreement. Furthermore, you have up to seven days after you
signed this Agreement to revoke it. If you wish to revoke this Agreement after signing it, you may do so by delivering a letter of revocation to me. If you do not revoke this Agreement, the eighth day after the date you signed it will be the
“Effective Date.” Because of the seven-day revocation period, no part of this Agreement will become effective or enforceable until the Effective Date. 
  

3. Salary and Vacation Pay. On the Termination Date, the Company will pay you
$             (less all applicable withholding taxes and other deductions). This amount represents all of your salary earned through the Termination Date and all of your accrued but
unused vacation time or PTO. You acknowledge that, if you did not execute this Agreement, you would not be entitled to receive any additional money from the Company. The only payments and benefits that you are entitled to receive from the Company in
the future are those specified in this Agreement. 
  
 4.
Severance Benefits. In consideration of executing this Agreement, you will receive from the Company the severance payments and other benefits described in Section 2 of the Severance Agreement dated August 26, 2004, between you and the Company
(the “Severance Agreement”). As described in Section 2 of the Severance Agreement, the continuation of such severance benefits is subject to your compliance with the covenants described in Section 3 of the Severance Agreement. 

 
 5. Release of Your Claims. In consideration of receiving the
severance payments and other benefits described in Section 2 of the Severance Agreement, you waive, 
  

 11 

 release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its
predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns and employee benefit plans with respect to any matter, including (without limitation) any matter related
to your employment with the Company or the termination of that employment, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of
privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights
Act of 1964, the California Fair Employment and Housing Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act and all other laws and regulations relating to employment. However, this release bars only those
claims that arose prior to the execution of this Agreement. Execution of this Agreement does not bar: 
  
 (a) Any claim that arises hereafter; 
  
 (b) Any claim arising under the Indemnification Agreement dated April 30, 2003, between you and the Company, as amended (the
“Indemnification Agreement”); 
  
 (c)
Any claim to indemnification or advancement of expenses arising under the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate”), or the Company’s Amended and Restated Bylaws, as amended (the
“Bylaws”); or 
  
 (d) Any claim to
indemnification or advancement of expenses arising under applicable State statutes. 
  
 6. Release of the Company’s Claims. The Company waives, releases and promises never to assert any claims or causes of action, whether or not now known, against you or your successors, agents or assigns
with respect to any matter, including (without limitation) any matter related to your employment with the Company or the termination of that employment, including (without limitation) claims to attorneys’ fees or costs and claims of defamation,
fraud, breach of contract or breach of the covenant of good faith and fair dealing. However, this release bars only those claims that arose prior to the execution of this Agreement. Execution of this Agreement does not bar: 
  
 (a) Any claim that arises hereafter; 
  
 (b) Any claim arising under the Indemnification Agreement;

  
 (c) Any claim to repayment of indemnification
payments arising under the Certificate or the Bylaws; or 
  
 (d) Any claim to repayment of indemnification payments arising under applicable State statutes. 
  
 7. Waiver. You and the Company expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any
analogous law of any 
  

 12 

 other State), which reads as follows: “A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” 
  

8. Promise Not To Sue. You agree that you will never, individually or with any other person, commence, aid in any way (except as required by
legal process) or prosecute, or cause or permit to be commenced or prosecuted, any action or other proceeding based on any claim that has been released pursuant to Section 5 above. The Company agrees that it will never, individually or with any
other person, commence, aid in any way (except as required by legal process) or prosecute, or cause or permit to be commenced or prosecuted, any action or other proceeding based on any claim that has been released pursuant to Section 6 above.

  
 9. No Admission. Nothing contained in this Agreement
will constitute or be treated as an admission by you or the Company of liability, any wrongdoing or any violation of law. 
  
 10. Employee Agreement. At all times in the future, you will remain bound by your Employee Agreement with the Company. 
  
 11. Company Property. You represent that you have returned to the
Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company. 
  
 12. Severability; Modifications. If any term of this Agreement is held
to be invalid, void or unenforceable, the remainder of this Agreement will remain in full force and effect and will in no way be affected, and the parties will use their best efforts to find an alternate way to achieve the same result. This
Agreement may be modified only in a written document signed by you and a duly authorized officer of the Company. 
  
 13. Choice of Law; Arbitration. This Agreement will be construed and interpreted in accordance with the laws of the State of California (other than
their choice-of-law provisions). The arbitration requirement described in Section 7 of the Severance Agreement shall also apply to this Agreement. 
  
 14. Execution. This Agreement may be executed in counterparts, each of which will be considered an original, but all of which together will
constitute one agreement. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature. 
  
 Please indicate your agreement with the above terms by signing
below. 
  
 Very truly yours, 
  
 ARIBA, INC. 
  

 13 

 By:                                      
                 
  
 Title:
                                        
           
  
 I agree to the
terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement
at any time in the future. 
  
  

                                 Signature of Tayloe Stansbury 
  
 Dated:                                     
                                        
      
  

 14 

 EXHIBIT B 
  

LIST OF COMPANIES 
  
 Agile 
 Atlas Commerce 
 B2E Markets 
 Broadvision 
 C1 
 Clarus 
 Concur 
 diCarta 
 Emptoris

 First Index 
 FreeMarkets 
 Frictionless Commerce 
 Healy Hudson 
 i2 
 iMany 
 ICG Commerce 
 Manugistics 
 Matrix One 
 Oracle 
 PeopleSoft 
 Peregrine 
 PurchasePro 
 Siebel 
 ShareMax 
 Webango 
 Zeborg 
  

 15

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