Registration Rights Agreement



 Exhibit 4.7 
  

FINAL EXECUTION COPY 
  
 TERRA INDUSTRIES INC. 
  
 REGISTRATION RIGHTS AGREEMENT 
  
 December 16, 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 (including any equity securities issued or issuable directly or indirectly with respect to the Shares, whether by way of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization) 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 preliminary Prospectus) included in the Shelf Registration Statement and 

  

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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 Shelf Registration for not more than 45 days
upon prior notice of such postponement to 

  

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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, and to file and cause the effectiveness of any such amendment or supplement 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 

  

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Statement the 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. 
  
 (n) The Company shall cooperate with each seller of
Registrable Securities covered by any Shelf Registration Statement and its counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. 
  
 (o) The Company will cooperate with the Holders of
Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders may request prior to sales of Registrable Securities pursuant to such 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, members, partners, managers, 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 

  

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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 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 

  

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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 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. Neither the Company nor any Holder shall 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,
in lieu of indemnifying such indemnified 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 

  

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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, member, partner, manager, Affiliate 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 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 the termination of
this Agreement or 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. 
  

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 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 
  
 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 

  

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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. 
  

			
	Very truly yours,
	
	Terra Industries Inc.
		
	By	 	 /s/ Mark A. Kalafut

	 Name: 
	 	 Mark A. Kalafut

	 Title: 
	 	 Vice President, General Counsel &
 Corporate Secretary



  

 -13- 








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

	PURCHASER:	 Basso Multi-Strategy Holding Fund Ltd 

  

			
		
	By:	 	 /s/ Howard I. Fischer

	 Name: 
	 	 Howard I. Fischer

	 Title:
	 	 Authorized Signatory


  









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

	PURCHASER:	 Anchorage Capital Master Offshore, Ltd. 

  

			
	 By:
	 	 Anchorage Advisors, L.L.C., its advisor

	 By:
	 	 Anchorage Advisors Management, L.L.C.,
 its managing member

		
	 By:
	 	 /s/ Anthony Davis

	 Name:
	 	 Anthony Davis

	 Title:
	 	 Managing Member


  









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

	PURCHASER:	 AG Domestic Convertibles, L.P. 

  

			
		
	By:	 	 /s/ Joseph R. Wekselblatt

	 Name: 
	 	 Joseph R. Wekselblatt, C.R.O.

	 Title:
	 	 General Partner


  









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

	PURCHASER:	 AG Offshore Convertibles, Ltd. 

  

			
	By:	 	 Anglo, Gordon & Co., LP Director

		
	By:	 	 /s/ Joseph R. Wekselblatt

	 Name: 
	 	 Joseph R. Wekselblatt, C.R.O.

	 Title:
	 	 General Partner


  









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

	PURCHASER:	 Avenue Special Situations Fund III, L.P. 

  

			
		
	By:	 	/S/  SONIA GARDNER
	 Name:
	 	Sonia Gardner
	 Title:
	 	 

  









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

	PURCHASER:	 Avenue Investments, L.P. 

  

			
		
	By:	 	/S/  SONIA GARDNER
	 Name:
	 	Sonia Gardner
	 Title:
	 	 

  









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

	PURCHASER:	 Avenue International, Ltd. 

  

			
		
	By:	 	/S/  SONIA GARDNER
	 Name:
	 	Sonia Gardner
	 Title:
	 	 

  









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

	PURCHASER:	 GMAM Group Pension Trust I 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 Barnet Partners Ltd. 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 St. Albans Partners Ltd. 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 Yield Strategies Fund I, L.P. 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 Yield Strategies Fund II, L.P. 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 Bank of America Pension Plan 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 Equity Overlay Fund, LLC 

  

			
		
	By:	 	 /s/ Alexander A. Lach

	 Name:
	 	 Alexander A. Lach

	 Title:
	 	 Partner


  









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

	PURCHASER:	 Windmill Masterfund L.P. 

  

			
	 By:
	 	 Duquesne Capital Management L.L.C.
 as its Investment
Manager

		
	By:	 	 /s/ Howard T. Kaminsky

	 Name:
	 	 Howard T. Kaminsky

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 Equitec Group LLC 

  

			
		
	By:	 	 /s/ David Barclay

	 Name:
	 	 David Barclay

	 Title:
	 	 General Counsel


  









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

	PURCHASER:	 Front Point Convertible Arbitrage Fund, LP 

  

			
		
	By:	 	 /s/ Arthur J. Lev

	 Name:
	 	 Arthur J. Lev

	 Title:
	 	 Authorized Signatory


  









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

	PURCHASER:	 Special Value Portfolio (“Fund”), a series of the Dreyfus Variable Investment Fund 

  

			
	 By:
	 	Jennison Associates LLC, as subadviser for the Fund
		
	By:	 	 /s/ Mark De Franco

	 Name:
	 	Mark De Franco
	 Title:
	 	 Senior Vice President


  









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

	PURCHASER:	 Manstay MAP Fund (“Fund”), a series of the Mainstay Funds 

  

			
	By:	 	Jennison Associates LLC, a subadviser for the fund
		
	By:	 	 /s/ Mark De Franco

	 Name:
	 	Mark De Franco
	 Title:
	 	 Senior Vice President


  









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

	PURCHASER:	 Jennison Institutional Opportunistic Equity Fund for Non-Qualified Trusts (“Fund”), a portfolio of the Prudential Trust Company Master Commingled Trust for
Tax-Exempt Trusts 

  

			
	By:	 	Jennison Associates LLC, a subadviser for the Fund
		
	By:	 	 /s/ Mark De Franco

	 Name:
	 	Mark De Franco
	 Title:
	 	 Senior Vice President


  









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

	PURCHASER:	 ING Equity Opportunistics Portfolio (“Fund”), a series of the ING Investors Trust 

  

			
	By:	 	Jennison Associates LLC, as subadviser for the Fund
		
	By:	 	 /s/ Mark De Franco

	 Name:
	 	Mark De Franco
	 Title:
	 	 Senior Vice President


  









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

	PURCHASER:	 Jennison Equity Opportunity Fund (“Fund”), a series of the Prudential Investment Portfolios, Inc. 

  

			
	By:	 	Jennison Associates LLC, as subadviser for the Fund
		
	By:	 	 /s/ Mark De Franco

	 Name:
	 	Mark De Franco
	 Title:
	 	 Senior Vice President


  









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

	PURCHASER:	 Capital Appreciation Portfolio (“Fund”), a series of the Ohio National Fund, Inc. 

  

			
	By:	 	Jennison Associates LLC, as subadviser for the Fund
		
	By:	 	 /s/ Mark De Franco

	 Name:
	 	 Mark De Franco

	 Title:
	 	 Senior Vice President


  









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

	PURCHASER:	 JMG Capital Partners LP 

  

			
		
	By:	 	 /s/ Jonathon Glaser

	 Name:
	 	 Jonathon Glaser

	 Title:
	 	 Member Manager


  









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

	PURCHASER:	 JMG Triton Offshore, Ltd. 

  

			
		
	By:	 	 /s/ Jonathon Glaser

	 Name:
	 	 Jonathon Glaser

	 Title:
	 	 Member Manager


  









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

	PURCHASER:	 King Street Capital, L.P. 

  

			
	By:	 	 King Street Capital Management, L.L.C.
 Its Investment
Manager

		
	By:	 	 /s/ Brian J. Higgins

	 Name:
	 	 Brian J. Higgins

	 Title:
	 	 Managing Principal


  









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

	PURCHASER:	 King Street Capital, Ltd. 

  

			
	 By:
	 	 King Street Capital Management, L.L.C.
 Its Investment
Manager

		
	By:	 	 /s/ Brian J. Higgins

	 Name:
	 	 Brian J. Higgins

	 Title:
	 	 Managing Principal


  









 The foregoing Agreement is hereby confirmed and accepted as of the date first above written. 
  
 PURCHASER:  St. Thomas Trading, Ltd. 
  

			
		
	By:	 	 /s/ JT

	 Name:
	 	 JT

	 Title:
	 	 Director


  









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

	PURCHASER:	 Perry Partners International Inc. 

  

			
		
	By:	 	 /s/ Nathaniel J. Klipper

	 Name:
	 	 Nathaniel J. Klipper

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 Perry Partners LP 

  

			
		
	By:	 	 /s/ Nathaniel J. Klipper

	 Name:
	 	 Nathaniel J. Klipper

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 Auda Classic Plc 

  

			
		
	By:	 	 /s/ Nathaniel J. Klipper

	 Name:
	 	 Nathaniel J. Klipper

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 QVT Fund LP 

  
 By its general partner, QVT Associates GP LLC 
  

			
		
	By:	 	 /s/ Dan Gold

	 Name:
	 	 Dan Gold

	 Title:
	 	 Managing Member

		
	By:	 	 /s/ Nicholas Brumm

	 Name:
	 	 Nicholas Brumm

	 Title:
	 	 Managing Member


  









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

	PURCHASER:	 SAB Capital Partners, L.P. 

  

			
	 By:
	 	 SAB Capital Advisors, LLC

		
	By:	 	 /s/ Norman Louie

	 Name:
	 	 Norman Louie

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 SAB Overseas Fund, Ltd. 

  

			
	 By:
	 	SAB Capital Management, L.P. Investment Manager
	 By:
	 	SAB Capital Management, LLC General Partner
		
	By:	 	 /s/ Norman Louie

	 Name:
	 	 Norman Louie

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 Seneca Capital LP 

  

			
		
	By:	 	 /s/ Doug Hirsch

	 Name:
	 	 Doug Hirsch

	 Title:
	 	Managing Member of Seneca Capital Advisers, LLC, as General Partner of Seneca Capital LP

  









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

			
	 PURCHASER:
	 	 Seneca Capital International Ltd.



			
		
	By:	 	 /s/ Doug Hirsch

	 Name:
	 	 Doug Hirsch

	 Title:
	 	Managing Member of Seneca Capital Investments, LLC, as Investment Adviser to Seneca Capital International Ltd.

  









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

			
	PURCHASER:	 	 SCP Domestic Fund, LP



			
		
	By:	 	 /s/ Kenneth Palumbo

	 Name:
	 	 Kenneth Palumbo

	 Title:
	 	 CFO


  









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

			
	PURCHASER:	 	 SCP Overseas Fund Ltd.



			
		
	By:	 	 /s/ Kenneth Palumbo

	 Name:
	 	 Kenneth Palumbo

	 Title:
	 	 CFO


  









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

			
	PURCHASER:	 	 SCP Equity Fund Overseas Ltd.



			
		
	By:	 	 /s/ Kenneth Palumbo

	 Name:
	 	 Kenneth Palumbo

	 Title:
	 	 CFO


  









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

			
	PURCHASER:	 	 SCP Equity Fund Domestic, LP



			
		
	By:	 	 /s/ Kenneth Palumbo

	 Name:
	 	 Kenneth Palumbo

	 Title:
	 	 CFO


  









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

			
	PURCHASER:	 	 Sphinx convertible Arb. Fund SPC



			
		
	By:	 	 /s/ Syed Mehdi

	 Name:
	 	 Syed Mehdi

	 Title:
	 	 Vice President Finance & Administration
 SSI
Investment Mgt.


  









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

	PURCHASER:	 Institutional Benchmarks Master Fund Ltd. 

  

			
		
	By:	 	 /s/ Syed Mehdi

	 Name:
	 	 Syed Mehdi

	 Title:
	 	 Vice President Finance & Administration

	 	 	 SSI Investment Mgt.


  









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

	PURCHASER:	 SSI Hedged Convertible Market Neutral L.P. 

  

			
		
	By:	 	 /s/ Syed Mehdi

	 Name:
	 	 Syed Mehdi

	 Title:
	 	 Vice President Finance & Administration

	 	 	 SSI Investment Mgt.


  









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

	PURCHASER:	 Delta Pleaides LP 

  

			
		
	By:	 	 /s/ Peter Hofbauer

	 Name:
	 	 Peter Hofbauer

	 Title:
	 	 Chief Operating Officer


  









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

	PURCHASER:	 Delta Offshore, Ltd. 

  

			
		
	By:	 	 /s/ Peter Hofbauer

	 Name:
	 	 Peter Hofbauer

	 Title:
	 	 Chief Operating Officer


  









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

	PURCHASER:	 Delta Institutional, LP 

  

			
		
	By:	 	 /s/ Peter Hofbauer

	 Name:
	 	 Peter Hofbauer

	 Title:
	 	 Chief Operating Officer


  









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

	PURCHASER:	 Delta Onshore LP 

  

			
		
	By:	 	 /s/ Peter Hofbauer

	 Name:
	 	 Peter Hofbauer

	 Title:
	 	 Chief Operating Officer


  









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

	PURCHASER:	 UBS O’Connor Global Convertible Arbitrage Master Limited 

  

			
		
	By:	 	 /s/ George Locasto

	 Name:
	 	 George Locasto

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 President and Fellows of Harvard College 

  

			
	By:	 	 Whippoorwill Associates, Inc., as agent


  

			
		
	By:	 	 /s/ David Strumwasser

	 Name:
	 	 David Strumwasser

	 Title:
	 	 Managing Director


  









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

	PURCHASER:	 ZLP Master Opportunity Fund Ltd. 

  

			
		
	By:	 	 /s/ Stuart J. Zimmer

	 Name:
	 	 Stuart J. Zimmer

	 Title:
	 	 Investment Manager


  









 Schedule 1 
  
 Purchasers 
  

			
	 Name and Address

	  	Number of Shares


	 AIG Soundshore/Basso
	  	 
	 Basso Multi-Strategy Holding Fund Ltd.
	  	400,000
		
	 Anchorage Capital Group, LLC
	  	 
	 Anchorage Capital Master Offshore Ltd.
	  	1,000,000
		
	 Angelo Gordon & Co.
	  	 
	 AG Domestic Convertibles LP
	  	275,000
	 AG Offshore Convertible Ltd.
	  	575,000
		
	 Avenue Capital Management
	  	 
	 Avenue Special Situations Fund III, L.P.
	  	450,000
	 Avenue Investments, L.P.
	  	140,000
	 Avenue International, Ltd.
	  	410,000
		
	 Camden Asset Management
	  	 
	 GMAM Group Pension Trust I
	  	146,100
	 Barnet Partners Ltd.
	  	132,200
	 St. Albans Partners Ltd.
	  	231,400
	 Yield Strategies Fund I, LP
	  	73,100
	 Yield Strategies Fund II, LP
	  	73,000
	 Bank of America Pension Plan
	  	146,100
	 Equity Overlay Fund LLC
	  	73,100
		
	 Duquesne Capital Management, L.L.C.
	  	 
	 Windmill Masterfund L.P.
	  	4,500,000
		
	 Equitec
	  	 
	 Equitec Group LLC
	  	25,000
		
	 Frontpoint
	  	 
	 Front Point Convertible Arbitrage Fund, LP
	  	20,000
		
	 Jennison Associates LLC
	  	 
	 Special Value Portfolio
	  	25,300
	 Mainstay MAP Fund
	  	373,200
	 Jennison Institutional Opportunistic Equity Fund for Non-qualified Trusts
	  	7,800
	 ING Equity Opportunities Portfolio
	  	240,200

  










			
	 Name and Address

	  	Number of Shares


	 Jennison Equity Opportunity Fund
	  	759,400
	 Capital Appreciation Portfolio
	  	94,100
		
	 JMG Capital
	  	 
	 JMG Capital Partners LP
	  	62,500
	 JMG Triton Offshore Fund Ltd.
	  	62,500
		
	 Kingstreet Capital Management, LLC
	  	 
	 King Street Capital LP
	  	214,500
	 King Street Capital Ltd
	  	435,500
		
	 Marin Capital
	  	 
	 St. Thomas Trading, Ltd.
	  	5,000
		
	 Perry Capital
	  	 
	 Perry Partners International Inc
	  	25,783
	 Perry Partners LP
	  	9,678
	 Auda Classic Plc
	  	264
		
	 QVT Financial LP
	  	 
	 QVT Fund LP
	  	750,000
		
	 SAB Capital Management, LP
	  	 
	 SAB Capital Partners L.P.
	  	3,020,065
	 SAB Overseas Fund Ltd
	  	3,729,935
		
	 Seneca Capital Investments, LLC
	  	 
	 Seneca Capital L.P.
	  	800,000
	 Seneca Capital International Ltd.
	  	1,700,000
		
	 Shumway Capital Partners LLC
	  	 
	 SCP Domestic Fund LP
	  	86,258
	 SCP Overseas Fund Ltd
	  	523,965
	 SCP Equity Fund Overseas Ltd
	  	70,575
	 SCP Equity Fund Domestic LP
	  	69,202
		
	 SSI Investment Management
	  	 
	 SphinX Convertible Arb. Fund SPC
	  	60,995
	 Institutional Benchmarks Master Fund Ltd.
	  	93,335
	 SSI Hedged Convertible Market Neutral LP
	  	45,670

  

 -65- 









			
	 Name and Address

	  	Number of Shares


	 Trafelet & Company LLC
	  	 
	 Delta Pleaides LP
	  	118,000
	 Delta Offshore Ltd
	  	793,000
	 Delta Institutional LP
	  	714,000
	 Delta Onshore LP
	  	125,000
		
	 UBS O’Connor LLC f/b/o/ O’Connor
	  	 
	 Global Convertible Arbitrage Master Limited
	  	175,000
		
	 Whippoorwill Associates
	  	800,000
	 President and Fellows of Harvard College
	  	 
		
	 Zimmer Lucas
	  	 
	 ZLP Master Opportunity Fund Ltd.
	  	400,000

  

 -66- 








 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.

  









 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. 
  










	 	(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




  

 -69- 









	 	 
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:___________________________________________________________________________ 
  
 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; 

  

	 	•	 	through the writing of options; 

  

	 	•	 	privately negotiated transactions 

  

	 	•	 	short sales; or 

  

	 	•	 	any other method permitted pursuant to applicable law. 

  
 In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into short sales or hedging transactions with
broker-dealers, or may in turn engage in short sales of the Registrable Securities and the undersigned or such broker-dealers may 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:___________________________________________________________________________ 
  

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 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 (to the extent such information is required by law to be in the Shelf
Registration Statement) provided herein 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. 
  

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 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:
	 	 


  

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