Exhibit 10.1.12
INCENTIVE STOCK OPTION AGREEMENT
Date of Grant: [DATE]
Number of Shares: [NUMBER]
Exercise Price Per Share: [PRICE]
[NAME]
[ADDRESS]
[CITY, STATE, ZIP]
Dear [SALUTATION]:
We are pleased to inform you that, as a key employee of Terra Industries
Inc. (the "Corporation") or a Subsidiary thereof, you have been granted, under
the Terra Industries Inc. 1992 Stock Incentive Plan, an Incentive Stock Option
(the "Option"), evidenced by this letter, to purchase up to a total of the
number of Common Shares set forth above at the price per share set forth above
and on the terms and conditions set forth below. The Option is intended (but not
warranted) 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 [DATE] . 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 Number
of Shares set forth above 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 Number of Shares set forth above 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 Number of Shares set forth above beginning on the first business day
following the third anniversary of the Date of Grant.
d. The Option shall be exercisable with respect to all of the Number of
Shares set forth above beginning on the day any one of the following occurs: (i)
any person or group of persons acting in concert (other than Minorco, a company
incorporated under the laws of Luxembourg as a societe anonyme, and its
affiliates or a group consisting solely of such persons (the "Minorco
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 Minorco 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 employment with the Corporation and all Subsidiaries 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 employment terminates by reason of your death or Total
Disability, the Option shall terminate and cease to be exercisable one year from
the date of death or Total Disability.
b. If your employment terminates by reason of Retirement, the Option shall
terminate and cease to be exercisable three months from the date of Retirement.
c. If your employment 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.
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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. For the purposes of this Agreement: (a) a transfer of your employment from
the Corporation to a Subsidiary or vice versa, or from one Subsidiary to
another, without an intervening period, shall not be deemed a termination of
employment, and (b) if you are granted in writing a leave of absence, you shall
be deemed to have remained in the employment of the Corporation or a Subsidiary
during such leave of absence.
7. 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.
8. 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.
9. 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 integral
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 option 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
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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.
10. 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 of cash and such shares that have been held
by you for a period of at least six months.
11. You agree to notify the Corporate Secretary of the Corporation in the event
the shares acquired by you on exercise of the Option are sold or otherwise
disposed of within one year from the date of exercise or two years from the date
the Option was granted.
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:
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President and Chief Executive Officer
By:
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Senior Vice President, General Counsel
and Corporate Secretary
I hereby agree to the terms and conditions set forth above and acknowledge
receipt of the 1992 Stock Incentive Plan and the Prospectus covering shares
issued under that plan.
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Signature of Employee
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