Exhibit 10.8

 

Execution Version

Final

 

CONVERSION AGREEMENT

 

By and Between

 

TERRA MISSISSIPPI NITROGEN, INC.

 

and

 

ORICA USA INC.

 

Dated as of July 21, 2005

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TABLE OF CONTENTS

 

ARTICLE I. INTERPRETATION    5

1.1 Definitions

   5

1.2 Interpretation

   9

1.3 Exhibit

   10 ARTICLE II. CONVERSION    10

2.1 Seller Undertakings

   10

2.2 Performance Standards

   10

2.3 Control of Conversion Work

   10

2.4 Consultation with Buyer

   10

2.5 Buyer Undertakings

   11

2.6 Drums

   11 ARTICLE III. TERM, TERMINATION AND PURCHASE RIGHT    12

3.1 Term

   12

3.2 Buyer’s Termination for Breach

   12

3.3 Seller’s Termination for Breach

   12

3.4 Effect of Termination

   12

3.5 Purchase Rights

   12 ARTICLE IV. LICENSE OF PROCESS DESIGN    14 ARTICLE V. FORCE MAJEURE    14

5.1 Occurrence of Event of Force Majeure

   14

5.2 Notice to Buyer

   14 ARTICLE VI. AUDIT RIGHT    15

6.1 Records

   15 ARTICLE VII. INSURANCE    15

 

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7.1 Seller-Provided Insurance

   15

7.2 General Conditions of Seller’s Insurance Policies

   16

7.3 Buyer-Provided Insurance

   17

7.4 General Conditions of Buyer’s Insurance Policies

   18 ARTICLE VIII. LIMITATION ON LIABILITY/INDEMNIFICATION    18

8.1 Waiver of Certain Damages

   18

8.2 Indemnification of Seller Indemnitees

   18

8.3 Indemnification of Buyer Indemnitees

   19

8.4 Procedures for Indemnification

   20 ARTICLE IX. [RESERVED]    21 ARTICLE X. DISPUTE RESOLUTION    22
ARTICLE XI. GENERAL    23

11.1 Confidentiality and Publicity

   23

11.2 Notices

   24

11.3 Governing Law

   24

11.4 Severability

   24

11.5 Captions; Headings

   24

11.6 Assignment; Successors and Assigns

   25

11.7 Counterparts

   25

11.8 Relationship of Parties

   25

11.9 Entire Agreement

   25

 

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Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.

 

CONVERSION AGREEMENT

 

This CONVERSION AGREEMENT (the “Agreement”) is made the 21st day of July, 2005
(“Effective Date”), by and between TERRA MISSISSIPPI NITROGEN, INC. (“Seller”),
a Delaware corporation with principal offices at 600 Fourth Street, Sioux City,
Iowa 51101, and ORICA USA INC. (“Buyer”), a Delaware corporation with principal
offices at 33101 East Quincy Avenue, Watkins, Colorado 80137.

 

RECITALS

 

WHEREAS, Seller owns and operates an ammonia, nitric acid, agricultural grade
ammonium nitrate, ammonium nitrate solution (“ANS”) and urea ammonium nitrate
solution manufacturing facility and site located in Yazoo County, Mississippi
(the “Plant”); and

 

WHEREAS, Seller desires to modify, supplement and convert a portion of the Plant
(such portion generally consisting of the #3 ammonium nitrate prilling plant, #4
finishing train, the Storage Dome (as defined below) and associated loadout
equipment, the “Facility”) to produce prilled industrial grade ammonium nitrate
(“IGAN”) pursuant to the Project Definition (as defined below) and pursuant to
further design and engineering work undertaken by Seller (the “Conversion
Project”); and

 

WHEREAS, Seller and Buyer have entered into that certain Interim Supply
Agreement, dated as of July 21, 2005 (the “Interim Supply Agreement”), pursuant
to which Seller has agreed to sell and Buyer has agreed to purchase IGAN and ANS
as more particularly described therein;

 

WHEREAS, Seller and Buyer have entered into that certain Ammonium Nitrate Supply
Agreement, dated as of July 21, 2005 (the “Long Term Supply Agreement”),
pursuant to which Seller has agreed to sell and Buyer has agreed to purchase
IGAN and ANS as more particularly described therein;

 

WHEREAS, the Conversion Project is necessary to enable Seller to perform its
IGAN supply obligations under the Long Term Supply Agreement; and

 

WHEREAS, this Agreement, the Interim Supply Agreement, and the Long Term Supply
Agreement shall be collectively referred to herein as the “Related Agreements”;
and

 

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WHEREAS, Seller and Buyer desire to set forth their respective rights and
obligations with respect to the Conversion Project and related matters.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained
in this Agreement and the Related Agreements, the Parties covenant and agree as
follows:

 

ARTICLE I.

INTERPRETATION

 

1.1 Definitions. The following terms shall have the meanings assigned thereto in
this Agreement:

 

“Affiliate” means any Person that directly or indirectly controls, is controlled
by, or is under common control with a specified Person. For purposes of this
definition, “control” means an ability to directly or indirectly vote more than
fifty percent (50%) of the shares or other equity interests at the time entitled
to vote upon the election of directors or managers of a second Person.

 

“ANS” shall have the meaning set forth in the Recitals hereto.

 

“Buyer” shall have the meaning set forth in the Preamble hereto.

 

“Buyer Contact” means that individual designated from time-to-time by Buyer in
writing as the individual with authority to represent Buyer’s interests with
respect to the Conversion Project and to review the Conversion Work and approve
Conversion Project expenditures as provided in Section 2.4 hereof.

 

“Buyer’s Indemnitees” means Buyer, its parent company, partners, subsidiaries
and any other Affiliates, Buyer’s Representatives, and their respective
directors, officers, employees, attorneys-in-fact, agents and Affiliates.

 

“Claim” means any action, suit, proceeding, hearing, investigation, audit,
litigation, charge, complaint, claim, or demand by any Person.

 

“Commissioning” or “Commissioned” means the first business day after which the
last of all of the following have occurred: (a) all materials, supplies, goods,
tools, machinery and equipment comprising the converted Facility have been
constructed, erected, installed, inspected and tested in accordance with the
Project Definition and the design and engineering documents created by Seller
based on the Project Definition, both as subsequently amended by mutual
agreement, and the converted Facility has been tied in to the Plant, in each
case to the extent necessary to permit the safe and sound startup and operation
of the converted Facility as a fully integrated system (but excluding correction
of minor non-operational matters such as painting, signage and landscaping),
(b) the converted Facility has been in reasonably continuous operation (subject
to storage limitations) and has produced at least an average daily volume of
**** Tons of IGAN over a period of fourteen (14) consecutive days, as
demonstrated by performance tests conducted by Seller, (c) Buyer has conducted
testing establishing

 

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to its satisfaction that the converted Facility is producing IGAN meeting the
Specifications during the time period in subparagraph (b) above, (d) the Parties
have executed a writing indicating their agreement that the standards set forth
in clauses (a) through (c) have been satisfied, and (e) Seller has obtained all
Permits required by applicable Laws for operation of the Facility.

 

“Confidential Information” shall have the meaning set forth in Section 11.1
hereof.

 

“Contest Notice” shall have the meaning set forth in Section 8.4(b) hereof.

 

“Conversion Kit” shall mean the Drums, pre-dryer conveyors, pre-dryer air
preheaters, pre-dryer fan, dryer elevator, dryer air preheater, dryer fan,
pre-cooler elevator, pre-cooler conveyers, and other machinery and equipment
constructed and installed in the converted Facility pursuant to the Project
Definition.

 

“Conversion Project” shall have the meaning set forth in the Recitals hereto.

 

“Conversion Project Capital Budget” shall mean that certain budget agreed to by
Seller and Buyer regarding the estimated costs (based on the Project Definition
and on design and engineering work performed by Seller) of the Conversion
Project and attached hereto as Exhibit A.

 

“Conversion Work” shall have the meaning set forth in Section 2.1 hereof.

 

“Damages” means any and all Claims, losses, liens, injuries to persons or
property, and causes of action of every kind and character including strict
liability claims and administrative law actions and orders, including but not
limited to, the amounts of judgments, fines, penalties, interest, court costs,
investigation expenses, and costs and legal fees (including but not limited to
attorneys’ and experts’ fees), but shall in no event, as between or among Buyer,
Buyer’s Indemnitees, Seller, and Seller’s Indemnitees, include special,
indirect, consequential, punitive, exemplary or other similar damages, including
Claims for lost profits, lost business opportunities or business interruption.

 

“Drums” shall have the meaning set forth in Section 2.6 hereof.

 

“Effective Date” shall have the meaning set forth in the Preamble hereto.

 

“Environmental Laws” means any applicable Laws relating to the environment,
human health or safety, pollution or other environmental degradation or
Hazardous Materials.

 

“Event of Force Majeure” means any strike or other labor trouble, fire, flood,
riot, war, embargo, accident, act of God or terrorism, requisition or direction
by Governmental or Regulatory Authority, priorities or compliance with
governmental action or any Law, shortage of essential materials or equipment, or
any other circumstance beyond reasonable control of the obligee, whether similar
to or dissimilar from the above enumerated causes.

 

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“Facility” shall have the meaning set forth in the Recitals hereto.

 

“Governmental or Regulatory Authority” means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision.

 

“Hazardous Materials” means (a) petroleum or petroleum products, fractions,
derivatives or additives, natural or synthetic gas, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls and radon gas, (b) any substances
defined as or included in the definition of “hazardous wastes,” “hazardous
materials,” “hazardous substances,” “extremely hazardous substances,”
“restricted hazardous wastes,” “special wastes,” “toxic substances,” “toxic
chemicals” or “toxic pollutants,” “contaminants” or “pollutants” or words of
similar import under any Environmental Law, (c) radioactive materials,
substances and waste, and radiation, and (d) any other substance exposure to
which is regulated under any Environmental Law or could give rise to Liabilities
under common law.

 

“IGAN” shall have the meaning set forth in the Recitals hereto.

 

“Indemnified Party” shall have the meaning set forth in Section 8.4(a) hereof.

 

“Indemnifying Party” shall have the meaning set forth in Section 8.4(a) hereof.

 

“Interim Supply Agreement” shall have the meaning set forth in the Recitals
hereto.

 

“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority and “Laws” includes,
without limitation, all Environmental Laws.

 

“Liability” or “Liabilities” means all Claims and Damages, regardless of whether
any such Claims or Damages would be required to be disclosed on a balance sheet
prepared in accordance with generally accepted accounting principles or are
known as of the Effective Date.

 

“Long Term Supply Agreement” shall have the meaning set forth in the Recitals
hereto.

 

“Month” means a calendar month.

 

“Notice of Claim” shall have the meaning set forth in Section 8.4(a) hereof.

 

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“Notice of Liability” shall have the meaning set forth in Section 8.4(b) hereof.

 

“OCI” shall have the meaning set forth in Section 2.6 hereof.

 

“Order” means any writ, judgment, judicial decision, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).

 

“Party” means Buyer or Seller, as the case may be, and “Parties” shall, unless
the context dictates otherwise, mean Buyer and Seller collectively.

 

“Permit” means any permit, license, exemption, action, certificate of authority,
authorization, approval, or registration issued by or required to be issued by a
Governmental or Regulatory Authority in connection with ownership or operation
of the Facility.

 

“Person” means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.

 

“Plant” shall have the meaning set forth in the Recitals hereto.

 

“Process Design” shall mean Buyer’s process design concept and process
descriptions incorporated into the Project Definition, including the process
flow diagrams in Appendix A thereto.

 

“Project Definition” shall mean the document prepared by Buyer and agreed to by
Seller entitled “Project South Project Definition” (No. EN2364 – PD – 001 (Rev
F), which incorporates the Process Design and which Seller will rely upon and
shall use a basis for carrying out the Conversion Work and completing the
Conversion Project.

 

“Quarter” means a calendar quarter.

 

“Record Retention Period” shall have the meaning set forth in Section 6.7(a)
hereof.

 

“Records” shall have the meaning set forth in Section 6.7(a) hereof.

 

“Related Agreements” shall have the meaning set forth in the Recitals hereto.

 

“Release” means the presence, release, issuance, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through the air,
soil, surface water, ground water or property other than as specifically
authorized by (and then only to the extent in compliance with) Environmental
Laws and Permits.

 

“Representative” means any Person that is an agent, contractor, servant,
employee or licensee of another Person.

 

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“Seller” shall have the meaning set forth in the Preamble hereto.

 

“Seller’s Indemnitees” means Seller, its parent company, partners, subsidiaries
and any other Affiliates, Seller’s Representatives, and their respective
directors, officers, employees, attorneys-in-fact, agents and Affiliates.

 

“Side Letter Agreement” means the letter agreement between the Parties and other
Persons dated July 21, 2005 regarding the capital for the Conversion Project.

 

“Site” means that portion of land within the boundaries of the Plant more
particularly described on Seller’s Engineering Drawing C-146-010-Z15 (April
2005) on which the Facility is situated.

 

“Storage Dome” means Seller’s ammonium nitrate storage dome at the Plant which
is capable upon Commissioning of storing approximately 3,600 Tons of IGAN, based
upon Buyer’s storage pile height recommendation.

 

“Submission Date” shall have the meaning set forth in Section 10.2 hereto.

 

“Term” shall have the meaning set forth in Section 3.1 hereto.

 

“Ton” means a short ton of two thousand (2,000) pounds avoirdupois.

 

1.2 Interpretation. In this Agreement:

 

(a) all terms defined in the singular shall have the same meanings in the plural
and vice versa;

 

(b) all references to currency in this Agreement are references to the lawful
currency of the United States;

 

(c) unless otherwise noted, all references to Sections and Subsections shall be
deemed to be references to the Sections and Subsections of this Agreement;

 

(d) the captions and headings contained in this Agreement are for convenience of
reference only and shall not be considered or given any effect in construing the
provisions hereof if any question of intent should arise;

 

(e) reference to any Law or Laws means such Law or Laws as amended, modified,
codified, re-enacted, supplemented or superseded in whole or in part; and in
effect from time to time;

 

(f) no provision of this Agreement shall be interpreted or construed against
either Party solely because that Party or its legal representative drafted such
provision; and

 

(g) terms which are capitalized but not defined herein shall have the meanings
assigned them in the Long Term Supply Agreement.

 

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1.3 Exhibit. The following Exhibits are attached to this Agreement and
incorporated into and form an integral part of this Agreement:

 

Exhibit

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Description

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Exhibit A    Conversion Project Capital Budget Exhibit B    Drums and associated
equipment

 

ARTICLE II.

CONVERSION

 

2.1 Seller Undertakings. As an inducement for Buyer to enter into the Long Term
Supply Agreement, Seller shall perform or provide, or cause to be performed or
provided, all engineering, procurement, construction, erection, installation and
Commissioning work, services, equipment, machinery and materials to accomplish
and complete the Conversion Project in accordance with the Project Definition
and the terms and conditions set forth in this Agreement (collectively, the
“Conversion Work”). Seller has commenced the Conversion Work prior to the
Effective Date and this Agreement shall be deemed to apply to and govern such
Work. Subject to the receipt of all Permits necessary in connection with the
Conversion Work and operation of the converted Facility (which Permits Seller
shall promptly apply for and diligently pursue), Seller shall use its
commercially reasonable efforts to complete the Conversion Project and cause the
Commissioning to occur no later than September 1, 2006.

 

2.2 Performance Standards. Seller shall perform, and shall require its
contractors, subcontractors and other Representatives to perform, the Conversion
Work with reasonable diligence and dispatch, in a lawful, safe, cost-effective
and otherwise commercially reasonable manner, and in accordance with
(a) Seller’s documented operating and quality assurance procedures, (b) the
Conversion Project Capital Budget, (c) the Project Definition, (d) the drawings,
process flow diagrams, plans, schematics, and other design and engineering
documents prepared by Seller based on the Project Definition and Process Design,
(e) recognized industry standards and practices, and (f) all applicable Laws.

 

2.3 Control of Conversion Work. Except with respect to the development and
provision of the Project Definition, and except as provided in Sections 2.4 and
2.5, Seller shall at all times have sole authority and responsibility with
respect to the performance of the Conversion Work and Buyer shall have no
responsibilities with respect to the Conversion Work.

 

2.4 Consultation with Buyer. From time to time as necessary, Seller shall
consult with the Buyer Contact concerning the Project Definition and the
Conversion Work. Upon the reasonable request of Buyer, Seller shall provide
Buyer with reasonably detailed information concerning the progress of, costs
incurred and anticipated to be incurred in connection with, the Conversion
Project, and other information concerning the Conversion Project as may
reasonably be requested from time to time by Buyer. Seller shall obtain Buyer’s
approval prior to incurring costs in connection with the Conversion Work which
exceed the Conversion Project Capital Budget, or any material line item in the
Conversion Project Capital Budget.

 

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2.5 Buyer Undertakings.

 

(a) Prior to the Effective Date, Buyer has developed and provided to Seller the
Project Definition.

 

(b) Buyer agrees that it shall be responsible for all costs and expense
contemplated by the Conversion Project Capital Budget and actually incurred by
Seller (including any such amounts in excess of the Conversion Project Capital
Budget approved by Buyer’s Contact) through to Commissioning, such costs and
expenses to be reimbursed to Seller by Buyer’s payment of the Facility Fee under
the Long Term Supply Agreement. In the event that, due to a defect in the
Process Design, completion of the Conversion Project results in Conversion
Project Capital Budget overruns, such additional cost to the extent attributable
to such defect shall initially be incurred by Seller and thereafter reimbursed
by Buyer within thirty (30) days after receiving Seller’s invoice; provided
that, if the Parties agree to treat such costs and expense as a supplementary
capital project, such costs and expense will be included in the Facility Fee to
be paid by Buyer under the Long Term Supply Agreement. In the event that, due to
a defect in the design and engineering documents of Seller or any negligence on
the part of Seller in the performance of the Conversion Work, completion of the
Conversion Project results in Conversion Project Capital Budget overruns, such
additional costs and expense shall solely be Seller’s responsibility and not
subject to reimbursement by Buyer.

 

(c) Buyer agrees that it shall be responsible for all costs and expense not
contemplated by the Conversion Project Capital Budget in connection with any
Expansion Capital Expenditure or which are required in order to comply with
applicable Law; provided that, if the Parties agree to treat such costs and
expense as a supplementary capital project, such costs and expense will be
included in the Facility Fee to be paid by Buyer under the Long Term Supply
Agreement.

 

(d) Buyer shall assist Seller in Commissioning the Facility. This assistance
shall include a detailed review of the pre-Commissioning and Commissioning plan,
the attendance of an Orica technical resource during Commissioning trials and
acceptance trials and trouble shooting assistance if Process Design or technical
issues arise during Commissioning.

 

2.6 Drums. The Project Definition will require the acquisition by Seller from
Buyer’s Affiliate Orica Canada Inc. (“OCI”) and installation of two IGAN dryer
drums and associated equipment more particularly itemized in Exhibit B hereto
(the “Drums”). Seller agrees to inspect the Drums promptly after the Effective
Date and, subject to the results of such inspection, Seller agrees to purchase,
and Buyer shall cause OCI to supply and arrange for delivery to the Site of such
Drums at a time mutually acceptable to Seller and OCI. Buyer shall bear the risk
or loss or damage to the Drums prior to their delivery to the Site. The purchase
price for the Drums will be an amount equal to

 

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the sum of OCI’s book values for the Drums as of the date of OCI’s most recent
balance sheet prior to the Effective Date, plus the cost of loading and
transporting the Drums to the Site. Such aggregate amount will be included in
the Conversion Project Capital Budget and paid in cash by Seller to OCI within
thirty (30) days from the arrival of the Drums at the Plant.

 

ARTICLE III.

TERM, TERMINATION AND PURCHASE RIGHT

 

3.1 Term. The term (“Term”) of this Agreement shall commence on the Effective
Date and, unless earlier terminated pursuant to Sections 3.2 or 3.3 below, and
subject to Section 3.4 below, shall expire on the first business day following
the date the converted Facility is Commissioned.

 

3.2 Buyer’s Termination for Breach. Buyer may terminate this Agreement if Seller
fails to perform its obligations hereunder, and such failure shall not have been
cured within thirty (30) days after notice thereof shall have been received by
Seller or such longer period as may be reasonably required to cure such breach
or default (provided that Seller shall be using commercially reasonable efforts
to cure such breach or default). Such termination shall be effective on the date
specified in Buyer’s termination notice.

 

3.3 Seller’s Termination for Breach. Seller may terminate this Agreement if
Buyer fails to perform its obligations hereunder, and such failure shall not
have been cured within thirty (30) days after notice thereof shall have been
received by Buyer or such longer period as may be reasonably required to cure
such breach or default (provided that Buyer shall be using commercially
reasonable efforts to cure such breach or default). Such termination shall be
effective on the date specified in Seller’s termination notice.

 

3.4 Effect of Termination. Upon the expiration or earlier termination of this
Agreement, this Agreement shall immediately become void and of no further force
and effect; provided, however, that the following provisions shall survive the
expiration or termination of this Agreement indefinitely or as otherwise set
forth therein: Section 2.5 (b) and (c), except to the extent Buyer is relieved
from payment therefor as provided in Section VI.D.2. of the Long Term Supply
Agreement; Section 3.5; Article IV; Section 6.3; Article VII, Article VIII;
Article X; and Section 11.1. Notwithstanding anything to the contrary contained
in this Agreement, a termination of this Agreement for any reason shall not
affect any rights or remedies of either Party arising out of any breach of this
Agreement prior to such termination.

 

3.5 Purchase Rights. Buyer and Seller shall have the following rights and
obligations with the respect to the Conversion Kit:

 

(a) Upon the termination of this Agreement under Section 3.2 above prior to
Commissioning, Buyer shall have the right to purchase the Conversion Kit for an
amount equal to Seller’s out-of-pocket and Seller’s in-house engineering costs
incurred prior to the effective date of termination with respect to the
acquisition and installation of the Conversion Kit.

 

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(b) Upon the termination of this Agreement under Section 3.3 above prior to
Commissioning, Seller shall have the right to retain the Conversion Kit;
provided that Seller shall also have the option to require Buyer to purchase and
remove the Conversion Kit. If Seller exercises such option, it shall so notify
Buyer within five (5) business days of the effective date of termination, in
which event Buyer shall do so and pay an amount equal to Seller’s out-of-pocket
and Seller’s in-house engineering costs incurred prior to the effective date of
termination with respect to the acquisition and installation of the Conversion
Kit.

 

(c) Upon termination of the Term of the Long Term Supply Agreement pursuant to
Section II.A. thereof, Buyer shall have the right to purchase the Conversion Kit
for an amount equal to the sum of $1.00.

 

(d) Upon termination of the Long Term Supply Agreement by Buyer prior to the
expiration of the Term therein pursuant to Section XIV.B.4. or XVII. thereof,
Buyer shall have the right to purchase the Conversion Kit for an amount equal to
the sum of (i) $1.00 plus (ii) any portion of the Facility Fee relating to the
Conversion Kit which remains unpaid on the effective date of such termination,
such portion to be calculated pro-rata based on the ratio of the cost of the
Conversion Kit paid by Seller to the final total Conversion Project cost.

 

(e) Upon termination of the Long Term Supply Agreement by Seller prior to
expiration of the Term therein pursuant to Sections XIV.A., XIV.B.4. or XVII.
thereof, Seller shall have the right to retain the Conversion Kit; provided that
Seller shall also have the option to require Buyer to purchase and remove the
Conversion Kit. If Seller exercises such option, it shall so notify Buyer within
five (5) business days of the effective date of termination of the Long Term
Supply Agreement, in which event Buyer shall do so and pay an amount equal to
the sum of $1.00 plus any portion of the Facility Fee relating to the Conversion
Kit which remains unpaid on the effective date of such termination, such portion
to be calculated pro-rata based on the ratio of the cost of the Conversion Kit
paid by Seller to the final total Conversion Project cost.

 

(f) With respect to Buyer’s options under Sections 3.5(a), (c), and (d), Buyer
shall exercise its purchase right, if at all, by written notice delivered to
Seller within ten (10) business days of the effective date of termination of
this Agreement or termination of the Long Term Supply Agreement, as applicable.
Upon receipt of Buyer’s notice of its election to purchase the Conversion Kit or
with respect to Buyer’s obligations under Sections 3.5(b) and (e), Seller shall
execute and deliver a bill of sale and assignment, in form and substance
reasonably satisfactory to Buyer, conveying to Buyer all of Seller’s right,
title and interest in and to the Conversion Kit, free and clear of all liens,
claims and encumbrances created by, through or under Seller, against delivery by
Buyer of the applicable purchase price.

 

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(g) Unless otherwise agreed, Buyer shall remove the Conversion Kit from the Site
within ninety (90) days following its purchase by Buyer and Buyer shall be
responsible for all costs associated with removal of such Conversion Kit.

 

(h) The Parties acknowledge that the Conversion Kit is or may be subject to a
lien and security interest in favor of Seller’s lenders. Seller shall use its
commercially reasonable efforts to cause its lenders to release their lien and
security interest in the Conversion Kit in the event and at the time Buyer
elects, or is otherwise obligated, to acquire the Conversion Kit.

 

ARTICLE IV.

LICENSE OF PROCESS DESIGN

 

4.1 License of Process Design. Buyer is the owner of and has the right to
license the Process Design. In consideration of the entry by Seller into this
Agreement and the performance of the Conversion Work, Buyer grants to Seller a
non-exclusive license (with no right to sublicense) to use the Process Design
solely for the purposes of performing the Conversion Work and operating the
converted Facility. Seller shall obtain Buyer’s written approval prior to making
any change to the Process Design. The license granted herein shall not be
transferred by Seller except in connection with an assignment by Seller of the
Long Term Supply Agreement to a Permitted Successor or Assign (as defined
therein) which intends to operate the Facility in which event Seller may
transfer the license to said permitted Successor or Assign who shall execute an
acknowledgement in Buyer’s favor of the provisions of this Article IV. Nothing
in this Agreement shall be construed to authorize Seller to, and Seller shall
not, use the Process Design in connection with any plant, site or facility other
than the Facility or for any purpose other than the Conversion Work.

 

4.2 Breach by Seller of License. Seller acknowledges that the Process Design is
proprietary and valuable to Buyer, and that Buyer will not be adequately
compensated by an award of damages for breach of the obligations imposed by
Section 4.1. Seller acknowledges and agrees that Buyer shall be entitled to seek
an injunction restraining violations of such Section 4.1.

 

ARTICLE V.

FORCE MAJEURE

 

5.1 Occurrence of Event of Force Majeure. Upon and during the continuance of an
Event of Force Majeure, the obligation of Seller to perform the Conversion Work
shall be temporarily suspended; provided that (i) such suspension shall relate
solely to that portion of the Conversion Work that Seller is unable to perform
or accept, as the case may be, and (ii) such suspension shall be in effect only
for such period during which such Event of Force Majeure shall be continuing.

 

5.2 Notice to Buyer. In the event Seller is prevented from performing the
Conversion Work as a result of an Event of Force Majeure, it shall promptly
notify

 

11

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Buyer by telephone (to be confirmed in writing within three (3) days of the
Event of Force Majeure) of the occurrence of an Event of Force Majeure and
describe, in reasonable detail, the portion of the Conversion Work that is
delayed or prevented and an estimate of the anticipated duration of the Event of
Force Majeure. In such event, Seller shall use commercially reasonable efforts
to mitigate the impact or consequence of the event on Buyer, subject to the
constraints of the Conversion Project Capital Budget except as otherwise agreed
by Buyer, and to recommence the performance of the Conversion Work to whatever
extent possible without undue delay.

 

ARTICLE VI.

AUDIT RIGHT

 

6.1 Records. During the Term, Seller shall keep and maintain proper, detailed,
accurate and complete records and supporting documentation, regardless of the
medium by which they are created or stored, concerning the performance and cost
of the Conversion Work and Conversion Project (collectively, the “Records”).
Seller shall keep and retain all Records for a period of 24 Months after
Commissioning (“Record Retention Period”).

 

6.2 Confidential Matters. The Parties acknowledge and agree that the Records
contain Confidential Information which shall be subject to the provisions of
Section 11.1 hereof.

 

6.3 Audit Right. At any time prior to the expiry of the Record Retention Period,
Buyer may audit the Records for any reasonable purpose relating to the
performance and cost of the Conversion Work and Conversion Project on the
business premises of Seller, and inspect, audit and copy any or all of the
Records. Seller shall co-operate with Buyer in carrying out the inspection,
audit and copying of such Records including, without limitation, by providing
Buyer and its agents with access to, and assistance with, all computer systems
and other electronic means by which any such Records may be kept. The inspection
of any or all of the Records by Buyer shall be done at Buyer’s own cost and
expense provided that if such inspection determines that the calculations made
by Seller are less than 99% accurate on average during the period covered by the
audit, then the costs of the audit shall be borne by Seller and Seller shall
make all necessary adjustments as the audit determines are required.

 

ARTICLE VII.

INSURANCE

 

7.1 Seller-Provided Insurance. Prior to commencement of the Conversion Work and
throughout the Term of this Agreement or the Term of the Long Term Supply
Agreement, whichever is longer, Seller shall procure and maintain insurance, at
its cost and expense with insurance companies reasonably acceptable to Buyer and
authorized to do business in Mississippi, covering all activities performed by
Seller or its Representatives in connection with the Conversion Work, the
ownership, operation and

 

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use of the Facility and the Plant, and performance under the Long Term Supply
Agreement as follows:

 

(a) Workers’ Compensation Insurance with statutory limits covering Seller’s
obligations under the Workers’ Compensation Act of Mississippi and all
statutorily or voluntarily-covered employees, and Employers Liability insurance,
with limits of not less than One Million Dollars ($1,000,000) per employee for
accident, injury or disease; provided that Seller shall not be required to carry
Workers’ Compensation coverage if it qualifies as a self-insurer under
applicable Law.

 

(b) Commercial General Liability Insurance (including Owner’s and Contractor’s
Protective Liability, Product/Completed Operations Liability, and Contractual
Liability) covering specific liabilities imposed under this Agreement with
limits of not less than One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) annual aggregate covering third-party bodily
injury, property damage and personal injury liability.

 

(c) Commercial Automobile Liability Insurance in compliance with all applicable
Laws or with a combined single limit of not less than One Million Dollars
($1,000,000) per occurrence covering bodily injury and property damage liability
arising out of owned, non-owned and hired vehicle use or maintenance.

 

(d) Excess Liability Insurance with limits of not less than Fifty Million
Dollars ($50,000,000) per occurrence and Fifty Million Dollars ($50,000,000)
annual aggregate providing coverage on a basis not more restrictive than
liability coverages described in subsections (a) through (c) above.

 

(e) Property Insurance covering “All-Risks” of physical loss or damage to
Seller’s owned, leased or rented real and personal property comprising or to be
incorporated in the Facility and the Plant. Such insurance shall cover the
insured property on a replacement cost basis. Seller shall ensure the sub-limit
for builders risk in relation to the Conversion Project is sufficient to cover
the replacement cost of the Conversion Kit. Such insurance shall include
deductibles consistent with prudent industry practices.

 

(f) Transit Insurance covering the interest of Seller and any of their
subcontractors or agents in respect of physical loss or damage to all materials
which are to be incorporated into the Facility while in the course of transit to
and from the Site. Coverage will apply warehouse to warehouse.

 

(g) Pollution Legal Liability Insurance to the extent commercially available on
reasonable terms, with limits of not less than One Million Dollars ($1,000,000)
per occurrence and Two Million Dollars ($2,000,000) annual aggregate covering
third-party bodily injury and property damage liability arising out of any
Releases from Seller’s use of or operations at the Plant.

 

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7.2 General Conditions of Seller’s Insurance Policies.

 

(a) Buyer as an Additional Insured. Insurance policies described herein and
procured by Seller shall include Buyer as an Additional Insured, where
appropriate, with respect to liability arising out of Seller’s conduct of the
Conversion Work, operation and use of the Facility and the Plant, and
performance under the Long Term Supply Agreement.

 

(b) Waiver of Subrogation Rights. Seller shall obtain from its insurance
carriers waivers of the right of subrogation with respect to Buyer and Buyer’s
insurance carriers and, except as otherwise provided herein, Seller does hereby
waive and release any Claim it may have against Buyer for damage or loss to the
Facility or the Plant or for loss of business income arising out of such damage
or loss notwithstanding that such damage or loss is covered by Buyer’s
insurance.

 

(c) Notice of Cancellation or Material Change. Insurance policies described
herein shall provide Buyer with a minimum thirty (30) days’ advance written
notice of cancellation, non-renewal or material change in coverage.

 

(d) Evidence of Insurance. Seller shall, at all times during the Term, provide
Buyer with current certificates of insurance clearly evidencing the existence of
insurance and the required provisions described herein.

 

(e) Deductibles. All deductibles under the insurance policies arranged pursuant
to Section 7.1 shall be paid by Seller.

 

7.3 Buyer-Provided Insurance. Prior to commencement of the Conversion Work and
throughout the Term of this Agreement or the Term of the Long Term Supply
Agreement, whichever is longer, Buyer shall procure and maintain insurance at
its cost and expense with insurance companies reasonably acceptable to Seller
and authorized to do business in Mississippi, covering all activities performed
by Buyer in connection with Buyer’s undertakings in Section 2.5 hereof and
Buyer’s performance under the Long Term Supply Agreement as follows:

 

(a) Commercial General Liability Insurance (including Product
Liability/Completed Operations Liability, and Contractual Liability) covering
specific obligations assumed by Buyer under this Agreement and the Long Term
Supply Agreement with limits of not less than One Million Dollars ($1,000,000)
per event and Two Million Dollars ($2,000,000) annual aggregate covering
third-party bodily injury, property damage and personal injury liability.

 

(b) Commercial Automobile Liability Insurance in compliance with all applicable
Laws or with a combined single limit of not less than One Million Dollars
($1,000,000) per event covering bodily injury and property damage liability
arising out of owned, non-owned and hired vehicle use or maintenance.

 

(c) Excess Liability Insurance with limits of not less than Fifty Million
Dollars ($50,000,000) per occurrence and Fifty Million Dollars ($50,000,000)
annual aggregate providing coverage on a basis not more restrictive than
liability coverages described in subsections (a) and (b) above.

 

14

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7.4 General Conditions of Buyer’s Insurance Policies.

 

(a) Seller as an Additional Insured. Insurance policies described herein and
procured by Buyer shall include Seller as an Additional Insured, where
appropriate, with respect to liability arising out of Buyer’s undertakings in
Section 2.5 hereof and Buyer’s performance under the Long Term Supply Agreement.

 

(b) Waiver of Subrogation Rights. Buyer shall obtain from its insurance carriers
waivers of the right of subrogation with respect to Seller and Seller’s
insurance carriers and, except as otherwise provided herein, Buyer does hereby
waive and release any Claim it may have against Seller for damage or loss to
Buyer’s assets or for loss of business income arising out of such damage or loss
notwithstanding that such damage or loss is covered by Seller’s insurance.

 

(c) Notice of Cancellation or Material Change. Buyer shall provide Seller with a
minimum thirty (30) days’ advance written notice of cancellation, non-renewal or
material change in coverage.

 

(d) Evidence of Insurance. Buyer shall, at all times during the Term, provide
Seller with current certificates of insurance clearly evidencing the existence
of insurance and the required provisions described herein.

 

(e) Deductibles. All deductibles under the insurance policies arranged pursuant
to Section 7.3 shall be paid by Buyer.

 

ARTICLE VIII.

LIMITATION ON LIABILITY/INDEMNIFICATION

 

8.1 Waiver of Certain Damages. IN NO EVENT SHALL EITHER SELLER OR BUYER BE
LIABLE TO THE OTHER PARTY OR THE OTHER PARTY’S INDEMNITEES UNDER ANY PROVISION
OF THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ANY INDEMNITY PROVISION
HEREOF) FOR PUNITIVE, EXEMPLARY, CONSEQUENTIAL, INCIDENTAL, INDIRECT, OR SPECIAL
DAMAGES IN TORT OR CONTRACT. FURTHERMORE, NEITHER SELLER NOR BUYER SHALL BE
LIABLE TO THE OTHER PARTY OR THE OTHER PARTY’S INDEMNITEES UNDER ANY PROVISION
OF THIS AGREEMENT FOR LOST PROFITS, LOST BUSINESS OPPORTUNITIES OR BUSINESS
INTERRUPTION. THE PRECEDING SENTENCES SHALL NOT BE CONSTRUED, HOWEVER, AS
LIMITING THE OBLIGATION OF EITHER SELLER OR BUYER TO INDEMNIFY THE OTHER PARTY
OR THE OTHER PARTY’S INDEMNITEES AGAINST CLAIMS ASSERTED BY THIRD PARTIES,
INCLUDING, BUT NOT LIMITED TO, THIRD PARTY CLAIMS FOR PUNITIVE, EXEMPLARY,
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES, OR FOR LOST PROFITS,
LOST BUSINESS OPPORTUNITIES OR BUSINESS INTERRUPTION.

 

8.2 Indemnification of Seller Indemnitees. Buyer shall indemnify and hold
harmless the Seller Indemnitees, and any Person claiming by or through any of
them,

 

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from and against all Liabilities by, on behalf of or to any Person arising from
or attributable to:

 

(a) the breach of any representation or warranty of Buyer made in this
Agreement;

 

(b) any failure by Buyer to perform in all respects any of its covenants,
agreements or obligations in this Agreement; and

 

(c) any negligent act or omission of Buyer or its Representatives with respect
to the Process Design.

 

The foregoing shall not be applicable to any Liability to the extent the
proximate cause of which results from a negligent act or omission of Seller or
its Representatives. The indemnities set forth in this Section shall survive the
expiration or earlier termination of this Agreement, except that the indemnity
in Section 8.2(c) shall not survive beyond three (3) years from expiration or
termination of the Agreement unless Seller has made an indemnification Claim
against Buyer prior to three (3) years from expiration or termination of the
Agreement. Buyer’s indemnity obligations under this Section are guaranteed by
Orica Investments Pty. Ltd. pursuant to that certain Continuing Guaranty of
Orica Investments Pty. Ltd. of even date herewith.

 

8.3 Indemnification of Buyer Indemnitees. Seller shall indemnify and hold
harmless the Buyer Indemnitees, and any Person claiming by or through any of
them, from and against all Liabilities by, on behalf of or to any Person arising
from or attributable to:

 

(a) the breach of any representation or warranty of Seller made in this
Agreement;

 

(b) any failure by Seller to perform in all respects any of its covenants,
agreements or obligations in this Agreement;

 

(c) any negligent act or omission, including without limitation violation of
applicable Environmental or other applicable Law, of Seller or its
Representatives in the performance of the Conversion Work;

 

(d) the environmental and other condition of the Plant on and after the
Effective Date, including without limitation any air, soil or groundwater
contamination or any other violations of Environmental Laws or other Laws
applicable to the Plant or the Facility; and

 

(e) any generation, handling, storage, disposal or transportation of Hazardous
Materials, whether occurring before or after the Effective Date, in, on or from
the Plant or the Facility, including without limitation any Release of Hazardous
Materials in, on or from the Plant or the Facility.

 

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The foregoing shall not be applicable to any Liability to the extent the
proximate cause of which results from a negligent act or omission of Buyer or
its Representatives; including, without limitation, with respect to the Process
Design if Seller has made an indemnification Claim against Buyer prior to three
(3) years from expiration or termination of the Agreement. The indemnities set
forth in this Section shall survive the expiration or earlier termination of
this Agreement. Seller’s indemnity obligations under this Section are guaranteed
by Terra Industries Inc. pursuant to that certain Continuing Guaranty of Terra
Industries Inc. of even date herewith.

 

8.4 Procedures for Indemnification.

 

(a) If there occurs an event that either Party asserts is an indemnifiable event
pursuant to Section 8.2 or 8.3, the Party seeking indemnification (the
“Indemnified Party”) shall promptly provide notice (the “Notice of Claim”) to
the other Party or Parties obligated to provide indemnification (the
“Indemnifying Party”). Providing the Notice of Claim shall be a condition
precedent to any Liability of the Indemnifying Party hereunder, and the failure
to provide prompt notice as provided herein will relieve the Indemnifying Party
of its obligations hereunder, but only if and to the extent that such failure
materially prejudices the Indemnifying Party hereunder. If the Indemnified Party
provides a Notice of Claim to the Indemnifying Party of the commencement
thereof, the Indemnifying Party shall be entitled to participate therein and, to
the extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnitee and, after notice from the
Indemnifying Party to such Indemnified Party of such election so to assume the
defense thereof, the Indemnifying Party shall not be liable to the Indemnified
Party hereunder for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by the Indemnified Party, in connection with
the defense thereof other than reasonable costs of investigation; provided,
however, that if the Indemnified Party reasonably believes that counsel for the
Indemnifying Party cannot represent both the Indemnified Party and the
Indemnifying Party because such representation would be reasonably likely to
result in a conflict of interest, then the Indemnified Party shall have the
right to its own defense by counsel (limited to one firm) of its own choosing
and at the sole cost and expense of the Indemnifying Party. The Indemnified
Party agrees to reasonably cooperate with the Indemnifying Party and its counsel
in the defense against any such asserted Liability. In any event, the
Indemnified Party shall have the right to participate at its own expense in the
defense of such asserted Liability. No Indemnifying Party, in the defense of any
Claim shall, except with the written consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the release of the Indemnified Party from all
Liability in respect to such Claim or that does not solely require the payment
of money damages by the Indemnifying Party. The Indemnifying Party agrees to
afford the Indemnified Party and its counsel the opportunity to be present at,
and to participate in, conferences with all Persons asserting any Claim against
the Indemnified Party or conferences with representatives of or counsel for such
Persons. In no event shall the Indemnifying Party, without the written consent
of the Indemnified Party, settle any Claim on terms that provide for (i) a
criminal sanction against the Indemnified Party or (ii) injunctive relief
affecting the Indemnified Party.

 

17

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(b) Upon receipt of a Notice of Claim, the Indemnifying Party shall have twenty
(20) calendar days to contest its indemnification obligation with respect to
such claim, or the amount thereof, by written notice to the Indemnified Party
(the “Contest Notice”); provided, however, that if, at the time a Notice of
Claim is submitted to the Indemnifying Party the amount of the Damage in respect
thereof has not yet been determined, such twenty (20) day period in respect of,
but only in respect of the amount of the Damage, shall not commence until a
further written notice (the “Notice of Liability”) has been sent or delivered by
the Indemnified Party to the Indemnifying Party setting forth the amount of the
Damage incurred by the Indemnified Party that was the subject of the earlier
Notice of Claim. Such Contest Notice shall specify the reasons or bases for the
objection of the Indemnifying Party to the Claim, and if the objection relates
to the amount of the Damages asserted, the amount, if any, that the Indemnifying
Party believes is due the Indemnified Party, and any undisputed amount shall be
promptly paid over to the Indemnified Party. If no such Contest Notice is given
within such twenty (20) day period, the obligation of the Indemnifying Party to
pay the Indemnified Party the amount of the Damage set forth in the Notice of
Claim, or subsequent Notice of Liability, shall be deemed established and
accepted by the Indemnifying Party.

 

(c) If the Indemnifying Party fails to assume the defense of such Claim or,
having assumed the defense and settlement of such Claim, fails reasonably to
contest such Claim in good faith, the Indemnified Party, without waiving its
right to indemnification, may assume, at the cost of the Indemnifying Party, the
defense and settlement of such Claim; provided, however, that (i) the
Indemnifying Party shall be permitted to join in the defense and settlement of
such Claim and to employ counsel at its own expense, (ii) the Indemnifying Party
shall cooperate with the Indemnified Party in the defense and settlement of such
Claim in any manner reasonably requested by the Indemnified Party and (iii) the
Indemnified Party shall not settle such Claim without soliciting the views of
the Indemnifying Party and giving them due consideration.

 

(d) The Indemnifying Party shall make any payment required to be made under this
Article in cash and on demand. Any payments required to be paid by an
Indemnifying Party under this Article that are not paid within five (5) business
days of the date on which such obligation becomes final shall thereafter be
deemed delinquent, and the Indemnifying Party shall pay to the Indemnified
Party, immediately upon demand, interest at the rate of ten percent (10%) per
annum, not to exceed the maximum nonusurious rate allowed by applicable Law,
from the date such payment becomes delinquent to the date of payment of such
delinquent sums, which interest shall be considered to be Damages of the
Indemnified Party.

 

ARTICLE IX.

[RESERVED]

 

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ARTICLE X.

DISPUTE RESOLUTION

 

10.1 The following process may be initiated by either Party upon notice to the
other Party. Except as otherwise expressly provided in this Agreement, and
except to the extent a Party deems it reasonably necessary to seek immediate
injunctive or equitable relief, in which event a Party may seek such relief to
protect its interests in an appropriate forum, in the event of any controversy
arising out of or relating to this Agreement, or any breach thereof, the Parties
agree for a period of thirty (30) days following notification that a controversy
or breach has arisen or occurred to attempt in good faith to resolve any such
controversy or breach between the respective senior officers for each Party who
are responsible for administration of this Agreement. Despite any injunctive
relief, the Parties will continue to participate in good faith in the procedures
specified herein. All applicable statutes of limitation, including, without
limitation, contractual limitation periods provided for in this Agreement, shall
be tolled while the procedures specified in this Article X are pending. The
Parties will take all actions, if any, necessary to effectuate the tolling of
any applicable statutes of limitation. If such senior officers are unable to
resolve the controversy or breach within the said thirty (30) days, then the
Parties shall submit the controversy or breach to the President of each Party
for resolution for a period of fifteen (15) days. If the Parties’ respective
Presidents resolve the controversy or breach, the Parties will adhere to their
resolution, and make such amendments to this Agreement as may be necessary.

 

10.2 In the event the Presidents are unable to resolve the controversy or breach
within said fifteen (15) days, either Party may submit the controversy or breach
to binding arbitration by notice to the other Party and the American Arbitration
Association. The Parties agree that this Agreement affects interstate commerce.
The Parties further agree that such binding arbitration shall be settled
exclusively in Wilmington, Delaware (unless the Parties mutually agree to
another location for convenience of the Parties or witnesses) pursuant to the
provisions of the Federal Arbitration Act and according to the Commercial Rules
of the American Arbitration Association then in effect in the State of Delaware.
The arbitrator shall be chosen from a panel of retired federal judges provided
by the American Arbitration Association. Alternate strikes shall be made to the
panel commencing with the Party requesting the arbitration until one name
remains. Such individual shall be the arbitrator for the controversy and shall
be appointed within thirty (30) days of the date of the demand for arbitration
by one of the Parties to this Agreement. The Party requesting the arbitration
shall notify the arbitrator who shall hold a hearing(s) within ninety (90) days
of the notice. The arbitrator shall render a decision within sixty (60) days
after the conclusion of the hearing(s). In all arbitration proceedings, with
respect to each particular controversy or breach, the arbitrator shall be
required to agree upon and approve either one of the positions advocated by
Seller or one of the positions advocated by Buyer, whichever best reflects and
implements the purposes and intent of this Agreement. Any decision rendered by
the arbitrator which does not reflect either a position advocated by Seller or a
position advocated by Buyer shall be beyond the scope of authority granted to
the arbitrator and the issue in question will be returned to the arbitrator for
a decision consistent with the terms of this Section. The decision of the
arbitrator shall be in

 

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writing and shall be final and binding upon the Parties as to the controversy or
breach submitted. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. All American Arbitration
Association fees and the fees and expenses of the arbitrator will be divided
equally between the Parties. The attorneys’ fees and arbitration costs and
expenses shall be borne by the Party whose contention was not upheld by the
arbitrator, except to the extent the arbitrator rules otherwise.

 

ARTICLE XI.

GENERAL

 

11.1 Confidentiality and Publicity.

 

(a) Each Party shall keep confidential any non-public information that it may
obtain from the other in connection with this Agreement or the Related
Agreements, and any non-public information in the possession of such Party
related to the Plant, the Site or the Facility (any such information that a
Party is required to keep confidential pursuant to this sentence shall be
referred to as “Confidential Information”). For avoidance of doubt, Confidential
Information includes without limitation all Buyer know-how relating to the
Project Definition , and all information, records, renderings, drawings,
knowledge, trade secrets, expertise, designs, data, practices and techniques
supplied by Buyer to Seller in connection with the Project Definition. Except as
otherwise provided in Article XXIII. of the Long Term Supply Agreement, no Party
may disclose Confidential Information to any other Person (other than its
Affiliates and its and its Affiliates’ directors, officers and employees, and
representatives of its advisors and lenders, in each case whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated in this Agreement or any Related Agreement) or use such
Confidential Information to the detriment of the other Party; provided that
(a) such Party may use and disclose any such information once it has been
publicly disclosed (other than by such Party in breach of its obligations under
this Section) or which, to its knowledge, rightfully has come into possession of
such Party (other than from the other Party), and (b) to the extent that such
Party may, in the reasonable judgment of its counsel, be compelled by Laws to
disclose any of such Confidential Information, such Party may disclose such
Confidential Information if it has used commercially reasonable efforts, and has
afforded the other Party the opportunity, to obtain an appropriate protective
order, or other satisfactory assurance of confidential treatment, for the
Confidential Information compelled to be disclosed. The obligations set forth
herein shall survive the termination or expiration of the last of the Related
Agreements for a period of two years.

 

(b) Each Party shall consult with and cooperate with the other with respect to
the content and timing of all press releases and other public announcements
concerning this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby. Except as required by applicable Laws or by any
national securities exchange or quotation system, no Party shall make any such
release, announcement or statement without the prior written consent and
approval of the other Party, which shall not unreasonably be withheld. Each
Party shall respond promptly to any such request for consent and approval.

 

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11.2 Notices. Except as provided herein, any notices, requests or other
communications required or permitted by any provision of this Agreement shall be
in writing and shall be deemed delivered if delivered by hand or mailed by U.S.
Postal Service, postage prepaid, by registered or certified mail, nationally
recognized overnight courier, or sent by facsimile with confirmation of receipt
and:

 

If to Seller:    Terra Mississippi Nitrogen, Inc.      Highway 49 East     
Yazoo City, MS 39194      Attention: Plant Manager      Telephone: (662)
746-4131      Facsimile (662) 751-2913 with copy to:    Terra Industries, Inc.  
   660 Fourth Street      Sioux City, Iowa      Attention: General Counsel     
Facsimile: (712) 233-5586 If to Buyer:    Orica USA Inc.      33101 East Quincy
Avenue      Watkins, CO 80137      Attention: President      Telephone: (303)
268-5166      Facsimile: (303) 268-5251 and:           Attention: General
Counsel      Telephone: (303) 268-5016      Facsimile: (303) 268-5252

 

Buyer or Seller may change the address and name of addressee to which subsequent
notices are to be sent by notice to the other given as aforesaid.

 

11.3 Governing Law. This Agreement is governed by the laws of the State of
Delaware without regard to its conflicts of law principles.

 

11.4 Severability. If any provision of this Agreement or the application thereof
to any Person or circumstances shall, to any extent, be determined to be invalid
or unenforceable, the remainder of this Agreement shall remain in full force and
effect, and this Agreement shall be construed as if such invalid or
unenforceable provision had not been contained herein.

 

11.5 Captions; Headings. The captions and headings in this Agreement are for
convenience and reference only and in no way define, limit or describe the scope
or

 

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intent of this Agreement or any part thereof, or in anyway affect this Agreement
and shall not be considered in any construction thereof.

 

11.6 Assignment; Successors and Assigns. This Agreement, and the rights and
obligations hereunder, may not be assigned or delegated by either Party without
the prior written consent of the other Party, which consent may be withheld for
any reason or no reason, subject to the provisions of Article IV hereof. From
and after the effective date of any assignment or delegation of this Agreement,
and the rights and obligations hereunder, which has been consented to in writing
by the non-assigning Party, the assigning or delegating Party shall be deemed
released from all obligations and liabilities hereunder which are based on acts,
omission, facts, events or circumstances first arising, occurring or existing
after the effective date of the assignment or delegation. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and permitted assigns.

 

11.7 Counterparts. This Agreement shall be executed in several counterparts,
each of which counterpart shall be considered as an original without the
presentation of the others.

 

11.8 Relationship of Parties. Seller shall be deemed for all purposes to be an
independent contractor of Buyer and the Parties shall not be considered a
partnership, joint venture, license arrangement or unincorporated association.

 

11.9 Entire Agreement. This Agreement, the Exhibits hereto, the Related
Agreements and the Side Letter Agreement constitute the entire agreement among
the Parties and supersede all prior agreements and understandings, oral or
written, among the Parties hereto with respect to the subject matter hereof and
thereof. There are no warranties, representations or other agreements between
the Parties in connection with the subject matter hereof except as set forth
specifically herein or contemplated hereby.

 

11.10 [signature page follows]

 

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The undersigned authorized representatives of the Parties hereto have caused
this Agreement to be executed and delivered effective on the Effective Date.

 

TERRA MISSISSIPPI NITROGEN, INC.

By:

 

/s/ Michael L. Bennett

--------------------------------------------------------------------------------

Name:

  Michael L. Bennett

Its:

  President

 

ORICA USA INC. By:  

/s/ Don Brinker

--------------------------------------------------------------------------------

Name:   Don Brinker Its:   President & CEO

 

23

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EXHIBIT A

CONVERSION PROJECT CAPITAL BUDGET

 

The cost estimate prepared by Seller and dated July 15, 2005 is incorporated
herein by reference. The Conversion Project Capital Budget is expected to be
finalized in September, 2005.

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EXHIBIT B

DRUMS AND ASSOCIATED EQUIPMENT

 

Two (2) IGAN dryer drums in accordance with ICI Data Sheet No. 1105-T8-02 and
Louisville Drying Machinery Drawing No. 100d-126 complete with girth gears,
gearboxes, motors, trunnions, guards, and inlet and outlet chutes.

 

25