Document:

exv4w2

 

Exhibit 4.2

THIRD SUPPLEMENTAL INDENTURE

(2010 NOTES)

     THIS THIRD SUPPLEMENTAL INDENTURE dated as of January 29, 2007 (this “Supplemental
Indenture”) among Terra Capital, Inc., a Delaware corporation (the “Company”), the
entities set forth on Schedule A hereto, as guarantors under the Indenture referred to
below (the “Guarantors”), and U.S. Bank National Association, as trustee under the
Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

     WHEREAS, the Company, the Guarantors and the Trustee heretofore executed and delivered an
Indenture, dated as of May 21, 2003 (as amended, supplemented, waived, or otherwise modified, the
“Indenture”), providing for the issuance of the 111/2% Second
Priority Senior Secured Notes due 2010 (the “Notes”) (capitalized terms used herein but not
otherwise defined have the meanings ascribed thereto in the Indenture);

     WHEREAS, Section 9.2 of the Indenture provides that the Company and the Trustee, with the
consent of the Holders of at least a majority in principal amount of the Notes then outstanding,
may amend or waive certain terms and covenants in the Indenture as described below;

     WHEREAS, the Holders of a majority in principal amount of the Notes outstanding have consented
to the waiver and amendments effected by this Supplemental Indenture;

     WHEREAS, the Company and each of the Guarantors are undertaking to execute and deliver this
Supplemental Indenture to amend certain terms and covenants in the Indenture in connection with the
Offer to Purchase and Consent Solicitation Statement of the Company, dated as of January 10, 2007,
and any amendments, modifications or supplements thereto (the “Tender Offer and
Solicitation”); and

     WHEREAS, this Supplemental Indenture has been duly authorized by all necessary corporate
action on the part of the Company and each of the Guarantors.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company, each of the Guarantors and
the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the
Notes as follows:

ARTICLE I

AMENDMENTS AND WAIVERS

     Section 1.1 Applicability of Certain Indenture Provisions to the Tender Offer and
Solicitation. The application of the provisions of Article 4 of the Indenture are hereby
waived to the extent that such provisions might otherwise interfere with the ability to enter into
agreements contemplated by, and to consummate, the Tender Offer and Solicitation.

     Section 1.2 Amendments to the Indenture. Effective at the time of payment or deposit
with DTC (the “Payment Date”) of an amount of money sufficient to pay for all Notes validly
tendered and accepted pursuant to the Tender Offer and Solicitation and to make all consent
payments required under the Tender Offer and Solicitation:

	 	(i)	 	The Indenture is hereby amended to delete Section 4.2 (Corporate Existence),
Section 4.4 (Payment of Taxes and Other Claims), Section 4.5 (Additional guarantees),
Section 4.6 (SEC Reports) (except to the extent required by the Trust Indenture Act of
1939), Section 4.7 (Compliance Certificate) (except to the extent required by the Trust
Indenture Act of 1939), Section 4.8 (Change of Control), Section 4.9 (Limitation on
Incurrence of Indebtedness), Section 4.10 (Limitation on Restricted Payments), Section
4.11 (Limitation on Liens), Section 4.12 (Limitation on Transactions with Affiliates),
Section 4.13 (Limitation on Asset Sales), Section 4.14 (Limitation on Dividend and
Other Restrictions Affecting Restricted Subsidiaries), Section 4.15 (Limitation on Sale
and Leaseback Transactions), Section 4.16 (Impairment of Security Interest), Section
4.17 (Conduct of Business) and Section 4.18 (Maintenance of Properties; Insurance;
Compliance with Laws) in their entirety and all references thereto contained elsewhere
in the Indenture in their entirety;

 

 

	 	(ii)	 	The Indenture is hereby amended to delete subsection (d) of Section 5.1
(Merger, Consolidation and Sale of Assets) in their entirety and all references thereto
contained in Section 5.1 and elsewhere in the Indenture in their entirety;

	 	(iii)	 	The failure to comply with the terms of any of the Sections of the Indenture
set forth in clauses (i) and (ii) above shall no longer constitute a Default or an
Event of Default under the Indenture and shall no longer have any other consequence
under the Indenture;

	 	(iv)	 	The Indenture is hereby amended to delete clauses (iii), (iv), (v), (vi) and
(ix) of Section 6.1 (Events of Default) in their entirety and all references thereto
contained in Section 6.1 and elsewhere in the Indenture in their entirety, and the
occurrence of the events described in clauses (iii), (iv), (v), (vi) and (ix) of
Section 6.1 shall no longer constitute Events of Default;

	 	(v)	 	All definitions set forth in Section 1.1 of the Indenture that relate to
defined terms used solely in sections deleted by this Supplemental Indenture are hereby
deleted in their entirety; and

	 	(vi)	 	All references to Sections 6.1 and 5.1 of the Indenture shall mean Sections 6.1
and 5.1 as amended by this Supplemental Indenture.

ARTICLE II

MISCELLANEOUS

     Section 2.1 Effect of Supplemental Indenture. Upon the execution and delivery of this
Supplemental Indenture by the Company, each of the Guarantors and the Trustee, the Indenture shall
be supplemented in accordance herewith, and this Supplemental Indenture shall form a part of the
Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and
delivered under the Indenture shall be bound hereby; provided, that the amendments to the Indenture
set forth in Section 1.2 of this Supplemental Indenture shall become operative as specified in
Section 1.2 hereof. Prior to the Payment Date, the Company may terminate this Supplemental
Indenture upon written notice to the Trustee.

     Section 2.2 Indenture Remains in Full Force and Effect. Except as supplemented
hereby, all provisions in the Indenture shall remain in full force and effect.

     Section 2.3 Indenture and Supplemental Indenture Construed Together. This
Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and
the Indenture and this Supplemental Indenture shall henceforth be read and construed together.

     Section 2.4 Confirmation and Preservation of Indenture. The Indenture as supplemented
by this Supplemental Indenture is in all respects confirmed and preserved.

     Section 2.5 Conflict with the Trust Indenture Act. If any provision of this
Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is
required under the TIA to be a part of and govern any provision of this Supplemental Indenture, the
provision of the TIA shall control. If any provision of this Supplemental Indenture modifies or
excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA
shall be deemed to apply to the Indenture as so modified or to be excluded by this Supplemental
Indenture, as the case may be.

     Section 2.6 Severability. In case any provision in this Supplemental Indenture shall
be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

     Section 2.7 Benefits of Supplemental Indenture. Nothing in this Supplemental
Indenture or the Notes, express or implied, shall give to any Person, other than the parties hereto
and thereto and their successors hereunder and thereunder and the Holders of the Notes, any benefit
of any legal or equitable right, remedy or claim under the Indenture, this Supplemental Indenture
or the Notes.

 

 

     Section 2.8 Successors. All agreements of the Company and each of the Guarantors in
this Supplemental Indenture shall bind their respective successors. All agreements of the Trustee
in this Supplemental Indenture shall bind its successors.

     Section 2.9 Acceptance by Trustee. The Trustee accepts the amendments to the
Indenture effected by this Supplemental Indenture and agrees to execute the trusts created by the
Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture.

     Section 2.10 Certain Duties and Responsibilities of the Trustee. In entering into
this Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the
Indenture and the Notes relating to the conduct or affecting the liability or affording protection
to the Trustee, whether or not elsewhere herein so provided.

     Section 2.11 Governing Law. This Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.

     Section 2.12 Counterparts. This Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

     Section 2.13 Headings. The Article and Section headings herein are inserted for
convenience of reference only, are not intended to be considered a part hereof and shall not modify
or restrict any of the terms or provisions hereof.

     Section 2.14 The Trustee. The Trustee shall not be responsible in any manner for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which are made by the Company and each of the Guarantors.

*   *   *   *   *

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed as of the date first written above.

	 	 	 	 	 
	 	TERRA CAPITAL, INC.

 	 
	 	By: 	/s/
Francis G. Meyer 	 
	 	Name:  	Francis G. Meyer 	 
	 	Title:  	Vice President 	 
	 
	 
	 	GUARANTORS:

BEAUMONT AMMONIA INC.

BEAUMONT HOLDINGS CORPORATION

BMC HOLDINGS INC.

PORT NEAL CORPORATION

TERRA CAPITAL HOLDINGS, INC.

TERRA HOUSTON AMMONIA, INC.

TERRA INDUSTRIES INC.

TERRA INTERNATIONAL, INC.

TERRA INTERNATIONAL (OKLAHOMA) INC.

TERRA METHANOL CORPORATION

TERRA NITROGEN CORPORATION

TERRA REAL ESTATE CORP.

TERRA (U.K.) HOLDINGS INC.

TERRA MISSISSIPPI HOLDINGS CORP.

TERRA MISSISSIPPI NITROGEN INC.

TERRA NITROGEN GP HOLDINGS, INC.

 	 
	 	By: 	/s/
Francis G. Meyer 	 
	 	Name:  	Francis G. Meyer 	 
	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By: 	/s/
Richard Prokosch 	 
	 	Name:  	Richard Prokosch 	 
	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

SCHEDULE A

SCHEDULE OF GUARANTORS

BEAUMONT AMMONIA INC. (Delaware)

BEAUMONT HOLDINGS CORPORATION (Delaware)

BMC HOLDINGS INC. (Delaware)

PORT NEAL CORPORATION (Delaware)

TERRA CAPITAL HOLDINGS, INC. (Delaware)

TERRA HOUSTON AMMONIA, INC. (Delaware)

TERRA INDUSTRIES INC. (Maryland)

TERRA INTERNATIONAL, INC. (Delaware)

TERRA INTERNATIONAL (OKLAHOMA) INC. (Delaware)

TERRA METHANOL CORPORATION (Delaware)

TERRA NITROGEN CORPORATION (Delaware)

TERRA REAL ESTATE CORP. (Iowa)

TERRA (U.K.) HOLDINGS INC. (Delaware)

TERRA MISSISSIPPI HOLDINGS CORP. (Mississippi)

TERRA MISSISSIPPI NITROGEN INC. (Delaware)

TERRA NITROGEN GP HOLDINGS, INC. (Delaware)exv10w1

 

Exhibit 10.1

TERRA CAPITAL, INC.

$330,000,000

7% Senior Notes due 2017

Purchase Agreement

New York, New York

January 25, 2007

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Ladies and Gentlemen:

          Terra Capital, Inc., a corporation organized under the laws of the state of Delaware (the
“Company”), proposes to issue and sell to you (the “Initial Purchaser”)
$330,000,000 principal amount of its 7% Senior Notes due 2017 (the “Notes”). The Notes are
to be issued under an indenture (the “Indenture”), to be dated as of February 2, 2007,
among the Company, Terra Industries Inc., a Maryland corporation (“Parent”), as guarantor,
the other guarantors listed on the signature pages hereof (together with Parent, the
“Guarantors” and, together with the Company, the “Issuers”) and U.S. Bank National
Association, as trustee (the “Trustee”). The Notes will have the benefit of the guarantees
(the “Guarantees” and, together with the Notes, the “Securities”) provided for in
the Indenture. Holders of the Securities will also have the benefit of a registration rights
agreement (the “Registration Rights Agreement”), dated as of February 2, 2007, between the
Issuers and the Initial Purchaser, pursuant to which the Issuers have agreed to register the
Securities under the Act subject to the terms and conditions therein specified. The use of the
neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain
terms used herein are defined in Section 19 hereof.

          In connection with the offering of the Securities, (A) the Company is conducting a tender
offer (the “Tender Offer”) for any and all of its 127/8% senior secured notes due 2008 (the
“2008 Notes”) and the 111/2% second priority senior secured notes due 2010 (the “2010
Notes” and together with the 2008 Notes, the “Senior Secured Notes”) and (B) the
Company, TNLP, Terra UK (collectively, the “Borrowers”) and Parent will enter into an
amendment to the $175,000,000 Revolving Credit Facility between the borrowers, Parent, Citicorp
USA, Inc. as a lender and administrative agent, and the other lenders listed therein (the “Bank
Amendment”).

 

 

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          This Agreement, the Securities, the Indenture, the Tender Offer, the Bank Amendment and the
Registration Rights Agreement are referred to collectively herein as the “Transaction
Documents”.

          The sale of the Securities to the Initial Purchaser will be made without registration of the
Securities under the Act in reliance upon exemptions from the registration requirements of the Act.

          In connection with the sale of the Securities, the Issuers have prepared a preliminary
offering memorandum, dated January 24, 2007 (the “Preliminary Memorandum”), and a final
offering memorandum, dated January 25, 2007 (the “Final Memorandum”) including or
incorporating by reference a description of the terms of the Securities, the terms of the offering
and a description of the Company. For purposes of this Agreement, “Issuer Written
Information” means any written communication (as defined in Rule 405 of the Securities Act)
that constitutes an offer to sell or a solicitation of an offer to buy the Securities other than
the Preliminary Memorandum or the Final Memorandum, and “Disclosure Package” means the
Preliminary Memorandum and the final term sheet prepared pursuant to Section 5(b) herein and in the
form attached as Schedule II hereto together with the Issuer Written Information, if any,
identified on Schedule III hereto. As used herein, the terms Preliminary Memorandum, Disclosure
Package and Final Memorandum shall include the documents, if any, incorporated by reference
therein. Each of the Preliminary Memorandum and the Final Memorandum sets forth certain
information concerning the Issuers and the Securities. The Company hereby confirms that it has
authorized the use of the Disclosure Package, the Preliminary Memorandum, the Final Memorandum and
the Recorded Road Show (as defined below), and any amendment or supplement thereto, in connection
with the offer and sale of the Securities by the Initial Purchaser.

          1. Representations and Warranties. The Issuers, jointly and severally, represent and
warrant to the Initial Purchaser as set forth below in this Section 1.

     (a) No Untrue Statements. The Preliminary Memorandum, at the date thereof, did
not contain any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading. At the Execution Time, the Disclosure Package does not contain
any untrue statement of a material fact or omit to state any material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not
misleading. At the Execution Time, on the Closing Date and on any settlement date, the
Final Memorandum did not, and will not, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Notwithstanding the
foregoing, the Issuers make no representation or warranty as to the information relating to
the Initial

 

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Purchaser contained in or omitted from the Preliminary Memorandum, the Disclosure
Package or the Final Memorandum, or any amendment or supplement thereto, in reliance
upon and in conformity with information furnished in writing to the Company by the Initial
Purchaser for inclusion therein. The Company has not distributed or referred to or will not
distribute or refer to any Issuer Written Information relating to the Securities other than
the Disclosure Package, the Final Memorandum and the recorded electronic road show made
available to investors (the “Recorded Road Show”) without the prior consent of the
Initial Purchaser (such consent, for any future distribution of written communications, not
to be unreasonably withheld). The Recorded Road Show does not conflict in any material
respect with the Disclosure Package or the Final Memorandum and, when taken together with
the Disclosure Package, did not, and at the Closing Date will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company and the Guarantors make no
representation or warranty as to the information contained in or omitted from the Recorded
Road Show, in reliance upon and in conformity with information furnished in writing to the
Company or on behalf of the Initial Purchaser specifically for inclusion therein.

     (b) [Intentionally omitted].

     (c) No Offers; Sales. None of the Issuers, nor any of their respective
Affiliates, nor any person acting on any of their behalf has (other than the Initial
Purchaser, as to whom the Issuers make no representation), directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under
circumstances that would require registration of the Securities under the Act.

     (d) No General Solicitation. None of the Issuers, nor any of their respective
Affiliates, nor any person acting on any of their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Securities in the United States.

     (e) Rule 144A(d)(3) Eligibility. The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Act.

     (f) Regulation S. None of the Issuers, nor any of their respective Affiliates,
nor any person acting on any of their behalf has engaged in any directed selling efforts
with respect to the Securities, and each of them has complied with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the meanings given to them
by Regulation S.

 

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     (g) Portal Eligibility. The Issuers have been advised by the NASD’s Portal
Market that the Securities have been designated Portal-eligible securities in accordance
with the rules and regulations of the NASD.

     (h) Investment Company Act. No Issuer is, nor after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof as described
in the Final Memorandum will be, an “investment company” within the meaning of the
Investment Company Act, without taking account of any exemption arising out of the number of
holders of the such Issuer’s securities.

     (i) No Compensation. No Issuer has paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of such Issuer in connection
with this offering (except as contemplated by this Agreement).

     (j) No Stabilization or Manipulation. None of the Issuers, nor any of their
respective Affiliates, nor any Person acting on its or their behalf has taken, directly or
indirectly, any action designed to cause or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in the stabilization or
manipulation of the price of any security of any Issuer to facilitate the sale or resale of
the Securities.

     (k) No Untrue Statements. The information provided by any Issuer pursuant to
Section 5(h) hereof will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

     (l) No Majority Interest. Parent does not have a majority voting or economic
interest in any entity other than (i) the Company, (ii) the other Guarantors, (iii) TNCLP,
TNLP, Terra UK, Terra Canada and (iv) non-operating subsidiaries with assets of less than
$1,000 (the entities in clauses (i), (ii) and (iii), the “Subsidiaries”).

     (m) Organization. Each of Parent and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate or partnership power
and authority to own or lease, as the case may be, and to operate its properties and conduct
its business as described in the Final Memorandum, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction which
requires such qualification, except as could not reasonably be expected to have a Material
Adverse Effect.

     (n) Authorization of Capital Stock. All the outstanding shares of capital
stock of each Subsidiary have been duly and validly authorized and issued and are

 

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fully paid and nonassessable, and, except as otherwise set forth in the Final Memorandum, all
outstanding shares of capital stock or other equity interests of the Subsidiaries are owned
by the Company either directly or through wholly owned
Subsidiaries free and clear of any perfected security interest or any other security
interests, claims, liens, charges or encumbrances (each, a “Lien”).

     (o) Equity Capitalization. The authorized capitalization of Parent on a
consolidated basis as of September 30, 2006 is as set forth in the Final Memorandum.

     (p) Accurate Summaries. The statements in the Final Memorandum under the
headings “Risk Factors — Risk Factors Relating to Our Business — We may be adversely
affected by environmental regulations to which we are subject,” “Business — Environmental
and Other Regulatory Matters,” “Business — Legal Matters,” “Description of Other
Indebtedness,” “Description of the Notes” and “Exchange Offer; Registration Rights,” insofar
as such statements summarize laws, legal proceedings, legal matters and documents discussed
therein, are accurate and fair summaries of such laws, legal proceedings, legal matters and
documents.

     (q) Purchase Agreement. This Agreement has been duly authorized, executed and
delivered by the Issuers.

     (r) Indenture. The Indenture has been duly authorized and, when executed and
delivered by the Issuers and the Trustee, will constitute a legal, valid and binding
agreement enforceable against the Issuers in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors’ rights generally from time to time in effect and to general
principles of equity (“Enforceability Exceptions”)).

     (s) Notes and Exchange Notes. The Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchaser, will have been duly executed and delivered by the
Company and will constitute legal, valid and binding obligations enforceable against the
Company in accordance with their terms and entitled to the benefits of the Indenture
(subject, as to the enforcement of remedies, to Enforceability Exceptions).

     (t) Guarantees. The Guarantees have been duly authorized and, when the Notes
have been executed and authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchaser, will have been duly executed and
delivered by the Guarantors and will constitute legal, valid and binding obligations
enforceable against the Guarantors in accordance with their terms and entitled to the
benefits of the Indenture (subject, as to the enforcement of remedies, to Enforceability
Exceptions).

 

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     (u) Registration Rights Agreement. The Registration Rights Agreement has been
duly authorized and, when executed and delivered by the Issuers, will constitute a legal, valid and binding
agreement enforceable against the Issuers in accordance with its terms (subject, as to the enforcement of remedies, to Enforceability
Exceptions and, with respect to rights of indemnity or contribution, federal and state
securities laws and public policy considerations).

     (v) Tender Offer. The Tender Offer has been duly authorized by the Company.

     (w) Bank Amendment. The Bank Amendment has been duly authorized by the
Borrowers and Parent, as applicable.

     (x) No Authorization; No Consents. No consent, approval, authorization, filing
with or order of any court, regulatory body, administrative agency, governmental agency,
authority or other body, arbitrator or other authority (each, a “Governmental
Authority”) is required in connection with the transactions contemplated herein or in
any other Transaction Document, except (i) in the case of compliance with the Registration
Rights Agreement, such as will be obtained under the Act and the Trust Indenture Act and
(ii) such as may be required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Initial Purchaser in the manner
contemplated herein and in the Final Memorandum and the Registration Rights Agreement.

     (y) No Conflict. None of (a) the execution and delivery of any Transaction
Document, (b) the issue and sale of the Securities, (c) the consummation of any other of the
transactions herein or therein contemplated and (d) the fulfillment of the terms hereof or
thereof will conflict with, result in a breach or violation of, or imposition of any Lien
upon any property or assets of Parent or any of the Subsidiaries pursuant to (i) the charter
or bylaws of Parent or any of the Subsidiaries; (ii) the terms of any material indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which Parent or any of the Subsidiaries is
a party or bound or to which its or their property is subject (after giving effect to the
Bank Amendment and the Tender Offer); or (iii) any material statute, law, rule, regulation,
judgment, order or decree applicable to Parent or any of the Subsidiaries of any
Governmental Authority having jurisdiction over Parent or any of the Subsidiaries or any of
its or their properties.

     (z) Financial Statements. The consolidated historical financial statements
included or incorporated by reference in the Disclosure Package and Final Memorandum present
fairly in all material respects the financial condition, results of operations and cash
flows of the entities to which they relate as of the dates and for the periods indicated,
comply with the applicable accounting requirements of the Act and

 

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have been prepared in conformity with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein). The selected historical consolidated financial data set forth under
the caption “Selected Consolidated Financial Data” in the Preliminary Memorandum and the
Final Memorandum conform to the requirements of Item 301 of Regulation S-K under the
Exchange Act (“Regulation S-K”) and fairly present, on the basis stated in the Final
Memorandum, the information included therein. The summary financial data set forth under
the caption “Summary Financial Data” in the Preliminary Memorandum and the Final Memorandum
fairly present, on the basis stated in the Final Memorandum, the information included
therein. The ratios of earnings to fixed charges set forth in the Preliminary Memorandum
and the Final Memorandum under the caption “Selected Consolidated Financial Data” have been
calculated in compliance with Item 503(d) of Regulation S-K.

     (aa) Litigation; Proceedings. No action, suit or proceeding by or before any
court or Governmental Authority involving Parent or any of the Subsidiaries or its or their
property is pending or, to the best knowledge of the Issuers, threatened that (i) could
reasonably be expected to have a material adverse effect on the performance of this
Agreement or any other Transaction Document, or the consummation of any of the transactions
contemplated hereby or thereby; or (ii) could reasonably be expected to have a Material
Adverse Effect except as described in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto).

     (bb) Ownership of Property. Each of Parent and the Subsidiaries owns or leases
all such properties as are necessary to the conduct of its operations as presently
conducted. Each of Parent and the Subsidiaries has good and marketable title to all real
property it purports to own and good and legal title to all personal property it purports to
own, including, without limitation, all owned by it, which is material to the business of
Parent and the Subsidiaries, taken as a whole, in each case free and clear of all Liens,
except (i) such as are described in the Disclosure Package and the Final Memorandum, (ii)
such as do not materially affect the value of such property and do not interfere in any
material respect with the use made and proposed to be made of such property by Parent or
such Subsidiary and (iii) in the case of personal property, such as would not have a
Material Adverse Effect. All real property, personal property and buildings held under
lease by each of Parent and the Subsidiaries are held by it under valid, subsisting and
enforceable leases or similar agreements, with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such real property, personal
property and buildings by such Issuer, except as described in the Disclosure Package and the
Final Memorandum (exclusive of any amendment or supplement thereto).

 

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     (cc) No Violation or Default. Neither Parent nor any Subsidiary is in
violation or default of (i) any provision of its charter or bylaws; (ii) the terms of any
material indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to which it is a
party or bound or to which its property is subject; or (iii) any material statute, law,
rule, regulation, judgment, order or decree applicable to Parent or any of the Subsidiaries
of any court, regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over Parent or such Subsidiary or any of its properties, as
applicable, other than, in the case of clause (ii), any violation or default that could not
reasonably be expected to have a Material Adverse Effect.

     (dd) Independent Accountants. Deloitte & Touche LLP (“Deloitte &
Touche”), who have certified certain financial statements of Parent and its subsidiaries
and of TNCLP and its subsidiaries and delivered its reports with respect to each of the
audited consolidated financial statements included or incorporated by reference in the
Disclosure Package and the Final Memorandum, are independent public accountants with respect
to Parent and TNCLP within the meaning of the Act and the applicable published rules and
regulations thereunder.

     (ee) No Taxes or Duties. There are no stamp or other issuance or transfer
taxes or duties or other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Issuers of the
Securities.

     (ff) Payment of Taxes. Each of Parent and the Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file could not reasonably
be expected to have a Material Adverse Effect, except as described in the Disclosure Package
and the Final Memorandum (exclusive of any amendment or supplement thereto)) and has paid
all taxes required to be paid by it and any other assessment, fine or penalty levied against
it, to the extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or as could not
reasonably be expected to have a Material Adverse Effect, except as described in the
Disclosure Package and the Final Memorandum (exclusive of any amendment or supplement
thereto).

     (gg) Insurance Matters. Each of Parent and the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is engaged. All material
policies of insurance and fidelity or surety bonds insuring Parent or any of the
Subsidiaries or its businesses, assets, employees, officers and directors are in full force
and effect. Neither Parent nor any of the Subsidiaries has any reason to believe that it

 

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will not be able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to continue its
business at a cost that could not reasonably be expected to have a Material
Adverse Effect, except as described in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto).

     (hh) Dividends and Distributions. No Subsidiary is currently prohibited,
directly or indirectly, from paying any dividends to its equity holders, from making any
other distribution on such Subsidiary’s capital stock, from repaying to its equity holders
any loans or advances to such Subsidiary from its equity holders or from transferring any of
such Subsidiary’s property or assets to its equity holders or any other Subsidiary, except
as described in the Disclosure Package and the Final Memorandum (exclusive of any amendment
or supplement thereto).

     (ii) Government Authorizations. Each of Parent and the Subsidiaries possesses
all licenses, certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its businesses, and
neither Parent nor any of the Subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or permit which,
singly or in the aggregate, would reasonably be expected to have a Material Adverse Effect,
except as described in the Disclosure Package and the Final Memorandum (exclusive of any
amendment or supplement thereto).

     (jj) Accounting Controls. Parent and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

     (kk) Compliance with Environmental Laws. (i) Each of Parent and the
Subsidiaries is in compliance with any and all applicable foreign, federal, state and local
laws and regulations and rules of common law relating to pollution or the protection of the
environment, natural resources or occupational health and safety, including without
limitation those relating to the release or threat of release of Hazardous Materials
(“Environmental Laws”); (ii) each of Parent and the Subsidiaries has received and is
in compliance with all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its businesses; (iii) each of

 

-10-

Parent and the Subsidiaries has
not received notice of any actual or potential liability for the investigation or
remediation of any Hazardous Materials; (iv) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter or request for information pending or, to the knowledge of the Issuers, threatened against Parent or any of the
Subsidiaries under any Environmental Law; (v) no lien, charge, encumbrance or restriction
has been recorded under any Environmental Law with respect to any assets, facility or
property owned, operated, leased or controlled by Parent or any of the Subsidiaries; (vi)
neither Parent nor any of the Subsidiaries is subject to any order, decree or agreement
requiring, or otherwise obligated or required to perform any response or corrective action
relating to any Hazardous Materials; (vii) neither Parent nor any of the Subsidiaries has
received notice that it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
(“CERCLA”), or any comparable state or foreign law; (viii) no property or facility
of Parent or any of the Subsidiaries is (a) listed or, to the knowledge of the Issuers,
proposed for listing on the National Priorities List under CERCLA or (b) listed in the
Comprehensive Environmental Response, Compensation and Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by any governmental
authority; and (ix) there are no past or present actions, events, operations or activities
which could reasonably be expected to prevent or interfere with compliance by Parent or any
Subsidiary with any applicable Environmental Law or to result in liability (including,
without limitation, fines or penalties) under any applicable Environmental Law, except in
the case of clauses (i) through (ix) hereof as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, except as described in the
Disclosure Package and the Final Memorandum (exclusive of any amendment or supplement
thereto). “Hazardous Materials” means any substance, chemical, material, pollutant,
waste, contaminant or constituent, which is subject to regulation under or could give rise
to liability under any Environmental Law.

     (ll) Environmental Review. In the ordinary course of its
business, Parent periodically reviews the effect of Environmental Laws on the
business, operations and properties of Parent and its subsidiaries, in the
course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review, the Issuers have reasonably concluded that such associated costs
and liabilities could not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect, except as described in the Disclosure
Package and the Final Memorandum (exclusive of any amendment or supplement
thereto).

 

 

-11-

     (mm) Employee Benefits Matters. Except as could not reasonably be
expected to have a Material Adverse Effect, each of Parent and the Subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards of Section 302 of the
United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
and the regulations and published interpretations thereunder with respect to each “plan” (as
defined in Section 3(3) of ERISA and such regulations and published interpretations) in
which employees of Parent and the Subsidiaries are eligible to participate and each such
plan is in compliance with the presently applicable provisions of ERISA and such regulations
and published interpretations; and neither Parent nor any of the Subsidiaries has incurred
any unpaid liability to the Pension Benefit Guaranty Corporation (other than for the payment
of premiums in the ordinary course) or to any such plan under Title IV of ERISA.

     (nn) Third Party Information. The statistical and market-related data included
in the Disclosure Package and the Final Memorandum are based on or derived from sources
which the Issuers believe to be reliable and accurate.

     (oo) No Default, Etc. There are no contracts, agreements or other documents
that would be required to be described in a prospectus under the Act that have not been
described in the Disclosure Package and the Final Memorandum (exclusive of any amendment or
supplement thereto). The contracts so described in the Disclosure Package and the Final
Memorandum are in full force and effect on the date of this Agreement. Neither Parent nor
any Subsidiary nor, to the knowledge of any Issuer, any other party is in breach of or
default under any such contracts, agreements or other documents, other than a breach or
default that could not reasonably be expected to have a Material Adverse Effect.

     (pp) Intellectual Property. Parent and the Subsidiaries own, possess, license
or have other rights to use all patents, patent applications, trade and service marks, trade
and service mark registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property (collectively, the
“Intellectual Property”) necessary for the conduct of their respective businesses as
now conducted or as proposed in the Disclosure Package and the Final Memorandum to be
conducted.

     (qq) Material Relationships. To each Issuer’s knowledge, except as disclosed
in the Disclosure Package and the Final Memorandum, neither Parent nor any of the
Subsidiaries (i) has any material lending or other relationship with any bank or lending
affiliate of the Initial Purchaser and (ii) intends to use any of the proceeds from the sale
of the Securities hereunder to repay any outstanding debt owed to any affiliate of the
Initial Purchaser.

 

-12-

     (rr) Transaction Documents. Each of the Transaction Documents conforms in all
material respects to the description thereof contained in the Disclosure Package and the
Final Memorandum.

     (ss) Labor Matters. There is no (i) significant unfair labor practice
complaint, grievance or arbitration proceeding pending or threatened against Parent or any
of the Subsidiaries before the National Labor Relations Board or any state or local labor
relations board, (ii) strike, labor dispute, slowdown or stoppage pending or threatened
against Parent or any of the Subsidiaries or (iii) union representation question existing
with respect to the employees of Parent or any of the Subsidiaries, except in the case of
clauses (i), (ii) and (iii), for such actions which, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. To the best knowledge of the
Company, no collective bargaining organizing activities are taking place with respect to
Parent or any of the Subsidiaries that could reasonably be expected to have a Material
Adverse Effect.

     (tt) Regulations T, U, X. Neither Parent nor any of the Subsidiaries nor any
agent thereof acting on any of their behalf has taken, and none of them will take, any
action that could cause this Agreement or the issuance or sale of the Securities to violate
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve System.

          Any certificate signed by an officer of any Issuer and delivered to the Initial Purchaser or
counsel for the Initial Purchaser in connection with the offering of the Securities shall be deemed
a representation and warranty by the Issuers, as to matters covered thereby, to the Initial
Purchaser.

          2. Purchase and Sale. In reliance upon the representations and warranties herein set
forth, the Company agrees to sell to the Initial Purchaser, and subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the Initial Purchaser
agrees to purchase from the Company, at a purchase price equal to 98.355% of the principal amount
thereof, the aggregate principal amount of Securities set forth opposite the name of the Initial
Purchaser on Schedule I hereto.

          3. Delivery and Payment. Delivery of and payment for the Securities shall be made at
10:00 A.M., New York City time, on February 2, 2007, or at such time on such later date as the
Initial Purchaser shall designate, which date and time may be postponed by agreement between the
Initial Purchaser and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the “Closing Date”). Delivery
of the Securities shall be made to the Initial Purchaser for the account of the Initial Purchaser
against payment by the Initial Purchaser of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to the

 

-13-

account specified by the Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company unless the Initial Purchaser shall otherwise instruct.

          4. Offering by Initial Purchaser. The Initial Purchaser represents and warrants to,
severally and not jointly, and agrees with, severally and not jointly, the Issuers that:

     (a) It has not offered or sold, and will not offer or sell, any Securities except (i)
to those it reasonably believes to be qualified institutional buyers (as defined in Rule
144A under the Act) and that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is aware that such sale is
being made in reliance on Rule 144A; or (ii) in accordance with the restrictions set forth
in Exhibit A hereto;

     (b) Neither it nor any person acting on its behalf has made or will make offers or
sales of the Securities in the United States by means of any form of general solicitation or
general advertising (within the meaning of Regulation D) in the United States; and

          5. Agreements. The Issuers, jointly and severally, agree with the Initial Purchaser
that:

     (a) Disclosure Package; Final Memorandum. The Issuers will furnish to the
Initial Purchaser and to counsel for the Initial Purchaser, without charge, during the
period referred to in paragraph (c) below, as many copies of the materials contained in the
Disclosure Package and the Final Memorandum and any amendments and supplements thereto as
they may reasonably request.

     (b) Final Term Sheet. You will prepare a final term sheet, containing solely a
description of final terms of the Securities and the offering thereof, in the form approved
by the Issuers and attached as Schedule II hereto.

     (c) Amendment; Supplement. The Issuers will not (except as is necessary to
comply with applicable law in the reasonable opinion of legal counsel to the Issuers and
after consultation with the Initial Purchaser) amend or supplement the Final Memorandum,
without the prior written consent of the Initial Purchaser.

     (d) Subsequent Event Notifications. If at any time prior to the completion of
the sale of the Securities by the Initial Purchaser (as determined by the Initial
Purchaser), any event occurs as a result of which the Disclosure Package and the Final
Memorandum, as then amended or supplemented, would include any untrue statement of a
material fact or omit to state any material fact necessary to make the statements

 

-14-

therein, in the light of the circumstances under which they were made, not misleading,
or if it should be necessary to amend or supplement the Disclosure Package or the Final
Memorandum to comply with applicable law, the Issuers promptly (i) will notify the Initial
Purchaser of any such event; (ii) subject to the requirements of paragraph (b) of this
Section 5, will prepare an amendment or supplement that will correct such statement or
omission or effect such compliance; and (iii) will supply any supplemented or amended
Disclosure Package or Final Memorandum to the Initial Purchaser and counsel for the Initial
Purchaser without charge in such quantities as they may reasonably request.

     (e) Qualification. The Issuers will arrange, if necessary, for the
qualification of the Securities for sale by the Initial Purchaser under the laws of such
jurisdictions as the Initial Purchaser may designate and will maintain such qualifications
in effect so long as required for the sale of the Securities; provided that in no
event shall any Issuer be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to service of process in
suits, other than those arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject. The Issuers will promptly advise the Initial
Purchaser of the receipt by any Issuer of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.

     (f) Resale. None of the Issuers will not, and will not permit any of their
Affiliates to, resell any Securities that have been acquired by any of them except in
compliance with federal securities laws.

     (g) No Solicitation. None of the Issuers will, and the Issuers will not permit
any of their respective Affiliates, nor any Person acting on any of their behalf to,
directly or indirectly, make offers or sales of any security, or solicit offers to buy any
security, under circumstances that would require the registration of the Securities under
the Act.

     (h) No General Solicitation. None of the Issuers will, and the Issuers will
not, permit any of their respective Affiliates nor any Person acting on any of their behalf
to engage in any form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Securities in the United States.

     (i) Information. So long as any of the Securities are “restricted securities”
within the meaning of Rule 144(a)(3) under the Act, each Issuer will, during any period in
which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act or
it is not exempt from such reporting requirements pursuant to and in compliance with Rule
12g3-2(b) under the Exchange Act, provide to each holder of

 

-15-

such restricted securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule 144A(d)(4) under the Act. This
covenant is intended to be for the benefit of the holders, and the prospective Purchasers
designated by such holders, from time to time of such restricted securities.

     (j) No Directed Selling Efforts. None of the Issuers will, and the Issuers
will not permit any of their respective Affiliates nor any person acting on any of their
behalf to, engage in any directed selling efforts with respect to the Securities, and each
of them will comply with the offering restrictions requirement of Regulation S. Terms used
in this paragraph have the meanings given to them by Regulation S.

     (k) DTC. Each Issuer will cooperate with the Initial Purchaser and use its
reasonable best efforts to permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.

     (l) No Stabilization or Manipulation. No Issuer will take, directly or
indirectly, any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of
the Securities.

     (m) Costs and Expenses. The Issuers, jointly and severally, agree to pay the
costs and expenses relating to the following matters: (i) the fees of the Trustee; (ii) the
preparation, printing or reproduction of the materials contained in the Disclosure Package
and Final Memorandum and each amendment or supplement to either of them; (iii) the printing
(or reproduction) and delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the materials contained in the Disclosure Package
and Final Memorandum, and all amendments or supplements to either of them, as may, in each
case, be reasonably requested for use in connection with the offering and sale of the
Securities; (iv) the preparation, printing, authentication, issuance and delivery of
certificates for the Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (v) any registration or qualification of
the Securities for offer and sale under the securities or blue sky laws of the several
states (including filing fees and the reasonable fees and expenses of counsel for the
Initial Purchaser relating to such registration and qualification (which counsel fees shall
be limited to $5,000)); (vi) admitting the Securities for trading in the Portal Market;
(vii) the transportation and other expenses incurred by or on behalf of their
representatives in connection with presentations to prospective purchasers of the
Securities; (viii) the fees and expenses of any Issuer’s accountants and the fees and
expenses of counsel (including local and special counsel) for any Issuer; (ix) one-half of
all costs and expenses with respect to

 

-16-

the charter of a private jet aircraft (or one-half of all costs and expenses of any
alternate means of transportation) in connection with presentations to prospective
purchasers of the Securities; (x) all other costs and expenses incident to the performance
by any Issuer of its obligations hereunder. Notwithstanding the foregoing, it is understood
that the Initial Purchaser will pay all fees and expenses of its counsel (except as
contemplated by clause (v)) and all transportation and other expenses of their
representatives in connection with this offering (other than as contemplated by clause
(ix)).

     (n) Compliance with Registration Rights. The Issuers will comply in all
material respects with all of their agreements set forth in the Registration Rights
Agreement.

     (o) Use of Proceeds. The Company will apply the net proceeds from the offering
and sale of the Securities in the manner described in the Final Memorandum under “Use of
Proceeds.”

          6. Conditions to the Obligations of the Initial Purchaser. The obligations of the
Initial Purchaser to purchase the Securities shall be subject to the accuracy of the
representations and warranties on the part of the Issuers contained herein at the Execution Time
and the Closing Date, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Issuers of their obligations hereunder
and to the following additional conditions:

     (a) The Issuers shall have requested and caused Kirkland & Ellis, special counsel for
the Issuers, to furnish to the Initial Purchaser its opinion, dated the Closing Date and
addressed to the Initial Purchaser substantially in the form of Exhibit B hereto.
In rendering such opinion, such counsel may rely, as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Issuers and public officials.

     (b) The Issuers shall have requested and caused John W. Huey, General Counsel of
Parent, to furnish to the Initial Purchaser his opinion, dated the Closing Date and
addressed to the Initial Purchaser, substantially in the form of Exhibit C hereto.

     (c) The Initial Purchaser shall have received from Cahill Gordon & Reindel
llp, counsel for the Initial Purchaser, such opinion or opinions, dated the Closing
Date and addressed to the Initial Purchaser, with respect to the issuance and sale of the
Securities, the Indenture, the Registration Rights Agreement, the Disclosure Package and the
Final Memorandum and other related matters as the Initial Purchaser may reasonably require,
and the Issuers shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.

 

-17-

     (d) Officer’s Certificate. Parent shall have furnished to the Initial
Purchaser a certificate of Parent, signed by the chief executive officer and the chief
financial officer of Parent, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Disclosure Package and the Final Memorandum and this
Agreement and that:

     (i) the representations and warranties of the Issuers in this Agreement are
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date, and the Issuers have complied with all
the agreements and satisfied all the conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date; and

     (ii) since the date of the most recent financial statements included in the
Disclosure Package and the Final Memorandum (exclusive of any amendment or
supplement thereto), there has been no material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of Parent and
the Subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as described in the Disclosure Package and the
Final Memorandum (exclusive of any amendment or supplement thereto).

     (e) Accounting Matters. At the Execution Time and at the Closing Date, the
Issuers shall have requested and caused Deloitte & Touche to furnish to the Initial
Purchaser letters, dated respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Initial Purchaser, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act and the
applicable rules and regulations thereunder, that they have performed a review of the
unaudited interim financial information of Parent and its subsidiaries and of TNCLP for the
nine-month periods ended September 30, 2006 and September 30, 2005, and as at September 30,
2006 and September 30, 2005, and stating in effect that:

     (i) In their opinion the audited consolidated financial statements included or
incorporated in the Preliminary Memorandum and the Final Memorandum and reported on
by them comply as to form in all material respects with the applicable accounting
requirements of the Exchange Act and the related published rules and regulations
thereunder.

     (ii) On the basis of a reading of the latest unaudited condensed consolidated
financial statements made available by Parent and its subsidiaries; their limited
review in accordance with the standards established under Statement on Auditing
Standards No. 100, of the unaudited interim financial information for the nine-month
periods ended September 30, 2006 and September 30, 2005, and as at September 30,
2006 and September 30, 2005;

 

-18-

carrying out certain specified procedures (but not an examination in accordance
with generally accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such letter; a
reading of the minutes of the meetings of the shareholders, directors and the
executive, audit and personnel committees of Parent and its subsidiaries; and
inquiries of certain officials of Parent who have responsibility for financial and
accounting matters of Parent and its subsidiaries as to transactions and events
subsequent to September 30, 2006, nothing came to their attention which caused them
to believe that:

     (1) any unaudited condensed consolidated financial statements included
or incorporated by reference in the Disclosure Package and the Final
Memorandum do not comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and with the rules
and regulations adopted by the Commission; and any material modifications
should be made to said unaudited condensed consolidated financial statements
for them to be in conformity with accounting principles generally accepted
in the United States of America; or

     (2) with respect to the period subsequent to September 30, 2006, there
were any changes, at a specified date not more than five days prior to the
date of the letter, in the capital stock, increase in long-term debt or any
decrease in consolidated net current assets, consolidated total assets,
working capital or stockholders’ equity of Parent and its subsidiaries or
Issuer as compared with amounts shown on the September 30, 2006 condensed
consolidated balance sheet included in the Final Memorandum, or for the
period from September 30, 2006 to such specified date there were any
decreases, as compared with the corresponding period in the preceding year
in consolidated net sales or income before income taxes or in total or per
share amounts of net income of Parent and its subsidiaries, except in all
instances for changes, increases or decreases which the Disclosure Package
and the Final Memorandum discloses or which are set forth in such letter, in
which case the letter shall be accompanied by an explanation by Parent as to
the significance thereof unless said explanation is not deemed necessary by
the Initial Purchaser.

     (iii) They have performed certain other specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of Parent

 

-19-

and its subsidiaries) described in the Disclosure Package and the Final
Memorandum, including the information set forth under the captions “Summary”,
“Capitalization,” “Selected Consolidated Financial Data” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in the
Preliminary Memorandum and the Final Memorandum agrees with the accounting records
of the Company and its subsidiaries, excluding any questions of legal
interpretation.

     (f) No Changes. Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Disclosure Package (exclusive of any amendment or
supplement thereto) and the Final Memorandum (exclusive of any amendment or supplement
thereto), there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (g) of this Section 6; or (ii) any change, or any
development involving a prospective change, in or affecting the condition (financial or
otherwise), prospects, earnings, business or properties of Parent and the Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Disclosure Package (exclusive of any
amendment or supplement thereto) and the Final Memorandum (exclusive of any amendment or
supplement thereto) the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Initial Purchaser, so material and adverse as to make
it impractical or inadvisable to market the Securities as contemplated by the Disclosure
Package (exclusive of any amendment or supplement thereto) and the Final Memorandum
(exclusive of any amendment or supplement thereto).

     (g) Portal Eligible; DTC. The Securities shall have been designated as
Portal-eligible securities in accordance with the rules and regulations of the NASD, and the
Securities shall be eligible for clearance and settlement through The Depository Trust
Company.

     (h) Ratings. Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any Issuer’s debt by any “nationally recognized statistical rating
organization” (as defined for purposes of Rule 436(g) under the Act) or any notice given of
any intended or potential decrease in any such rating or of a possible change in any such
rating that does not indicate the direction of the possible change.

     (i) Other Information. Prior to the Closing Date, the Issuers shall have
furnished to the Initial Purchaser such further information, certificates and documents as
the Initial Purchaser may reasonably request.

     (j) Bank Amendment. The Bank Amendment shall have been executed in form and
substance reasonably satisfactory to the Initial Purchaser.

 

-20-

     (k) Tender Offer. The supplemental indentures for the Senior Secured Notes
have been executed in form and substance reasonably satisfactory to the Initial Purchaser.

     (l) Indenture. The Indenture shall have been executed in a form satisfactory
to the Initial Purchaser.

          If any of the conditions specified in this Section 6 shall not have been fulfilled in all
material respects when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Initial Purchaser and counsel for the Initial
Purchaser, this Agreement and all obligations of the Initial Purchaser hereunder may be cancelled
at, or at any time prior to, the Closing Date by the Initial Purchaser. Notice of such
cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in
writing.

          The documents required to be delivered by this Section 6 will be delivered at the office of
counsel for the Initial Purchaser, at 80 Pine Street, New York, New York 10005, on the Closing
Date.

          7. Reimbursement of Expenses. If the sale of the Securities provided for herein is
not consummated because any condition to the obligations of the Initial Purchaser set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of any Issuer to perform any agreement
herein or comply with any provision hereof other than by reason of a default by the Initial
Purchaser, the Company will reimburse the Initial Purchaser on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.

          8. Indemnification and Contribution. (a) The Issuers, jointly and severally, agree to
indemnify and hold harmless the Initial Purchaser, the directors, officers, employees and agents of
each of the Initial Purchaser and each person who controls the Initial Purchaser within the meaning
of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which it may become subject under the Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Disclosure Package, the
Final Memorandum, the Recorded Road Show, any Issuer Written Information or any other written
information used by or on behalf of the Issuers in connection with the offer or sale of Securities,
or in any amendment 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 light of the circumstances under which they were made,
not misleading, and agrees to reimburse

 

-21-

each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Issuers 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 in the Disclosure Package, the Final Memorandum, the Recorded Road Show or in any amendment
thereof or supplement thereto, in reliance upon and in conformity with written information relating
to the Initial Purchaser furnished to the Company by or on behalf of the Initial Purchaser
specifically for inclusion therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.

          (b) The Initial Purchaser agrees to indemnify and hold harmless each Issuer, each of its
directors, each of its officers, and each person who controls such Issuer within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Issuers
to the Initial Purchaser, but only with reference to written information relating to the Initial
Purchaser furnished to the Company by the Initial Purchaser specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which the Initial Purchaser may otherwise
have. The Issuers acknowledge that the statements set forth in the last paragraph of the cover
page regarding the delivery of the Securities and the disclosure on page iii and under the heading
“Plan of Distribution” concerning stabilization, syndicate covering transactions and penalty bids
in the Preliminary Memorandum and the Final Memorandum, constitute the only information furnished
in writing by or on behalf of the Initial Purchaser for inclusion in the Preliminary Memorandum or
the Final Memorandum (or in any amendment or supplement thereto).

          (c) Promptly after receipt by an indemnified party under this Section 8 of 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 8, 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 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 retained by the
indemnified party or parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel to represent the indemnified party in an action,
the indemnified

 

-22-

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 such separate counsel if
(i) the use of counsel chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest; (ii) 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 which are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying party. It is
understood, however, that the Issuers shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expense of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Initial Purchaser and controlling
persons, which firm shall be designated in writing by the Initial Purchaser. 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. An indemnifying party shall
not be liable under this Section 8 to any indemnified party regarding any settlement 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 is consented to by such indemnifying party, which
consent shall not be unreasonably withheld.

          (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, the Issuers
and the Initial Purchaser agrees to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection with investigating
or defending same) (collectively “Losses”) to which the Issuers and the Initial Purchaser
may be subject in such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and by the Initial Purchaser on the other from the offering of the
Securities; provided, however, that in no case shall the Initial Purchaser be
responsible for any amount in excess of the purchase discount or commission applicable to the
Securities purchased by the Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Issuers and the Initial Purchaser
shall contribute in such proportion as is appropriate to reflect not only

 

-23-

such relative benefits but also the relative fault of the Issuers on the one hand and of the
Initial Purchaser on the other in connection with the statements or omissions which resulted in
such Losses, as well as any other relevant equitable considerations. Benefits received by the
Issuers shall be deemed to be equal to the total net proceeds from the offering (before deducting
expenses) received by the Company, and benefits received by the Initial Purchaser shall be deemed
to be equal to the total purchase discounts and commissions set forth on the cover of the Final
Memorandum. Relative fault shall be determined by reference to, among other things, whether any
untrue or any alleged untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information provided by the Issuers on the one hand or the Initial
Purchaser on the other, the intent of the parties and their relative knowledge, information and
opportunity to correct or prevent such untrue statement or omission. The Issuers and the Initial
Purchaser agree that it would not be just and equitable if contribution were determined by pro rata
allocation 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 8, each person who controls the Initial Purchaser within the meaning
of either the Act or the Exchange Act and each director, officer, employee and agent of the Initial
Purchaser shall have the same rights to contribution as the Initial Purchaser, and each person who
controls an Issuer within the meaning of either the Act or the Exchange Act and each officer and
director of an Issuer shall have the same rights to contribution as such Issuer, subject in each
case to the applicable terms and conditions of this paragraph (d).

          9. [Reserved].

          10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Initial Purchaser, by notice given to the Company prior to delivery of and
payment for the Securities, if at any time prior to such time (i) trading in any securities of
Parent or TNCLP shall have been suspended by the Commission or the New York Stock Exchange or
trading in securities generally on the New York Stock Exchange shall have been suspended or limited
or minimum prices shall have been established on such Exchange; (ii) a banking moratorium shall
have been declared either by Federal or New York State authorities; or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Initial Purchaser, impracticable or inadvisable to proceed
with the offering or delivery of the Securities as contemplated in the Disclosure Package and the
Final Memorandum (exclusive of any amendment or supplement thereto).

          11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Issuers or

 

-24-

their officers and of the Initial Purchaser set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or on behalf of the
Initial Purchaser or the Issuers or any of the officers, directors or controlling persons referred
to in Section 8 hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.

          12. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Initial Purchaser, will be mailed, delivered or telefaxed and
confirmed to the Initial Purchaser, c/o Citigroup Global Markets Inc., 388 Greenwich Street, New
York, New York 10013, Attention: General Counsel (fax no.: (212) 816-7912); or, if sent to the
Company, will be mailed, delivered or telefaxed and confirmed to it at Terra Centre, 600 Fourth
Street, P.O. Box 6000, Sioux City, Iowa 51102, Attention: Legal Department (fax no.: (712)
277-1340).

          13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers and directors and controlling
persons referred to in Section 8 hereof, and, except as expressly set forth in Section 5(h) hereof,
no other person will have any right or obligation hereunder.

          14. No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale
of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the
Company, on the one hand, and the Initial Purchaser and any Affiliate through which it may be
acting, on the other, (b) the Initial Purchaser is acting as principal and not as an agent or
fiduciary of the Company and (c) the Company’s engagement of the Initial Purchaser in connection
with the offering and the process leading up to the offering is as independent
contractors and not in any other capacity. Furthermore, the Company agrees that it is solely
responsible for making its own judgments in connection with the offering (irrespective of whether
the Initial Purchaser has advised or is currently advising the Company on related or other
matters). The Company agrees that they will not claim that the Initial Purchaser has rendered
advisory services of any nature or respect, or owe an agency, fiduciary or similar duty to the
Company, in connection with such transaction or the process leading thereto.

          15. Waiver of Tax Confidentiality. Notwithstanding anything herein to the contrary,
purchasers of the Securities (and each employee, representative or other agent of a purchaser) may
disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S.
tax structure of any transaction contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are provided to the purchasers of the Securities relating to
such U.S. tax treatment and U.S tax structure, other than any information for which nondisclosure
is reasonably necessary in order to comply with applicable securities laws.

 

-25-

          16. Applicable Law and Jurisdiction. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts made and to be
performed within the State of New York. The Company agrees that any suit, action or proceeding
against the Company brought by the Initial Purchaser, the directors, officers, employees and agents
of the Initial Purchaser, or by any person who controls the Initial Purchaser, arising out of or
based upon this Agreement or the transactions contemplated hereby may be instituted in any State or
U.S. federal court in The City of New York and County of New York, and waives any objection which
it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits
to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
Notwithstanding the foregoing, any action arising out of or based upon this Agreement may be
instituted by the Initial Purchaser, the directors, officers, employees, Affiliates and agents of
the Initial Purchaser, or by any person who controls the Initial Purchaser, in any court of
competent jurisdiction in Delaware.

          17. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
instrument.

          18. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.

          19. Definitions. The terms which follow, when used in this Agreement, shall have the
meanings indicated.

          “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 501(b) of Regulation D.

          “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 The City of New York.

          “Citigroup” shall mean Citigroup Global Markets Inc.

          “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.

          “Execution Time” shall mean, the date and time that this Agreement is executed and
delivered by the parties hereto.

 

-26-

          “Investment Company Act” shall mean the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission promulgated thereunder.

          “Material Adverse Effect” shall mean, with respect to the Company, any effect that is
materially adverse to the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.

          “NASD” shall mean the National Association of Securities Dealers, Inc.

          “Regulation D” shall mean Regulation D under the Act.

          “Regulation S” shall mean Regulation S under the Act.

          “Terra Canada” shall mean Terra International (Canada) Inc., an Ontario corporation.

          “Terra UK” shall mean Terra Nitrogen (U.K.) Limited, an English private limited
company.

          “TNCLP” shall mean Terra Nitrogen Company, L.P., a Delaware limited partnership.

          “TNLP” shall mean Terra Nitrogen, Limited Partnership, a Delaware limited partnership.

          “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission promulgated thereunder.

 

S-1

          If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall
represent a binding agreement between the Company and the Initial Purchaser.

	 	 	 	 	 
	 	Very truly yours,

TERRA CAPITAL, INC.

 	 
	 	By: 	/s/
Francis G. Meyer 	 
	 	Name:  	Francis G. Meyer 	 
	 	Title:  	Vice President 	 
	 
	 	Guarantors:

BEAUMONT AMMONIA INC.

BEAUMONT HOLDINGS CORPORATION

BMC HOLDINGS INC.

PORT NEAL CORPORATION

TERRA CAPITAL HOLDINGS, INC.

TERRA INDUSTRIES INC.

TERRA INTERNATIONAL, INC.

TERRA INTERNATIONAL (OKLAHOMA) INC.

TERRA METHANOL CORPORATION

TERRA NITROGEN CORPORATION

TERRA REAL ESTATE CORP.

TERRA (U.K.) HOLDINGS INC.

TERRA MISSISSIPPI HOLDINGS CORP.

TERRA MISSISSIPPI NITROGEN, INC.

TERRA HOUSTON AMMONIA, INC.

TERRA NITROGEN GP HOLDINGS, INC.

 	 
	 	By: 	/s/
Francis G. Meyer 	 
	 	Name:  	Francis G. Meyer 	 
	 	Title:  	Vice President 	 

 

S-2

	 	 	 	 	 

	 	 	 	 	 
	The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.	 	 
	 
	 	 	 	 
	CITIGROUP GLOBAL MARKETS INC.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Aaron Dannenberg 	 	 
	 

	 	 

Name: Aaron Dannenberg
	 	 
	 

	 	Title: Director	 	 

 

 

SCHEDULE I

	 	 	 	 	 
	 	 	Principal Amount of	 
	Initial Purchaser	 	Securities to Be Purchased	 
	Citigroup Global Markets Inc.
	 	$	330,000,000	 
	Total
	 	$	330,000,000	 
	 
	 	 	 

 

 

SCHEDULE II

TERM SHEET

The information in this term sheet (this “Term Sheet”) supplements the Company’s preliminary
offering memorandum, dated January 24, 2007 (the “Preliminary Memorandum”) and supercedes the
information in the Preliminary Memorandum to the extent inconsistent with the information in the
Preliminary Memorandum. This Term Sheet is qualified in its entirety by reference to the
Preliminary Memorandum. Terms used herein but not defined herein shall have the respective
meanings as set forth in the Preliminary Memorandum.

	 	 	 	 	 
	ISSUER

	 	Terra Capital, Inc.

	 
	 	 	 	 
	SECURITY

	 	7% Senior Notes due 2017

	 
	 	 	 	 
	RANKING

	 	Senior unsecured
obligations and will rank equally with all of our existing and
future
senior obligations, and
senior to any of our subordinated indebtedness.
	 
	SIZE

	 	$330,000,000		 
	 
	 	 	 	 
	MATURITY

	 	February 1, 2017

	 
	 	 	 	 
	PRICE TO PUBLIC

	 	99.110%		
	 
	 	 	 	 
	PAYMENT DATES

	 	February 1 and August 1

	 
	 	 	 	 
	TREASURY SPREAD

	 	226 basis points

	 
	 	 	 	 
	OPTIONAL REDEMPTION

	 	The Notes may be redeemed after February 1, 2012 for the prices set forth below:

	 

	 	2012	103.500%	
	 

	 	2013 	102.333%	
	 

	 	2014 	 101.167%	
	 

	 	2015 and thereafter	 100.00%	
	 
	OPTIONAL REDMEPTION

UPON QUALIFIED
EQUITY OFFERINGS:

	 	Up to 35% of the
Notes will be redeemable by the Issuer on or prior to
February 1, 2010
with the Net Cash Proceeds one or more Equity
Offerings at a price equal to 107% of
their principal amount, plus accrued and unpaid interest to the redemption date.

	 
	EXPECTED SETTLEMENT DATE

	 	February 2, 2007

	 
	 	 	 	 
	USE OF PROCEEDS

	 	The Issuer will
use the proceeds of this offering and cash on hand to redeem its

127/8% Senior Secured Notes due 2008 and its 111/2% Second
Priority Senior
Secured Notes due 2010 and to pay related premiums, fees and expenses.

	 
	 	 	 	 
	CUSIP/ISIN

	 	144A: 88089PAE3 / US88089PAE34

	 

	 	REG S: U8812AAC9 / USU8812AAC90

	 
	 	 	 	 
	SOLE BOOK-RUNNER

	 	Citigroup Global Markets Inc.

REVISIONS TO THE DESCRIPTION OF NOTES INCLUDED IN THE PRELIMINARY MEMORANDUM

 

 

In addition to pricing information set forth above, the following additional change is
being made to the “Description of the Notes” contained in the Preliminary Memorandum :

	 	 	 
	“—Certain
Definitions—Permitted Liens”:

	 	Clause (12) of the definition of
“Permitted Liens” is deleted in its
entirety and replaced with the
following: “Liens securing Indebtedness
incurred under clause (3) of the second
paragraph under “Certain Covenants —
Limitation on Incurrence of
Indebtedness”;”

This communication is intended for the sole use of the person to whom it is provided by the sender.

These securities have not been registered under the Securities Act of 1933, as amended, and may
only be sold to qualified institutional buyers pursuant to Rule 144A or pursuant to another
applicable exemption from registration.

A securities rating is not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time.

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND
SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT
OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

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