NON-EMPLOYEE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
Date of Grant: August 3, 1999
Number of Shares:________
Exercise Price Per Share: $________
Dear:
We are pleased to inform you that, as a non-employee director of Terra
Industries Inc. (the "Corporation") or a Subsidiary thereof, you have been
granted, under the Terra Industries Inc. 1997 Stock Incentive Plan, a
Nonqualified Stock Option, evidenced by this letter, to purchase up to a total
of the number of Common Shares set forth above at the exercise price per share
set forth above and on the terms and conditions set forth below. The Option is
not intended to be an incentive stock option within the meaning of section 422
of the Internal Revenue Code.
1. The Option cannot be exercised unless you sign your name in the space
provided on the copy of this letter enclosed with this letter and deliver
it to the Corporate Secretary of the Corporation, Terra Centre, 000 Xxxxxx
Xxxxxx, Xxxxx Xxxx, Xxxx 00000, before 4:30 p.m. central time on
______________. 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 will not
commit you to purchase any of the shares that are subject to the Option,
but will evidence your acceptance of the Option upon the terms and
conditions herein stated.
2. Subject to the provisions of this letter, the Option shall be exercisable,
in whole at any time or in part from time to time, in integral multiples of
100 shares each (to the maximum extent possible), during the period set
forth in this Section 2.
a. The Option shall be exercisable with respect to one-third of the total
Number of Shares evidenced by this letter beginning on the first
business day following the first anniversary of the Date of Grant.
b. The Option shall be exercisable with respect to the next one-third of
the total Number of Shares evidenced by this letter beginning on the
first business day following the second anniversary of the Date of
Grant.
c. The Option shall be exercisable with respect to the final one-third of
the total Number of Shares evidenced by this letter beginning on the
first business day following the third anniversary of the Date of
Grant.
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d. The Option shall be exercisable with respect to all of the Number of
Shares evidenced by this letter beginning on the day any one of the
following occurs: (i) any person or group of persons acting in concert
(other than Anglo American plc, a company incorporated under the laws
of the United Kingdom, 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 the
Corporation in an amount having, or convertible into securities
having, 25% or more of the ordinary voting power for the election of
directors of the Corporation, 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
the Corporation 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 the Corporation'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 the Corporation or (B) a sale or other disposition of
all or substantially all of the assets of the Corporation, or a
transaction having a similar effect.
e. The Option shall in all events terminate at the close of business on
the last business day preceding the tenth anniversary of the Date of
Grant, but shall be subject to earlier termination as provided in
Section 4 hereof.
3. The Option shall not be transferable by you otherwise than by will or by
the laws of descent and distribution. During your lifetime, the Option
shall be exercisable only by you.
4. If your service as a director with the Corporation terminates during the
term of this agreement, the Option shall automatically terminate and cease
to be exercisable, except the term shall be extended (subject to Section
2e) as follows:
a. If your service as a director terminates by reason of death, the
Option shall terminate and cease to be exercisable one year from the
date of death.
b. If your service as a director terminates by reason of Total Disability
or retirement with the permission of the Committee, the Option shall
terminate and cease to be exercisable three years from the date of
Total Disability or such retirement.
c. If your service as a director terminates on or within two years
subsequent to the circumstances contemplated in Section 2d, the Option
shall terminate and cease to be exercisable three months from the date
of such termination of service as a director.
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d. Notwithstanding the foregoing, in cases of special circumstances the
Committee may, in its sole discretion when it finds that a waiver
would be in the best interests of the Corporation, extend the term of
this Option with respect to all or a portion of the Number of Shares
set forth above for such period of time as the Committee deems
appropriate.
5. The Corporation shall not be obligated to deliver any shares until they
have been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange upon which are listed outstanding shares
of the same class as that of the shares at the time subject to the Option
and until there has been compliance with such laws or regulations as the
Corporation may deem applicable. The Corporation agrees to use its best
efforts to effect such listing and compliance. No fractional shares will be
delivered.
6. In the event of any merger, consolidation, stock dividend, split-up,
combination or exchange of shares or recapitalization or change in
capitalization, the number or kind of shares that are subject to the Option
immediately prior to such event shall be proportionately and appropriately
adjusted without increase or decrease in the aggregate option price to be
paid therefor upon exercise of the Option. The determination of the
Committee as to the terms of any such adjustment shall be binding and
conclusive upon you and any other person or persons who are at any time
entitled to exercise the Option.
7. Neither you nor any other person shall have any rights of a stockholder as
to shares under the Option until, after proper exercise of the Option, such
shares shall have been recorded on the Corporation's official stockholder
records as having been issued or transferred.
8. Subject to the terms and conditions of this Agreement, the Option may be
exercised in whole at any time or in part from time to time in intregal
multiples of 100 shares each (to the maximum extent possible) by a written
notice on a form approved by the Committee that (i) is signed by the person
or persons exercising the Option, (ii) is delivered to the Corporate
Secretary of the Corporation, Terra Centre, 000 Xxxxxx Xxxxxx, Xxxxx Xxxx,
Xxxx 00000 (or at such other place that the Corporate Secretary may specify
by written notice to you), (iii) signifies election to exercise the Option,
(iv) states the number of shares as to which it is being exercised, and (v)
is accompanied by payment in full of the exercise price of such shares. If
a properly executed notice of exercise of the Option is not delivered to
and in the hands of the Corporate Secretary of the Corporation by the
applicable expiration date or dates of this Option, such notice will be
deemed null and void and of no effect. If notice of exercise of the Option
is given by a person or persons other than you, the Corporation may require
as a condition to exercise of the Option the submission to the Corporation
of appropriate proof of the right of such person or persons to exercise the
Option. Certificates for shares so purchased will be issued and delivered
as soon as practicable.
9. Payment of the exercise price for shares may be made in cash, by the
delivery of or certification of ownership of Common Shares that have been
held by you for a period of at least six months with a Fair Market Value
equal to the exercise price, or by a combination
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of cash and such shares that have been held by you for a period of at least
six months.
10. You hereby agree to pay to the Corporation, or otherwise make arrangements
satisfactory to the Corporation regarding payment of, any federal, state or
local taxes required or authorized by law to be withheld with respect to
the award of this Option or its exercise (the "Withholding Taxes"). The
Corporation shall have, to the extent permitted by law, the right to deduct
from any payment of any kind otherwise due to you, any Withholding Taxes
and to condition the delivery of the Common Shares after the exercise of
the Option on the payment to the Corporation of the Withholding Taxes. In
lieu of the payment of such amounts in cash, you may pay all or a portion
of the Withholding Taxes by (i) the delivery of Common Shares not subject
to any Restriction Period or (ii) having the Corporation withhold a portion
of the Common Shares otherwise to be delivered upon exercise of the Option.
The Option is issued pursuant to the Plan and is 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: ________________________________________
Executive Vice President and
Chief Operating Officer
I hereby agree to the terms and conditions set forth above and acknowledge
receipt of the 1997 Stock Incentive Plan and the Prospectus covering shares
issued under that Plan.
______________________________
Signature of Director
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