Document:

exv4w1

 

EXHIBIT 4.1

 

 

TERRA CAPITAL, INC.,

as Company,

THE GUARANTORS party hereto

and

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

7% Senior Notes due 2017

 

INDENTURE

Dated as of February 2, 2007

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.1. Definitions
	 	 	1	 
	SECTION 1.2. Other Definitions
	 	 	29	 
	SECTION 1.3. Incorporation by Reference of Trust Indenture Act
	 	 	30	 
	SECTION 1.4. Rules of Construction
	 	 	30	 
	ARTICLE 2
	 	 	 	 
	 
	 	 	 	 
	THE NOTES
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.1. Form and Dating
	 	 	31	 
	SECTION 2.2. Execution and Authentication
	 	 	31	 
	SECTION 2.3. Registrar and Paying Agent
	 	 	32	 
	SECTION 2.4. Paying Agent To Hold Money in Trust
	 	 	32	 
	SECTION 2.5. Holder Lists
	 	 	32	 
	SECTION 2.6. Transfer and Exchange
	 	 	33	 
	SECTION 2.7. Replacement Notes
	 	 	35	 
	SECTION 2.8. Outstanding Notes
	 	 	35	 
	SECTION 2.9. Temporary Notes
	 	 	35	 
	SECTION 2.10. Cancellation
	 	 	35	 
	SECTION 2.11. Defaulted Interest
	 	 	36	 
	SECTION 2.12. CUSIP Numbers
	 	 	36	 
	SECTION 2.13. Restrictive Legends
	 	 	36	 
	SECTION 2.14. Special Transfer Provisions
	 	 	37	 
	ARTICLE 3
	 	 	 	 
	 
	 	 	 	 
	REDEMPTION
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.1. Notices to Trustee
	 	 	39	 
	SECTION 3.2. Selection of Notes To Be Redeemed
	 	 	40	 
	SECTION 3.3. Notice of Redemption
	 	 	40	 
	SECTION 3.4. Effect of Notice of Redemption
	 	 	41	 
	SECTION 3.5. Deposit of Redemption Price
	 	 	41	 
	SECTION 3.6. Notes Redeemed in Part
	 	 	41	 
	 
	 	 	 	 
	ARTICLE 4
	 	 	 	 
	 
	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.1. Payment of Notes
	 	 	41	 

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	 	 	Page	 
	SECTION 4.2. Corporate Existence
	 	 	42	 
	SECTION 4.3. Maintenance of Office or Agency
	 	 	42	 
	SECTION 4.4. Payment of Taxes and Other Claims
	 	 	42	 
	SECTION 4.5. Additional Guarantees
	 	 	42	 
	SECTION 4.6. SEC Reports
	 	 	43	 
	SECTION 4.7. Compliance Certificate
	 	 	43	 
	SECTION 4.8. Change of Control
	 	 	44	 
	SECTION 4.9. Limitation on Incurrence of Indebtedness
	 	 	44	 
	SECTION 4.10. Limitation on Restricted Payments
	 	 	47	 
	SECTION 4.11. Limitation on Liens
	 	 	50	 
	SECTION 4.12. Limitation on Transactions with Affiliates
	 	 	50	 
	SECTION 4.13. Limitation on Asset Sales
	 	 	51	 
	SECTION
4.14. Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries 
	 	 	55	 
	SECTION 4.15. Limitation on Sale and Leaseback Transactions
	 	 	56	 
	SECTION 4.16. [Reserved]
	 	 	56	 
	SECTION 4.17. Conduct of Business
	 	 	56	 
	SECTION 4.18. Maintenance of Properties; Insurance; Compliance with Law
	 	 	56	 
	SECTION 4.19. Covenant Suspension
	 	 	57	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	 	 
	 
	 	 	 	 
	SUCCESSOR COMPANY
	 	 	 	 
	 
	SECTION 5.1. Merger, Consolidation and Sale of Assets
	 	 	58	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	 	 
	 
	 	 	 	 
	DEFAULTS AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.1. Events of Default
	 	 	61	 
	SECTION 6.2. Acceleration
	 	 	63	 
	SECTION 6.3. Other Remedies
	 	 	64	 
	SECTION 6.4. Waiver of Past Defaults
	 	 	64	 
	SECTION 6.5. Control by Majority
	 	 	64	 
	SECTION 6.6. Limitation on Suits
	 	 	64	 
	SECTION 6.7. Rights of Holders To Receive Payment
	 	 	65	 
	SECTION 6.8. Collection Suit by Trustee
	 	 	65	 
	SECTION 6.9. Trustee May File Proofs of Claim
	 	 	65	 
	SECTION 6.10. Priorities
	 	 	65	 
	SECTION 6.11. Undertaking for Costs
	 	 	66	 
	 
	 	 	 	 
	ARTICLE 7
	 	 	 	 
	 
	 	 	 	 
	TRUSTEE
	 	 	 	 
	 
	SECTION 7.1. Duties of Trustee
	 	 	66	 

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	 	 	Page	 
	SECTION 7.2. Rights of Trustee
	 	 	67	 
	SECTION 7.3. Individual Rights of Trustee
	 	 	69	 
	SECTION 7.4. Trustee’s Disclaimer
	 	 	69	 
	SECTION 7.5. Notice of Defaults
	 	 	69	 
	SECTION 7.6. Reports by Trustee to Holders
	 	 	69	 
	SECTION 7.7. Compensation and Indemnity
	 	 	69	 
	SECTION 7.8. Replacement of Trustee
	 	 	70	 
	SECTION 7.9. Successor Trustee by Merger
	 	 	71	 
	SECTION 7.10. Eligibility; Disqualification
	 	 	71	 
	SECTION 7.11. Preferential Collection of Claims Against Terra Capital
	 	 	71	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	 	 
	 
	 	 	 	 
	DISCHARGE OF INDENTURE; DEFEASANCE
	 	 	 	 
	 
	SECTION 8.1. Discharge of Liability on Notes; Defeasance
	 	 	71	 
	SECTION 8.2. Conditions to Defeasance
	 	 	72	 
	SECTION 8.3. Application of Trust Money
	 	 	73	 
	SECTION 8.4. Repayment to Terra Capital
	 	 	73	 
	SECTION 8.5. Indemnity for Government Obligations
	 	 	74	 
	SECTION 8.6. Reinstatement
	 	 	74	 
	 
	 	 	 	 
	ARTICLE 9
	 	 	 	 
	 
	 	 	 	 
	AMENDMENTS AND WAIVERS
	 	 	 	 
	 
	 	 	 	 
	SECTION 9.1. Without Consent of Holders
	 	 	74	 
	SECTION 9.2. With Consent of Holders
	 	 	75	 
	SECTION 9.3. Compliance with Trust Indenture Act
	 	 	76	 
	SECTION 9.4. Revocation and Effect of Consents and Waivers
	 	 	76	 
	SECTION 9.5. Notation on or Exchange of Notes
	 	 	77	 
	SECTION 9.6. Trustee To Sign Amendments
	 	 	77	 
	 
	 	 	 	 
	ARTICLE 10
	 	 	 	 
	 
	 	 	 	 
	GUARANTEES
	 	 	 	 
	 
	 	 	 	 
	SECTION 10.1. Guarantees
	 	 	77	 
	SECTION 10.2. Limitation on Liability
	 	 	79	 
	SECTION 10.3. Successors and Assigns
	 	 	79	 
	SECTION 10.4. No Waiver
	 	 	79	 
	SECTION 10.5. Modification
	 	 	79	 
	SECTION 10.6. Release of Guarantor
	 	 	79	 
	SECTION 10.7. Execution of Supplemental Indenture for Future Guarantors
	 	 	80	 

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	 	 	Page	 
	ARTICLE 11
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	SECTION 11.1. Trust Indenture Act Controls
	 	 	80	 
	SECTION 11.2. Notices
	 	 	80	 
	SECTION 11.3. Communication by Holders with Other Holders
	 	 	81	 
	SECTION 11.4. Certificate and Opinion as to Conditions Precedent
	 	 	81	 
	SECTION 11.5. Statements Required in Certificate or Opinion
	 	 	81	 
	SECTION 11.6. When Notes Disregarded
	 	 	82	 
	SECTION 11.7. Rules by Trustee, Paying Agent and Registrar
	 	 	82	 
	SECTION 11.8. Legal Holidays
	 	 	82	 
	SECTION 11.9. Governing Law
	 	 	82	 
	SECTION 11.10. No Recourse Against Others
	 	 	82	 
	SECTION 11.11. Successors
	 	 	83	 
	SECTION 11.12. Multiple Originals
	 	 	83	 
	SECTION 11.13. Table of Contents; Headings
	 	 	83	 
	SECTION 11.14. Severability Clause
	 	 	83	 
	 
	Signatures
	 	 	S-1	 
	 
	Exhibit A  —  Form of Note
	 	 	A-1	 
	Exhibit B  —  Form of Exchange Note
	 	 	B-1	 
	Exhibit C  —  Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors
	 	 	C-1	 
	Exhibit D  —  Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S
	 	 	D-1	 
	Exhibit E  —  Form of Guarantee
	 	 	E-1	 
	Exhibit F  —  Form of Supplemental Indenture
	 	 	F-1	 

Note:        This Table of Contents shall not, for any purpose, be deemed to be part of the Indenture.
 

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CROSS-REFERENCE TABLE

	 	 	 
	TIA Section	 	Indenture Section
	310(a)(1)
	 	7.9; 7.10
	(a)(2)
	 	7.10
	(a)(3)
	 	N.A.
	(a)(4)
	 	N.A.
	(b)
	 	7.8; 7.10
	(b)(1)
	 	7.10
	(c)
	 	N.A.
	311(a)
	 	7.11
	(b)
	 	7.11
	312(a)
	 	2.5
	(b)
	 	2.5; 11.3
	(c)
	 	11.3
	313(a)
	 	7.6
	(b)
	 	7.6
	(c)
	 	13.2
	(d)
	 	7.6
	314(a)
	 	4.6; 4.7; 11.2
	(b)
	 	N.A.
	(c)(1)
	 	11.4
	(c)(2)
	 	11.4
	(c)(3)
	 	N.A.
	(d)
	 	12.6
	(e)
	 	11.5
	(f)
	 	N.A.
	315(a)
	 	7.1
	(b)
	 	7.5; 11.2
	(c)
	 	7.1
	(d)
	 	7.1
	(e)
	 	6.11
	316(a)(last sentence)
	 	11.6
	(a)(1)(A)
	 	6.5
	(a)(1)(B)
	 	6.4
	(a)(2)
	 	N.A.
	(b)
	 	6.7
	317(a)(1)
	 	6.9
	(a)(2)
	 	6.9
	(b)
	 	2.4
	318(a)
	 	11.1

 

N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.

 

 

     INDENTURE dated as of February 2, 2007, among TERRA CAPITAL, INC., a Delaware corporation
(“Terra Capital,” “Issuer” or the “Company”), TERRA INDUSTRIES INC., a Maryland corporation, as
parent guarantor (“Parent”), certain of Parent’s subsidiaries party hereto (each a “Guarantor” and,
collectively with Parent, the “Guarantors”) and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as trustee (the “Trustee”).

     Each party agrees as follows for the benefit of the other parties and for the equal and
ratable benefit of the Holders of Terra Capital’s 7% Senior Notes due 2017:

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

     SECTION 1.1. Definitions.

     “Acquired Indebtedness” means (1) with respect to any Person that becomes a Restricted
Subsidiary after the Issue Date, Indebtedness of such Person and its Subsidiaries existing at the
time such Person becomes a Restricted Subsidiary and (2) with respect to Parent or any Restricted
Subsidiary, any Indebtedness of a Person (other than Parent or a Restricted Subsidiary) existing at
the time such Person is merged with or into Parent or a Restricted Subsidiary, or Indebtedness
expressly assumed or incurred by Parent or any Restricted Subsidiary in connection with the
acquisition of an the stock or any asset or assets from another Person.

     “Additional Notes” means any additional Notes having identical terms and conditions to the
Notes issued pursuant to Article 2 and in compliance with Section 4.9.

     “affiliate” of any specified Person means any other Person, directly or indirectly,
controlling or controlled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, “control” when used with respect to any Person means the
power to direct the management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

     “amend” means amend, modify, supplement, restate or amend and restate, including successively;
and “amending” and “amended” have correlative meanings.

 

 

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     “Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of
(1) 1.0% of the principal amount of such Note; and (2) the excess, if any, of (a) the present value
at such Redemption Date of (i) the redemption price of such Note at February 1, 2012 (such
redemption price being set forth in the table appearing above under the caption “Optional
Redemption”), plus (ii) all required interest payments due on such Note through February 1, 2012
(excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate
equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the then
outstanding principal amount of such Note.

     “asset” means any asset or property, whether real, personal or mixed, tangible or intangible.

     “Asset Sale” means any Transfer by Parent or any Restricted Subsidiary of:

	 	•	 	any shares of Capital Stock of a Restricted Subsidiary (other than
directors’ qualifying shares and, to the extent required by local ownership
laws in foreign countries, shares owned by foreign shareholders);
	 
	 	•	 	all or substantially all the assets of any division, business segment or
comparable line of business of Parent or any Restricted Subsidiary; or
	 
	 	•	 	any other assets of Parent or any Restricted Subsidiary outside of the
ordinary course of business of Parent or such Restricted Subsidiary.

     Notwithstanding the foregoing, the term “Asset Sale” shall not include:

     (1) for purposes of Section 4.13, a Transfer (a) that constitutes a Permitted
Investment or a Restricted Payment permitted by Section 4.10 or (b) consummated in
compliance with Section 5.1;

     (2) sales of accounts receivable of the type specified in the definition of “Qualified
Securitization Transaction” to a Securitization Entity for the Fair Market Value thereof;

     (3) sales or grants of non-exclusive licenses to use the patents, trade secrets,
know-how and other intellectual property of Parent or any Restricted Subsidiary to the
extent that such licenses are granted in the ordinary course of business, and do not
prohibit Parent or any Restricted Subsidiary from using the technologies licensed and do not
require Parent or any Restricted Subsidiary to pay any fees for any such use;

     (4) a Transfer pursuant to any foreclosure of assets or other remedy provided by
applicable law by a creditor of Parent or any Restricted Subsidiary with a Lien on such
assets, if such Lien is permitted under this Indenture;

     (5) a Transfer involving only Temporary Cash Investments or inventory in the ordinary
course of business;

 

 

-3-

     (6) any Transfer of (i) damaged, worn-out or obsolete equipment in the ordinary course
of business and (ii) the manufacturing facility and related assets owned by Parent and its
Subsidiaries on the Issue Date in Donaldsville, Louisiana so long as from the Issuer Date
until the date of such Transfer it remains idled;

     (7) the lease or sublease of any real or personal property in the ordinary course of
business;

     (8) the sale at cost of equipment pursuant to a program in which participants agree to
purchase or construct and maintain specific spare parts necessary to operate production
facilities in the Permitted Business; or

     (9) a Transfer of assets having a Fair Market Value and a sale price of less than $2.0
million.

     “Attributable Debt” in respect of a Sale and Leaseback Transaction means, as at the time of
determination, the present value (discounted at the implied interest rate in such transaction) of
the total obligations of the lessee for rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period for which such lease has been
extended).

     “Bank Collateral Agent” means the Person designated as such under the Credit Facility or a
Person otherwise performing the duties typical of a collateral agent under a credit facility like
the Credit Facility.

     “Basket” has the meaning set forth in Section 4.10.

     “Board of Directors” means the Board of Directors of Parent or any committee thereof duly
authorized to act on behalf of such Board under this Indenture.

     “Business Day” means each day which is not a Legal Holiday.

     “Capital Lease Obligations” means an obligation that is required to be classified and
accounted for as a capital lease for financial reporting purposes in accordance with GAAP. The
amount of Indebtedness represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.

     “Capital Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt securities convertible
into such equity.

     “Casualty Event” shall mean, with respect to any property of any Person, any loss of title
with respect to such property or any loss of or damage to or destruction of, or any condemnation

 

 

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or
other taking (including by any Governmental Authority) of, such property for which such Person or
any of its Subsidiaries receives insurance proceeds or proceeds of a condemnation award or other
compensation. “Casualty Event” shall include but not be limited to any taking of all or any part
of any property of any Person or any part thereof, in or by condemnation or other eminent domain
proceedings pursuant to any law, or by reason of the temporary requisition of the use or occupancy
of all or any part of any property of any person or any part thereof by any Governmental Authority,
civil or military.

     “Change of Control” means the occurrence of any of the following events:

     (i) Issuer ceases to be a Wholly Owned Subsidiary of Parent;

     (ii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that for purposes of this clause such person or group shall be
deemed to have “beneficial ownership” of all securities that any such person or group has
the right to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of Voting Stock representing 35% or more of the
voting power of the total outstanding Voting Stock of Parent;

     (iii) during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (together with any new directors whose
election to the Board of Directors or whose nomination for election by the shareholders of
Parent was approved by a vote of 66 2/3% of the directors of Parent then still in office who
were either directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office;

     (iv) Parent consolidates with or merges with or into another Person or another Person
merges with or into Parent, or all or substantially all the assets of Parent and the
Restricted Subsidiaries, taken as a whole, are Transferred to another Person, and, in the
case of any such merger or consolidation, the securities of Parent that are outstanding
immediately prior to such transaction and which represent 100% of the aggregate voting power
of the Voting Stock of Parent are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are changed into or exchanged
for, in addition to any other consideration, securities of the surviving Person that
represent, immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving Person; or

     (v) Parent or Issuer liquidates or dissolves or the stockholders of Parent adopt a plan
of liquidation or dissolution.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Commission” or “SEC” means the Securities and Exchange Commission.

 

 

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     “Consolidated Coverage Ratio” as of any date of determination means the ratio of (i) the
aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters for
which internal financial statements are available to (ii) Consolidated Fixed Charges for such four
fiscal quarters; provided that:

     (1) if Parent or any Restricted Subsidiary has incurred any Indebtedness since the
beginning of such period that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an
incurrence of Indebtedness, or both, EBITDA and Consolidated Fixed Charges for such period
shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been incurred on the first day of such period and the discharge of any
other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds
of such new Indebtedness as if such discharge had occurred on the first day of such period
(except that, in the case of Indebtedness used to finance working capital needs incurred
under a revolving credit or similar arrangement, the amount thereof shall be deemed to be
the average daily balance of such Indebtedness during such four-fiscal-quarter period)

     (2) if since the beginning of such period Parent or any Restricted Subsidiary shall
have Transferred any assets in an Asset Sale, the EBITDA for such period shall be reduced by
an amount equal to the EBITDA (if positive) directly attributable to the assets which are
the subject of such Transfer for such period, or increased by an amount equal to the EBITDA
(if negative) directly attributable thereto for such period, and Consolidated Fixed Charges
for such period shall be reduced by an amount equal to the Consolidated Fixed Charges
directly attributable to any Indebtedness of Parent or any Restricted Subsidiary repaid,
repurchased, defeased, assumed by a third person (to the extent Parent and its Restricted
Subsidiaries are no longer liable for such Indebtedness) or otherwise discharged with
respect to Parent and its continuing Restricted Subsidiaries in connection with such
Transfer for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Fixed Charges for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent Parent and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);

     (3) if since the beginning of such period Parent or any Restricted Subsidiary (by
merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any
Person which becomes a Restricted Subsidiary) or an acquisition of assets, which acquisition
constitutes all or substantially all of an operating unit of a business, including any such
Investment or acquisition occurring in connection with a transaction requiring a calculation
to be made hereunder, EBITDA and Consolidated Fixed Charges for such period shall be
calculated after giving pro forma effect thereto (including the incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the first day of such period;
and

     (4) if since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into Parent or any Restricted Subsidiary since
the
beginning of such period) shall have made any Transfer of assets in an Asset Sale, any
Investment or acquisition of assets that would have required an adjustment pursuant to
clause (2) or clause (3) above if made by Parent or a Restricted Subsidiary during such
period, EBITDA

 

 

-6-

and Consolidated Fixed Charges for such period shall be calculated after
giving pro forma effect thereto as if such Transfer, Investment or acquisition occurred on
the first day of such period.

     For purposes of this definition, whenever pro forma effect is to be given to a transaction,
the amount of income, earnings or expense relating thereto and the amount of Consolidated Fixed
Charges associated with any Indebtedness incurred in connection therewith, the pro forma
calculations shall be (i) based on the reasonable good faith judgment of a responsible financial or
accounting officer of Parent and (ii) set forth in a certificate delivered to the Trustee from such
officer (it may include, for the avoidance of doubt, cost savings and operating expense reductions
resulting from such transaction (which are being given pro forma effect) that are reasonably
expected to be realized in the twelve month period immediately subsequent to such transaction).

     If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the
interest of such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term
in excess of 12 months).

     “Consolidated Fixed Charges” means, with respect to any period, the sum (without duplication)
of:

     (i) the interest expense of Parent and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied, including,
without limitation, (a) amortization of debt issuance costs and debt discount, (b) the net
payments, if any, under Interest Rate Agreements (including amortization of discounts), (c)
the interest portion of any deferred payment obligation, (d) accrued interest and (e)
commissions, discounts and other fees and charges incurred in respect of letters of credit
or bankers’ acceptance financings;

     (ii) the interest component of the Capital Lease Obligations paid or accrued during
such period;

     (iii) all interest capitalized during such period;

     (iv) interest accrued during such period on Indebtedness of the type described in
clause (6) or (7) of the definition of “Indebtedness”; and

     (v) the product of

	 	(x)	 	the amount of all dividends on any series of
Preferred Stock of Parent and the Restricted Subsidiaries (other than
dividends paid in Qualified
Stock and other than dividends paid to Parent or to a Restricted
Subsidiary) paid, accrued or scheduled to be paid or accrued during
such period times;

 

 

-7-

	 	(y)	 	a fraction, the numerator of which is one and
the denominator of which is one minus the then current effective
consolidated Federal, state and local tax rate of Parent, expressed as
a decimal;

excluding, however, any amount of such interest of any Restricted Subsidiary if the net income (or
loss) of such Restricted Subsidiary is excluded in the calculation of Consolidated Net Income
pursuant to clause (iii) of the proviso in the definition thereof (but only in the same proportion
as the net income (or loss) of such Restricted Subsidiary is so excluded from the calculation of
Consolidated Net Income).

     “Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (1) the
aggregate amount of all outstanding Indebtedness of Parent and its Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP consistently applied, as of the end of
the most recent fiscal quarter for which internal financial statements are available immediately
preceding the date on which such event for which such calculation is being made shall occur to (2)
the aggregate amount of EBITDA of Parent and its Restricted Subsidiaries for the period of the most
recent four consecutive fiscal quarters for which internal financial statements are available
immediately preceding the date on which such event for which such calculation is being made shall
occur, in each case with such pro forma adjustments to as are appropriate and consistent with the
pro forma adjustment provisions set forth in the definition of Consolidated Coverage Ratio.

     “Consolidated Net Income” means, for any period, the net income (or loss) of Parent and the
Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP
consistently applied; provided that there shall not be included in such Consolidated Net Income:

     (i) any extraordinary, non-recurring or unusual gains or losses or expenses;

     (ii) any net income or loss of any Person if such Person is not a Restricted
Subsidiary, except Consolidated Net Income shall be increased by the amount of cash actually
distributed by such Person during such period to Parent or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other distribution
paid to a Restricted Subsidiary, to the limitations contained in clause (iii) below);

     (iii) the net income of any Restricted Subsidiary to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income is not at
the time permitted, directly or indirectly, without prior approval (that has not been
obtained), pursuant to the terms of its charter or any agreement, instrument and
governmental regulation applicable to such Restricted Subsidiary or its stockholders;

     (iv) any gain or loss realized upon the sale or other disposition of (x) any assets
(including pursuant to Sale and Leaseback Transactions) which are not sold or otherwise
disposed of in the ordinary course of business or (y) any Capital Stock of any Person; and

     (v) the cumulative effect of a change in accounting principles;

 

 

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provided further that Consolidated Net Income shall be reduced by the product of (x) the amount of
all dividends on Designated Preferred Stock (other than dividends paid in Qualified Stock and other
than dividends paid to Parent or to a Restricted Subsidiary) paid, accrued or scheduled to be paid
or accrued during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated Federal, state and local
tax rate of Parent, expressed as a decimal.

     “Corporate Trust Office” means the office of the Trustee located at 60 Livingston Avenue,
EP-MN-WS3C , St. Paul, Minnesota 55107-2292; provided that corporate trust office or Trustee’s
Office located in New York shall mean the office of the Trustee located at 100 Wall Street, Suite
1600, New York, New York 10005.

     “Coverage Ratio Exception” has the meaning set forth in the proviso in Section 4.9(a).

     “Credit Facility” means one or more unsubordinated credit agreements, including the Amended
and Restated Revolving Credit Agreement dated December 21, 2004 among Issuer, Terra UK, Terra
Mississippi Holdings Corp., the guarantors party thereto, the lenders party thereto and Citicorp
USA, Inc., as administrative agent and (ii) the Credit Agreement dated December 21, 2004 among
TNLP, TNCLP, the lender party thereto and Citicorp USA, Inc., as administrative agent, and in each
case including any notes, guarantees, collateral and security documents (including mortgages,
pledge agreements and other security arrangements), instruments and agreements executed in
connection therewith, and in each case as amended or Refinanced from time to time, including any
agreement or agreements extending the maturity of, or Refinancing (including increasing the amount
of borrowings or other Indebtedness outstanding or available to be borrowed thereunder), all or any
portion of the Indebtedness under such agreement, and any successor or replacement agreement or
agreements with the same or any other agents, creditor, lender or group of creditors or lenders.

     “Credit Facility Obligations” means (i) all Indebtedness outstanding under any Credit
Facility, (ii) all other Obligations of Issuer or any Guarantor under or with respect to any Credit
Facility, including, without limitation, Obligations in respect of cash management services or
Hedging Obligations that are included as Obligations under and as defined in any Credit Facility,
and (iii) all other Obligations of the Issuer or any Guarantor in respect of cash management
services or Hedging Obligations that (pursuant to this clause (iii)) are designated by Issuer to be
Credit Facility Obligations for the purposes of this Indenture.

     “Currency Agreement” means, with respect to any Person, any foreign exchange contract,
currency swap agreement or other similar agreement to which such Person is a party or a
beneficiary.

     “Default” means any event which is, or after notice or passage of time or both would be, an
Event of Default.

     “Depository” means The Depository Trust Company, its nominees and their respective successors.

 

 

-9-

     “Designated Non-cash Consideration” means the fair market value of non-cash consideration
received by Parent or a Restricted Subsidiary in connection with an Asset Sale that is so
designated as Designated Non-cash Consideration pursuant to an officer’s certificate, setting forth
the basis of such valuation, executed by the principal financial officer of Parent, less the amount
of Temporary Cash Investments received in connection with a subsequent sale, redemption, repurchase
of, or collection or payment on, such Designated Non-cash Consideration.

     “Designated Preferred Stock” means preferred stock of Parent that is designated as Designated
Preferred Stock pursuant to an officers’ certificate executed by the principal executive officer
and the principal financial officer of Parent on the issuance date thereof, the Net Cash Proceeds
of which do not increase the Basket and are not used for purposes of Section 4.10(b)(2).

     “Discharge” means, with respect to the Credit Facility Obligations, the payment in full in
cash of the principal of, premium, if any, and interest on all Credit Facility Obligations and,
with respect to Hedging Obligations or letters of credit outstanding thereunder, delivery of cash
collateral or backstop letters of credit in respect thereof in compliance with the Credit Facility,
in each case after or concurrently with termination of all commitments thereunder, and payment in
full in cash of any other Credit Facility Obligations that are due and payable at or prior to the
time such principal, premium and interest are paid.

     “Disqualified Stock” means, with respect to any Person, any Capital Stock which by its terms
(or by the terms of any security into which it is convertible or for which it is exchangeable) or
upon the happening of any event:

     (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise; or

     (ii) is redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the date that is 91 days after the Stated Maturity of the Notes;

provided that any class of Capital Stock of such Person that, by its terms, authorizes such Person
to satisfy in full its obligations with respect to the payment of dividends or upon maturity,
redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the
delivery of Qualified Stock, and that is not convertible, puttable or exchangeable for Disqualified
Stock or Indebtedness, will not be deemed to be Disqualified Stock so long as such Person satisfies
its obligations with respect thereto solely by the delivery of Qualified Stock; provided further
that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof (or the holders of any security into or for which such Capital Stock is
convertible, exchangeable or exercisable) the right to require Parent or any Restricted Subsidiary
to redeem or
purchase such Capital Stock upon the occurrence of a change in control occurring prior to the final
maturity date of the Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to such holders than Section 4.8
and such Capital Stock specifically provides that Parent or such Restricted Subsidiary will not
redeem or purchase any such Capital Stock pursuant to such provisions prior to Issuer’s purchase of
the Notes as required pursuant to Section 4.8.

 

 

-10-

          “Domestic Subsidiary” means a Restricted Subsidiary of Parent that is not a Foreign
Subsidiary.

          “EBITDA” for any period means the sum of Consolidated Net Income for such period plus, without
duplication, the following to the extent deducted in calculating such Consolidated Net Income:

     (i) Consolidated Fixed Charges;

     (ii) income tax expense determined on a consolidated basis in accordance with GAAP;

     (iii) depreciation expense determined on a consolidated basis in accordance with GAAP;

     (iv) amortization expense determined on a consolidated basis in accordance with GAAP;

     (v) minority interest; and

     (vi) all other non-cash items reducing such Consolidated Net Income (excluding (x) any
non-cash item to the extent that it represents an accrual of, or reserve for, cash
disbursements to be made in any subsequent period and (y) the amount attributable to
minority interests) for such period;

provided that EBITDA shall be reduced by the following:

     (a) all non-cash items increasing such Consolidated Net Income (excluding (x) any
non-cash item to the extent that it represents an accrual of cash receipts to be received in
a subsequent period and (y) the amount attributable to minority interests); and

     (b) amounts paid as dividends or distributions to any Person other than Parent or any
Restricted Subsidiary.

          Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization of, a Subsidiary of Parent shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that the net income of
such Subsidiary was included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended or otherwise distributed to
Parent by such Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of
its charter and all agreements, instruments and governmental regulations applicable to such
Subsidiary or its stockholders.

          “Equity Offering” means a public offering or private placement of Capital Stock of Parent or
Issuer (other than Disqualified Stock) that generates gross proceeds to the issuer thereof of at
least $50.0 million.

 

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          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Exchange and Registration Rights Agreement” has the meaning set forth under “Exchange Offer;
Registration Rights.”

          “Exchange Notes” means the 7% Senior Notes due 2017 to be issued in exchange for the Initial
Notes pursuant to the Registration Rights Agreement.

          “Fair Market Value” means, with respect to any asset, the price (after taking into account any
liabilities relating to such assets) that would be negotiated in an arm’s-length transaction for
cash between a willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction. Fair Market Value (other than of any asset with a public
trading market) in excess of $10.0 million shall be determined by the Board of Directors acting
reasonably and in good faith and shall be evidenced by a board resolution delivered to the Trustee.
Fair Market Value (other than of any asset with a public trading market) in excess of $20.0
million shall be determined by an Independent Financial Advisor, which determination shall be
evidenced by an opinion delivered to the Trustee.

          “Foreign Subsidiary” means a Restricted Subsidiary that is incorporated in a jurisdiction
other than the United States or a State thereof or the District of Columbia and with respect to
which a majority of its sales (determined on a consolidated basis in accordance with GAAP) is
generated from or derived from operations outside the United States of America and a majority of
its assets is located outside the United States of America.

          “GAAP” means generally accepted accounting principles in the United States of America as in
effect and adopted by Parent on the date hereof.

          “Governmental Authority” shall mean any federal, state, local or foreign court, central bank
or governmental agency, authority, instrumentality or regulatory body.

          “guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Indebtedness or other obligation of any Person and any obligation,
direct or indirect, contingent or otherwise, of such Person:

     (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods, securities or
services, to take-or-pay or to maintain financial statement conditions or otherwise); or

     (2) entered into for the purpose of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part);

provided that the term “guarantee” shall not include endorsements for collection or deposit in the
ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning. The
term “guarantor” shall mean any Person guaranteeing any obligation.

 

-12-

          “Guarantee” means a full and unconditional senior guarantee of the Notes pursuant to Article
10.

          “Guarantor” means (i) each of Beaumont Ammonia Inc., a Delaware corporation; Beaumont Holdings
Corporation, a Delaware corporation; BMC Holdings Inc., a Delaware corporation; Port Neal
Corporation, a Delaware corporation; Terra (UK) Holdings Inc., a Delaware corporation; Terra
Capital Holdings, Inc., a Delaware corporation; Terra Industries Inc., a Maryland corporation;
Terra International (Oklahoma) Inc., a Delaware corporation; Terra International, Inc., a Delaware
corporation; Terra Methanol Corporation, a Delaware corporation; Terra Nitrogen Corporation, a
Delaware corporation; Terra Real Estate Corp., an Iowa corporation; Terra Mississippi Holdings
Corp., a Mississippi corporation; Terra Mississippi Nitrogen, Inc., a Delaware corporation; Terra
Houston Ammonia, Inc., a Delaware corporation and Terra Nitrogen GP Holdings Inc., a Delaware
corporation, and (ii) any other Restricted Subsidiary of Parent that issues a Guarantee of the
Notes, in each case, until such Person is released from its Guarantee in accordance with Section
10.6.

          “Hedging Obligations” of any Person means the obligations of such Person pursuant to any
Interest Rate Agreement or Currency Agreement entered into in the ordinary course of business and
not for speculative purposes.

          “Holder” or “Noteholder” means the Person in whose name a Note is registered on the
Registrar’s books.

          “Immaterial Subsidiary” means, at any time, any Restricted Subsidiary of Parent that is
designated by Parent as an “Immaterial Subsidiary” if and for so long as such Restricted
Subsidiary, together with all other Immaterial Subsidiaries, has (i) total assets at such time not
exceeding 5% of Parent’s Total Assets as of the most recent fiscal quarter for which balance sheet
information is available and (ii) total revenues and operating income for the most recent 12-month
period for which income statement information is available not exceeding 5% of Parent’s
consolidated revenues and operating income, respectively; provided that such Restricted Subsidiary
shall be an Immaterial Subsidiary only to the extent that and for so long as all of the above
requirements are satisfied.

          “incur” means issue, create, assume, guarantee, incur or otherwise become liable for; provided
that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed
to be incurred by such Subsidiary at the time it becomes a Restricted Subsidiary. Neither the
accrual
of interest nor the accretion of original issue discount shall be considered an incurrence of
Indebtedness. The term “incurrence” when used as a noun shall have a correlative meaning.

          “Indebtedness” means, with respect to any Person, without duplication, and whether or not
contingent:

     (1) all indebtedness of such Person for borrowed money or for the deferred purchase
price of assets or services or which is evidenced by a note, bond, debenture or similar
instrument, to the extent it would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP;

 

-13-

     (2) all Capital Lease Obligations of such Person;

     (3) all obligations of such Person in respect of letters of credit or bankers’
acceptances issued or created for the account of such Person;

     (4) net obligations of such Person under Interest Rate Agreements or Currency
Agreements;

     (5) all Disqualified Stock issued by such Person and all Preferred Stock issued by any
Subsidiary of such Person, in each case, valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends thereon;

     (6) to the extent not otherwise included, any guarantee by such Person of any other
Person’s indebtedness or other obligations described in clauses (1) through (5) above; and

     (7) all Indebtedness of others secured by a Lien on any asset of such Person, whether
or not such Indebtedness is assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (x) the Fair Market Value of such asset at such date of
determination and (y) the amount of such Indebtedness.

     For the avoidance of doubt, “Indebtedness” shall not include:

     (a) current trade payables incurred in the ordinary course of business and payable in
accordance with customary practices;

     (b) deferred tax obligations;

     (c) minority interest;

     (d) non-interest bearing installment obligations and accrued liabilities incurred in
the ordinary course of business; and

     (e) obligations of Parent or any Restricted Subsidiary pursuant to contracts for, or
options, puts or similar arrangements relating to, the purchase of raw materials or the sale
of inventory at a time in the future entered into in the ordinary course of business.

For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified
Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if such price is based upon, or measured
by the Fair Market Value of, such Disqualified Stock, such Fair Market Value is to be determined in
good faith by the board of directors of the issuer of such Disqualified Stock. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations as described above at such
date; provided that the amount outstanding at any time of any Indebtedness issued with original
issue discount shall be deemed to be

 

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the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP. The accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional Indebtedness or
Disqualified Stock, the reclassification of preferred stock as Indebtedness due to a change in
accounting principles, and the payment of dividends on Disqualified Stock in the form of additional
shares of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance
of Disqualified Stock for purposes of this Indenture.

          “Indenture” means this Indenture as amended or supplemented from time to time by one or more
supplemental indentures entered into pursuant to the applicable provisions hereof or otherwise in
accordance with the terms hereof.

          “Independent Financial Advisor” means a firm (i) which does not, and whose directors, officers
or Affiliates do not, have a material financial interest in Parent or any of its Subsidiaries; and
(ii) which, in the judgment of the Board of Directors, is otherwise independent and qualified to
perform the task for which it is to be engaged.

          “Initial Notes” means the 7% Senior Notes due 2017 of Terra Capital originally issued on the
Issue Date.

          “Initial Purchasers” means, collectively, Citigroup Global Markets Inc. and Credit Suisse
First Boston LLC.

          “interest” means, with respect to the Notes, the sum of any interest and any Liquidated
Damages on the Notes.

          “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement
or other similar financial agreement or arrangement.

          “Investment” in any Person means any direct or indirect advance, loan or other extension of
credit (including by way of guarantee or similar arrangement) or capital contribution to, or any
purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by,
such Person. “Investment” excludes (a) any Restricted Payment of the type described in clause (ii)
of the definition thereof and (b) any purchase or acquisition of Indebtedness of Parent or any of
its Subsidiaries.

          For purposes of the definition of “Unrestricted Subsidiary,” the definition of “Restricted
Payment” and Section 4.10:

     (i) “Investment” shall include the portion (proportionate to Parent’s direct and
indirect equity interest in such Subsidiary) of the Fair Market Value of the net assets of
any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary;

     (ii) any asset Transferred to or from an Unrestricted Subsidiary shall be valued at its
Fair Market Value at the time of such Transfer; and

 

-15-

     (iii) if Parent or any Restricted Subsidiary Transfers any Capital Stock of any direct
or indirect Restricted Subsidiary, or any Restricted Subsidiary issues Capital Stock, such
that, after giving effect to any such Transfer or issuance, such Person is no longer a
Restricted Subsidiary, Parent shall be deemed to have made an Investment on the date of any
such Transfer or issuance equal to the Fair Market Value of the Capital Stock of such Person
held by Parent or such Restricted Subsidiary immediately following any such Transfer or
issuance.

          “Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s and BBB- (or the equivalent) by S&P, or, in either case, an equivalent rating by any other
Rating Agency.

          “Issue Date” means February 2, 2007.

          “Issuer Surviving Entity” has the meaning set forth in Section 5.1.

          “Lien” means, with respect to any asset, any mortgage, deed of trust, lien, pledge, charge,
debenture, security interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in any asset and any filing of, or agreement to give, any
financing statement under the UCC or equivalent statutes) of any jurisdiction other than to
evidence a lease.

          “Liquidated Damages” has the meaning set forth in paragraph 8 of the Initial Notes.

          “Make Whole Amount” means the excess, if any, of (i) an amount equal to the sum of the present
values of the remaining scheduled payments of principal of the Notes to be redeemed or purchased
and the scheduled payment of interest thereon to originally scheduled maturity, discounted to the
redemption or purchase date (assuming a 360-day year consisting of twelve 30-day months) at
the Special Adjusted Treasury Rate from the respective dates on which such principal and
interest would have been payable over (ii) the principal amount of the Notes being redeemed or
purchased.

          “Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency
business.

          “Net Available Proceeds” from an Asset Sale means the aggregate cash proceeds received by such
Person and/or its affiliates in respect of such transaction, including any cash received upon sale
or other disposition of any Designated Non-cash Considerations received in any Asset Sale, which
amount is equal to the excess, if any, of:

     (i) the cash received by such Person and/or its affiliates (including any cash payments
received by way of deferred payment pursuant to, or monetization of, a note or installment
receivable or otherwise, but only as and when received) in connection with such transaction,
over

     (ii) the sum of (a) the amount of any Indebtedness that is secured by such asset and
which is required to be repaid by such Person in connection with such transaction, plus (b)

 

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all fees, commissions, and other expenses incurred by such Person in connection with such
transaction, plus (c) provision for taxes, including income taxes, attributable to the
transaction or attributable to required prepayments or repayments of Indebtedness with the
proceeds of such transaction, plus (d) a reasonable reserve for the after-tax cost of any
indemnification payments (fixed or contingent) attributable to seller’s indemnities to
purchaser in respect of such transaction undertaken by Parent or any of its Restricted
Subsidiaries in connection with such transaction, plus (e) if such Person is a Restricted
Subsidiary, any dividends or distributions payable to holders of minority interests in such
Restricted Subsidiary from the proceeds of such transaction.

          “Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock, means the cash
proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or
placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or payable as a result
thereof.

          “Non-U.S. Person” means a Person who is not a U.S. Person, as defined in Regulation S.

          “Notes” means the Initial Notes and the Exchange Notes.

          “Obligations” means, with respect to any Indebtedness, any principal, interest, penalties,
fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under
the documentation governing such Indebtedness.

          “Offering Memorandum” means the offering memorandum, dated January 25, 2007, relating to the
Initial Notes.

          “Officer” means, with respect to Parent, the Chairman of the Board, any Vice Chairman, the
Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President
or Vice President, the Secretary or any Assistant Secretary.

          “Officers’ Certificate” means, with respect to any Person, a certificate signed by two
Officers, one of which is the Chairman of the Board, the Chief Executive Officer, the Chief
Financial Officer, the President or any Executive Vice President.

          “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable
to the Trustee. The counsel may be an employee of or counsel to Parent or the Trustee.

          “Parent Surviving Entity” has the meaning set forth in Section 5.1.

          “Permitted Asset Swap” means the concurrent purchase and sale or exchange of Related Business
Assets or a combination of Related Business Assets and Temporary Cash Investments between Parent or
any of its Restricted Subsidiaries and another Person; provided that any Net Available Proceeds
received must be applied in accordance with the “Limitation on Asset Sales” covenant.

 

-17-

          “Permitted Business” means (i) the same or a similar line of business as Parent and the
Restricted Subsidiaries are engaged in on the date hereof as described in the Offering Memorandum
and (ii) such business activities as are complementary, incidental, ancillary or related to, or are
reasonable extensions of, the foregoing.

          “Permitted Indebtedness” has the meaning set forth in Section 4.9(b).

          “Permitted Investment” means:

     (1) any Investment in Temporary Cash Investments or the Notes or the Exchange Notes;

     (2) any Investment in Issuer or any Restricted Subsidiary;

     (3) any Investment by Parent or any Restricted Subsidiary in a Person, if as a result
of such Investment: (x) such Person becomes a Restricted Subsidiary; or (y) such Person is
merged or consolidated with or into, or Transfers or conveys all or substantially all of its
assets to, or is liquidated into, Issuer or a Guarantor;

     (4) receivables owing to Parent or any Restricted Subsidiary if created or acquired in
the ordinary course of business and payable or dischargeable in accordance with customary
trade terms; provided that such trade terms may include such concessionary trade terms as
Parent or any such Restricted Subsidiary deems reasonable under the circumstances;

     (5) loans or advances to employees of Parent or any Restricted Subsidiary that are made
in the ordinary course of business consistent with past practices of Parent or such
Restricted Subsidiary;

     (6) Investments in any Person to the extent such Investment represents the non-cash
portion of the consideration received in an Asset Sale as permitted pursuant Section 4.13 or
represents consideration received from the sale of assets not considered to be an Asset Sale
for purposes of such covenant;

     (7) Investments of cash or Temporary Cash Investments in any Restricted Subsidiary that
is not a Guarantor in the form of Indebtedness that is not subordinated by its terms to any
other obligations;

     (8) Investments in securities of trade creditors or customers received pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers;

     (9) Hedging Obligations incurred pursuant to clause (7) of the definition of “Permitted
Indebtedness”;

     (10) Investments in joint ventures not to exceed $10.0 million at any time outstanding;
provided that each such joint venture is engaged only in a Permitted Business;

 

-18-

     (11) any Investment by Parent or a Wholly Owned Subsidiary of Parent in a
Securitization Entity; provided that such Investment is in the form of a Purchase Money Note
or an equity interest or interests in accounts receivable generated by Parent or any of its
Subsidiaries;

     (12) any Indebtedness of Parent to any of its Subsidiaries incurred in connection with
the purchase of accounts receivable and related assets by Parent from any such Subsidiary
which assets are subsequently conveyed by Parent to a Securitization Entity in a Qualified
Securitization Transaction;

     (13) any guarantees of Indebtedness permitted by clause (6) or (17) of the definition
of “Permitted Indebtedness”;

     (14) any Investment by TNCLP or TNLP in the other;

     (15) additional Investments in an aggregate amount, taken together with all other
Investments made pursuant to this clause (15) that are at that time outstanding, not to
exceed the greater of $45.0 million and 3% of Total Assets at the time of such Investment
(with the fair market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value);

     (16) any Investment in a Permitted Business in an aggregate amount, taken together with
all other Investments made pursuant to this clause (16) that are at that time outstanding,
not to exceed the greater of $30.0 million and 2% of Total Assets at the time of such
Investment (with the fair market value of each Investment being measured at the time made
and without giving effect to subsequent changes in value); and

     (17) the contribution of any asset associated with the Teesside facility and Severnside
facility of Terra Nitrogen (UK) Limited or the Capital Stock of any Person holding such
assets to a joint venture with Kemira GrowHow UK Limited; and

     (18) Investments consisting of take-or-pay obligations contained in supply agreements,
relating to products, services or commodities of a type that Parent or any of its
Subsidiaries uses or sells in the ordinary course of business.

          The amount of any Investments outstanding for purposes of clause (10), (15), (16) or (17)
above and the amount of Investments deemed made since the Issue Date for purposes of Section
4.10(b) shall be equal to the aggregate amount of Investments made pursuant to such clause reduced
(but not below zero) by the following (to the extent not included in the calculation of
Consolidated Net Income for purposes of determining the Basket and without duplication):

     (a) the aggregate net proceeds (including the Fair Market Value of assets other than
cash) received by Parent or any Restricted Subsidiary upon the sale or other disposition of
any Investment made pursuant to such clause;

 

-19-

     (b) the net reduction in Investments made pursuant to such clause resulting from
dividends, repayments of loans or advances or other Transfers of assets to Parent or any
Restricted Subsidiary;

     (c) to the extent that the amount available for Investments under such clause was
reduced as the result of the designation of an Unrestricted Subsidiary, the portion
(proportionate to Parent’s equity interest in such Subsidiary) of the Fair Market Value of
the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
redesignated, or liquidated or merged into, a Restricted Subsidiary; and

     (d) the net reduction in Investments made pursuant to such clause resulting from
repayment of letters of credit or the expiration of letters of credit undrawn.

     “Permitted Liens” means:

     (1) Liens on assets of a Person at the time such Person becomes a Subsidiary; provided
that (a) such Lien was not incurred in anticipation of or in connection with the transaction
or series of related transactions pursuant to which such Person became a Subsidiary and (b)
such Lien does not extend to or cover any assets of Parent or any other Restricted
Subsidiary;

     (2) Liens existing on the Issue Date;

     (3) Liens imposed by law that are incurred in the ordinary course of business and do
not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, mechanics’,
landlords’, materialmen’s, employees’, laborers’, employers’, suppliers’, banks’,
repairmen’s and other like Liens, in each case, for sums not yet due or that are being
contested in
good faith by appropriate proceedings and that are appropriately reserved for in
accordance with GAAP if required by GAAP;

     (4) Liens for taxes, assessments and governmental charges not yet due or payable or
subject to penalties for non-payment or that are being contested in good faith by
appropriate proceedings and that are appropriately reserved for in accordance with GAAP if
required by GAAP;

     (5) Liens on assets acquired or constructed after the Issue Date securing Purchase
Money Indebtedness and Capital Lease Obligations; provided that such Liens shall in no event
extend to or cover any assets other than the assets acquired or constructed after the Issue
Date with the proceeds of such Purchase Money Indebtedness of Capital Lease Obligations;

     (6) zoning restrictions, easements, rights-of-way, restrictions on the use of real
property, other similar encumbrances on real property incurred in the ordinary course of
business and minor irregularities of title to real property that do not (a) secure
Indebtedness, or (b) individually or in the aggregate materially impair the value or
marketability of the real property affected thereby or the occupation, use and enjoyment in
the ordinary course of business of Parent and the Restricted Subsidiaries at such real
property;

 

-20-

     (7) terminable or short-term leases or permits for occupancy, which leases or permits
(a) expressly grant to Parent or any Restricted Subsidiary the right to terminate them at
any time on not more than six months’ notice and (b) do not individually or in the aggregate
interfere with the operation of the business of Parent or any Restricted Subsidiary or
individually or in the aggregate impair the use (for its intended purpose) or the value of
the property subject thereto;

     (8) Liens resulting from operation of law with respect to any judgments, awards or
orders to the extent that such judgments, awards or orders do not cause or constitute an
Event of Default; provided that any such Liens shall be paid, discharged, bonded or stayed
prior to the sale or forfeiture of any portion of the collateral on account of such Liens;

     (9) bankers’ Liens, rights of setoff and other similar Liens existing solely with
respect to cash and cash equivalents on deposit in one or more accounts maintained by Parent
or any Restricted Subsidiary in accordance with the provisions of this Indenture, in each
case granted in the ordinary course of business in favor of the bank or banks with which
such accounts are maintained, securing amounts owing to such bank with respect to cash
management and operating account arrangements; provided that in no case shall any such Liens
secure (either directly or indirectly) the repayment of any Indebtedness;

     (10) Liens securing Refinancing Indebtedness relating to Permitted Liens of the type
described in clauses (1), (2) and (5) of this definition; provided that such Liens extend
only to the assets securing the Indebtedness being Refinanced;

     (11) other Liens securing obligations (not constituting indebtedness for money
borrowed) in an aggregate amount at any time outstanding not to exceed the greater of $45.0
million and 3% of Total Assets;

     (12) Liens securing Indebtedness incurred under Section 4.9(b)(3);

     (13) Liens securing Hedging Obligations of the type described in clause (7) of the
definition of “Permitted Indebtedness”;

     (14) Liens securing Indebtedness of Foreign Subsidiaries;

     (15) Liens in favor of Issuer or any Guarantor; provided that such Liens do not secure
obligations that are assigned to any Person other than the Bank Collateral Agent pursuant to
the Credit Facility;

     (16) Liens on assets or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided that such Lien was not incurred in anticipation of or in connection
with the transaction or series of related transactions pursuant to which such Person became
a Subsidiary;

 

-21-

     (17) pledges of or Liens on raw materials or on manufactured products as security for
any drafts or bills of exchange drawn in connection with the importation of such raw
materials or manufactured products;

     (18) Liens in favor of banks that arise under Article 4 of the UCC on items in
collection and documents relating thereto and proceeds thereof and Liens arising under
Section 2-711 of the UCC;

     (19) Liens arising or that may be deemed to arise in favor of a Securitization Entity
arising in connection with a Qualified Securitization Transaction;

     (20) pledges or deposits by such Person under workers’ compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or appeal bonds to which
such Person is a party, or deposits as security for contested taxes or import duties or for
the payment of rent or deposits as security for the payment of insurance-related obligations
(including, but not limited to, in respect of deductibles, self-insured retention amounts
and premiums and adjustments thereto), in each case incurred in the ordinary course of
business;

     (21) Liens in favor of issuers of surety, performance, judgment, appeal and like bonds
or letters of credit issued in the ordinary course of business;

     (22) Liens occurring solely by the filing of a UCC statement, which filing has not been
consented to by Parent or any Restricted Subsidiary;

     (23) any obligations or duties affecting any property of Parent or any Restricted
Subsidiary to any municipality or public authority with respect to any franchise, grant,
license or permit that do not materially impair the use of such property for the purposes
for which it is held;

     (24) Liens on any property in favor of domestic or foreign governmental bodies to
secure partial, progress, advance or other payments pursuant to any contract or statute, not
yet due and payable;

     (25) Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements; and

     (26) deposits, pledges or other Liens to secure obligations under purchase or sale
agreements.

          “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.

 

-22-

          “Preferred Stock” as applied to the Capital Stock of any corporation, means Capital Stock of
any class or classes (however designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such corporation.

          “principal” of a Note means the principal of the Note plus the premium, if any, payable on the
Note which is due or overdue or is to become due at the relevant time.

          “Private Placement Legend” means the legend initially set forth on the Notes in the form set
forth in Section 2.13.

          “Purchase Money Indebtedness” mean Indebtedness (i) consisting of the deferred purchase price
of assets, conditional sale obligations, obligations under any title retention agreement, other
purchase money obligations and obligations in respect of industrial revenue bonds or similar
Indebtedness, in each case where the maturity of such Indebtedness does not exceed the anticipated
useful life of the asset being financed, and (ii) incurred to finance the acquisition by Parent or
a Restricted Subsidiary of such asset, including additions and improvements; provided that any Lien
arising in connection with any such Indebtedness shall be limited to the specified asset being
financed or, in the case of real property or fixtures, including additions and improvements, the
real property on which such asset is attached; provided further that such Indebtedness is incurred
within 120 days after such acquisition of, or the completion of construction of, such asset by
Parent or Restricted Subsidiary

          “Purchase Money Note” means a promissory note evidencing a line of credit, which may be
irrevocable, from, or evidencing other Indebtedness owed to, Parent or any of its Subsidiaries in
connection with a Qualified Securitization Transaction, which note shall be repaid from cash
available to the maker of such note, other than amounts required to be established as reserves
pursuant to
agreements, amounts paid to investors in respect of interest, principal and other amounts
owing to such investors and amounts paid in connection with the purchase of newly generated
receivables.

          “Qualified Institutional Buyer” or “QIB” shall have the meaning specified in Rule 144A under
the Securities Act.

          “Qualified Securitization Transaction” means any transaction or series of transactions that
may be entered into by Parent, any Restricted Subsidiary or a Securitization Entity pursuant to
which Parent or such Restricted Subsidiary or that Securitization Entity may, pursuant to customary
terms, sell, convey or otherwise transfer to, or grant a security interest in for the benefit of,
(i) a Securitization Entity or Parent or any Restricted Subsidiary which subsequently transfers to
a Securitization Entity (in the case of a transfer by Parent or such Restricted Subsidiary) and
(ii) any other Person (in the case of transfer by a Securitization Entity), any accounts receivable
(whether now existing or arising or acquired in the future) of Parent or any Restricted Subsidiary
which arose in the ordinary course of business of Parent or such Restricted Subsidiary, and any
assets related thereto, including, without limitation, all collateral securing such accounts
receivable, all contracts and contract rights and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets (including contract
rights) which are customarily transferred or in respect of which security interests are customarily
granted in connection with asset securitization transactions involving accounts receivable.

 

-23-

          “Qualified Stock” means any Capital Stock of Parent other than Disqualified Stock.

          “Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating
on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as
the case may be, selected by the Issuer which shall be substituted for Moody’s or S&P or both, as
the case may be.

          “Refinance” means, in respect of any Indebtedness, to refinance, extend, increase, replace,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange
or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative
meanings.

          “Refinancing Indebtedness” means, with respect to any Indebtedness, Indebtedness incurred to
Refinance such Indebtedness that does not:

     (1) result in an increase in the aggregate principal amount of Indebtedness being
Refinanced as of the date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such Indebtedness and plus
the amount of reasonable expenses incurred in connection with such Refinancing) or

     (2) create Indebtedness with (a) a Weighted Average Life to Maturity that is less than
the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (b) a final
maturity earlier than the final maturity of the Indebtedness being Refinanced;

provided that (x) if the Indebtedness being Refinanced is subordinated by its terms to the Notes or
a Guarantee, then such Refinancing Indebtedness shall be subordinated by its terms to the Notes or
such Guarantee at least to the same extent and in the same manner as the Indebtedness being
Refinanced and (y) the obligor(s) on the Refinancing Indebtedness shall not include any Person that
is not Issuer or a Guarantor or a Person that is an obligor on the Indebtedness being Refinanced.

          “Registration Rights Agreement” means the Registration Rights Agreement dated the Issue Date
among Terra Capital, the Guarantors party thereto and the Initial Purchasers.

          “Regulation S” means Regulation S under the Securities Act.

          “Regulation S-X” means Regulation S-X under the Securities Act.

          “Related Business Assets” means assets (other than cash or Temporary Cash Investments) used or
useful in a Permitted Business, provided that any assets received by Parent or a Restricted
Subsidiary in exchange for assets transferred by Parent or a Restricted Subsidiary shall not be
deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt
of the securities of such Person, such Person would become a Restricted Subsidiary.

          “Responsible Officer” means, when used with respect to the Trustee, any officer assigned to
the Corporate Trust Office, including any vice president, assistant vice president, assistant

 

-24-

          secretary or any other officer of the Trustee to whom any corporate trust matter is referred
because of his or her knowledge or familiarity with the particular subject.

          “Restricted Payment” means, with respect to any Person:

     (i) any dividend or other distribution declared or paid on any Capital Stock of Parent
(other than dividends or distributions payable solely in Qualified Stock);

     (ii) any payment to purchase, redeem or otherwise acquire or retire for value any
Capital Stock of Parent or any affiliate of Parent (other than any Restricted Subsidiary);

     (iii) any payment to purchase, redeem, defease or otherwise acquire or retire for value
any Subordinated Obligations prior to the Stated Maturity thereof (other than any Purchase
Money Indebtedness incurred after the Issue Date upon the sale of the related asset); or

     (iv) the making of an Investment (other than a Permitted Investment), including any
Investment in an Unrestricted Subsidiary (including by the designation of any Subsidiary of
Parent as an Unrestricted Subsidiary).

          “Restricted Security” has the meaning assigned to “Restricted Security” in Rule 144(a)(3)
under the Securities Act; provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a
Restricted Security.

          “Restricted Subsidiary” means Issuer and each other Subsidiary of Parent that is not an
Unrestricted Subsidiary.

          “Rule 144A” means Rule 144A under the Securities Act.

          “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any
successor to its rating agency business.

          “Sale and Leaseback Transaction” means an arrangement relating to property now owned or
hereafter acquired whereby Parent or a Restricted Subsidiary transfers such property to a Person
and Parent or a Restricted Subsidiary leases it from such Person.

          “Securities Act” shall mean the Securities Act of 1933, as amended.

          “Securitization Entity” means a Wholly Owned Subsidiary of Parent (or another Person in which
Parent or any Subsidiary of Parent makes an Investment and to which Parent or any Subsidiary of
Parent transfers accounts receivable):

     (1) which is designated by the Board of Directors (as provided below) as a
Securitization Entity and engages in no activities other than in connection with the
financing of accounts receivable;

 

-25-

     (2) no portion of the Indebtedness or any other obligations (contingent or otherwise)
of which (a) is guaranteed by Parent or any of its Subsidiaries (other than the
Securitization Entity) (excluding guarantees of obligations (other than the principal of,
and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings), (b) has
recourse to or obligates Parent or any of its Subsidiaries (other than the Securitization
Entity) in any way other than pursuant to Standard Securitization Undertakings or (c)
subjects any asset of Parent or any of its Subsidiaries (other than the Securitization
Entity), directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings and other than any interest in
the accounts receivable (whether in the form of an equity interest in such assets or
subordinated indebtedness payable primarily from such financed assets) retained or acquired
by Parent or any of its Subsidiaries;

     (3) with which neither Parent nor any of its Subsidiaries has any material contract,
agreement, arrangement or understanding other than on terms no less favorable to Parent or
such Subsidiary than those that might be obtained at the time from Persons that are not
affiliates of Parent, other than fees payable in the ordinary course of business in
connection with servicing receivables of such entity; and

     (4) to which neither Parent nor any of its Subsidiaries has any obligation to maintain
or preserve such entity’s financial condition or cause such entity to achieve certain levels
of operating results.

          Any such designation by the Board of Directors shall be evidenced to the Trustee by filing
with the Trustee a certified copy of the resolution giving effect to such designation and an
Officers’ Certificate certifying that such designation complied with the foregoing conditions.

          “Significant Subsidiary” means (i) any Restricted Subsidiary that is a “significant
subsidiary” of Parent on a consolidated basis within the meaning of Regulation S-X promulgated by
the SEC or (ii) any Restricted Subsidiary that, when aggregated with all other Restricted
Subsidiaries that are not otherwise Significant Subsidiaries and as to which any event described in
Section 6.1(vii), (viii), or (ix) has occurred and is continuing, would constitute a Significant
Subsidiary under clause (i) of this definition.

          “Standard Securitization Undertakings” means representations, warranties, covenants and
indemnities entered into by Parent or any of its Subsidiaries which are reasonably customary in an
accounts receivable securitization transaction.

          “Stated Maturity” means, with respect to any security, the date specified in such security as
the fixed date on which the final payment of principal of such security is due and payable,
including pursuant to any mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).

          “Subordinated Obligation” means any Indebtedness of Parent, Issuer or a Guarantor (whether
outstanding on the Issue Date or thereafter incurred) which is subordinated by its terms in right
of payment to the Notes or the Guarantee of Parent or such Guarantor.

 

-26-

          “Subsidiary” means, in respect of any Person, any corporation, association, partnership or
other business entity of which Voting Stock representing more than 50% of the total voting power of
all outstanding Voting Stock of such Person is at the time owned, directly or indirectly, by (i)
such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.

          “Taxes” means any tax, duty, levy, impost, assessment or other governmental charge (including
penalties, interest, expenses and any other liabilities related thereto) levied, imposed or
assessed by or on behalf of any taxing authority.

          “Temporary Cash Investments” means any of the following:

     (i) any investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency thereof;

     (ii) investments in time or demand deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof issued by a bank
or trust company which is organized under the laws of the United States of America, any
State thereof or any foreign country recognized by the United States, and which bank or
trust
company has capital, surplus and undivided profits aggregating in excess of $50,000,000
(or the foreign currency equivalent thereof) and has outstanding debt which is rated “A-2”
or higher by Moody’s Investors Service, Inc. (“Moody’s”), “A” or higher by Standard & Poor’s
Ratings Group (“S&P”) or the equivalent rating by any other nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund distributor;

     (iii) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above;

     (iv) investments in commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an affiliate of Issuer) organized and in
existence under the laws of the United States of America, any State thereof or the District
of Columbia or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is “P-2” or higher from Moody’s, “A-2” or
higher from S&P or the equivalent rating by any other nationally recognized statistical
rating organization (as defined above);

     (v) investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof, and rated at
least “A” by Moody’s or “A” by S&P; and

 

-27-

     (vi) shares of any money market mutual fund rated at least AAA or the equivalent
thereof by S&P, at least Aaa or the equivalent thereof by Moody’s or any other mutual fund
at least 95% of whose assets consist of the type specified in clauses (i) through (v) above.

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

          “Terra UK” means Terra Nitrogen (U.K.) Ltd., an English company.

          “Terra UK Customer Debt” means Indebtedness for borrowed money of a customer of Terra UK owing
to a financial institution in the United Kingdom; provided that:

     (i) such customer uses the entire principal proceeds of such Indebtedness to pay for
goods and services purchased from Terra UK;

     (ii) such customer is required to repay such Indebtedness in full within 12 months of
the date on which such Indebtedness is incurred;

     (iii) in the reasonable opinion of Terra UK, such customer is creditworthy; and

     (iv) it is a condition of the extension of credit by such financial institution to such
customer that Terra UK guarantee a portion of such Indebtedness.

          “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the
date of this Indenture, except as provided in Section 9.3.

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

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

          “Total Assets” means the total assets of Parent and its Restricted Subsidiaries on a
consolidated basis, as shown on the most recent balance sheet of Parent.

          “Transfer” means to sell, assign, transfer, lease (other than pursuant to an operating lease
entered into in the ordinary course of business), convey or otherwise dispose of, including by Sale
and Leaseback Transaction, consolidation, merger or otherwise, in one transaction or a series of
transactions. “Transferred,” “Transferor” and “Transferee” have correlative meanings.

          “Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption
Date of United States Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available
at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to February 1, 2012; provided, however, that if the period from the
Redemption Date to February 1, 2012 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

-28-

          “Trustee” means the party named as such in this Indenture until a successor replaces it and,
thereafter, means the successor.

          “Trust Officer” means the Chairman of the Board, the President or any other officer or
assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

          “UCC ” means the Uniform Commercial Code in effect in the applicable jurisdiction.

          “Unrestricted Subsidiary” means (i) any Subsidiary of Parent that at the time of determination
shall have been designated an Unrestricted Subsidiary by the Board of Directors; and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
Parent (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or
holds any Lien on any assets of, Issuer or any other Subsidiary of Parent that is not a Subsidiary
of the Subsidiary to be so designated; provided that (i) no Default has occurred and is continuing
or would occur as a consequence thereof, (ii) either (x) Issuer could incur at least $1.00 of
additional Indebtedness under Section 4.9(a) or (y) the Consolidated Coverage Ratio of the Issuer
and the Restricted Subsidiaries is greater than immediately prior to such designation and (iii)
either (x) the Subsidiary to be so designated has total assets of $1,000 or less or (y) if such
Subsidiary has assets greater than $1,000, such designation would be permitted under Section 4.10
(treating the Fair Market Value of Issuer’s proportionate interest in the net worth of such
Subsidiary on such date calculated in accordance with
GAAP as the amount of the Investment). The Board of Directors may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) no Default shall have
occurred and is continuing and (ii) Indebtedness of such Unrestricted Subsidiary and all Liens on
any asset of such Unrestricted Subsidiary outstanding immediately following such redesignation
would, if incurred at such time, be permitted to be incurred under this Indenture.

          “U.S. Government Obligations” means direct obligations (or certificates representing an
ownership interest in such obligations) of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of the United States of
America is pledged and which are not callable at the issuer’s option.

          “U.S. Legal Tender” means such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public or private debts.

          “Voting Stock” of a Person means all classes of Capital Stock or other interests (including
partnership interests) of such Person then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

          “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:

     (1) the then outstanding aggregate principal amount of such Indebtedness into

     (2) the sum of the total of the products obtained by multiplying (x) the amount of each
then remaining installment, sinking fund, serial maturity or other required payment of

 

-29-

principal, including payment at final maturity, in respect thereof, by (y) the number of
years (calculated to the nearest one-twelfth) that will elapse between such date and the
making of such payment.

          “Wholly Owned Subsidiary” means a Restricted Subsidiary all the Capital Stock of which (other
than directors’ qualifying shares) is owned by Parent and/or one or more Wholly Owned Subsidiaries.

          SECTION 1.2. Other Definitions.

	 	 	 	 
	Term	 	Defined in Section
	“Affiliate Transaction”

	 	4.12	 
	“Bankruptcy Law”

	 	6.1	 
	“covenant defeasance option”

	 	8.1	(b) 
	“Custodian”

	 	6.1	 
	“defeasance trust”

	 	8.2	 
	“Event of Default”

	 	6.1	 
	“Excess Proceeds”

	 	4.13	(f)
	“Global Notes”

	 	2.1	(b)
	“Guaranteed Obligations”

	 	10.1	 
	“legal defeasance option”

	 	8.1	(b)
	“maximum fixed repurchase price”

	 	1.1	 
	“Moody’s”

	 	1.1	 
	“Net Proceeds Deficiency”

	 	4.13	(f) 
	“Net Proceeds Offer”

	 	4.13	(f)
	“Net Proceeds Offer Amount”

	 	4.13	(i)
	“Net Proceeds Offer Period”

	 	4.13	(i)
	“Notes Register”

	 	2.3	 
	“Participants”

	 	2.6	 
	“Paying Agent”

	 	2.3	 
	“Payment Default

	 	6.1	 
	“Physical Notes”

	 	2.1	(b)
	“Private Placement Legend”

	 	2.13	 
	“Purchase Date”

	 	4.13	(h)
	“Registrar”

	 	2.3	 
	“Related Investment”

	 	4.13	(e)
	“Release Notice”

	 	12.4	 
	“Required Filing Dates”

	 	4.6	 
	“S&P”

	 	1.1	 
	“Unused Proceeds”

	 	4.14	(c)
	“Unused Proceeds Offer”

	 	4.15	(d)
	“Unused Proceeds Offer Amount”

	 	4.15	(d)
	“Unused Proceeds Offer Period”

	 	4.15	(d)

 

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          SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to
the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this
Indenture. The following TIA terms have the following meanings:

     “Commission” means the SEC.

     “indenture securities” means the Notes.

     “indenture security holder” means a Noteholder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

     “obligor” on the indenture securities means Terra Capital, the Guarantors or any other
obligor on the indenture securities.

          All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule have the meanings assigned to them by such
definitions.

     SECTION 1.4. Rules of Construction. (a) Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

     (3) “or” is not exclusive;

     (4) “including” means including without limitation;

     (5) words in the singular include the plural and words in the plural include the
singular;

     (6) the principal amount of any non-interest-bearing or other discount security at any
date shall be the principal amount thereof that would be shown on a balance sheet of Parent
dated such date prepared in accordance with GAAP;

     (7) all references to $, US$, dollars or United States dollars shall refer to the
lawful currency of the United States; and

     (8) “herein,” “hereof” and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.

 

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ARTICLE 2

THE NOTES

          SECTION 2.1. Form and Dating.

          (a) The Initial Notes and the Trustee’s certificate of authentication relating thereto shall
be substantially in the form of Exhibit A hereto. The Exchange Notes and the Trustee’s certificate
of authentication relating thereto shall be substantially in the form of Exhibit B hereto. The
Notes may have notations, legends or endorsements required by law, stock exchange rules, agreements
to which Parent or Terra Capital is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to Parent or Terra Capital, as the case may be).
Each Note shall be dated the date of its authentication. If required, the Notes may bear the
appropriate legend regarding any original issue discount for federal income tax purposes. Each
Note shall have an executed Guarantee from each of the Guarantors.

          The terms and provisions contained in the Notes, annexed hereto as Exhibits A and B, shall
constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable,
Terra Capital, the Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.

          (b) Global Notes. The Notes offered and sold in reliance on Rule 144A and Notes offered and
sold in reliance on Regulation S shall be issued initially in the form of one or more permanent
Global Notes (“Global Notes”) in definitive, fully registered form without interest coupons, in
substantially the form of Exhibit A, which shall be deposited on behalf of the purchasers of the
Notes represented thereby with the Trustee, at the Trustee’s office in New York City, as custodian
for the Depository, and registered in the name of the Depository or a nominee of the Depository,
duly executed by Terra Capital (and having an executed Guarantee endorsed thereon) and
authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Section
2.13. The aggregate principal amount of the Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depository or its nominee in
the limited circumstances hereinafter provided.

          Securities issued in exchange for interests in Global Notes pursuant to Section 2.6 may be
issued in the form of permanent certificated Securities in registered form in substantially the
form set forth in Exhibit A (the “Physical Notes”).

          SECTION 2.2. Execution and Authentication. An Officer of Terra Capital and each Guarantor
shall sign the Notes and the Guarantees, respectively, by manual or facsimile signature. If an
Officer whose signature is on a Note no
longer holds that office at the time the Trustee authenticates the Note, the Note shall be
valid nevertheless. A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate
and make available for delivery (i) Initial Notes for original issue in an aggregate principal
amount of $330,000,000, (ii) Exchange Notes from time to time for issue only in exchange for a like
principal amount of Initial Notes, in each case, upon a written order of Terra Capital signed

 

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by an
Officer of Terra Capital and (iii) subject to Section 4.9, Additional Notes. Such order shall
specify the amount of the Notes to be authenticated and the date on which the Notes are to be
authenticated. The aggregate principal amount of Notes outstanding at any time may not exceed
$330,000,000 except as provided in Section 2.7. The Trustee may appoint an authenticating agent
acceptable to Terra Capital to authenticate the Notes, upon the consent of Terra Capital to such
appointment. Unless limited by the terms of such appointment, an authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An authenticating agent has
the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

          SECTION 2.3. Registrar and Paying Agent. Terra Capital shall maintain an office or agency
where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an
office or agency where Securities may be presented for payment (the “Paying Agent”). The
Registrar, acting on behalf of and as agent for Terra Capital, shall keep a register (the “Notes
Register”) of the Notes and of their transfer and exchange. Terra Capital may have one or more
co-registrars and one or more additional paying agents.

          The term “Paying Agent” includes any additional paying agent. Terra Capital shall enter into
an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to
this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. Terra Capital shall notify the Trustee of
the name and address of any such agent. If Terra Capital fails to maintain a Registrar or Paying
Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.7. Terra Capital or a Subsidiary thereof may act as Paying Agent, Registrar,
co-Registrar or transfer agent.

          Terra Capital initially appoints the Trustee as Registrar and Paying Agent in connection with
the Notes, until such time as the Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other agent may resign upon 30 days’ notice to Terra
Capital.

          SECTION 2.4. Paying Agent To Hold Money in Trust. On or prior to each due date of the
principal and interest on any Note, Terra Capital shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. Terra Capital shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment
of principal of or interest on the Notes and shall notify the Trustee of any default by Terra
Capital in making any such payment. If Terra Capital or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. Terra Capital at any time may require a Paying Agent to pay all money held by
it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with
this Section, the Paying Agent shall have no further liability for the money delivered to the
Trustee.

          SECTION 2.5. Holder Lists. The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of Holders. If the
Trustee is not the Registrar, Terra Capital shall furnish to the Trustee, in writing at least five
Business

 

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Days before each interest payment date and at such other times as the Trustee may request
in writing, a list in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Holders; provided, however, that as long as the Trustee is the Registrar, no
such list need be furnished.

          SECTION 2.6. Transfer and Exchange. The Notes shall be issued in registered form and shall be
transferable only upon the surrender of a Note for registration of transfer. When a Note is
presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar
and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Registrar shall record in the Notes Register the transfer as requested
if the requirements of Section 8-401(1) of the UCC are met, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the designated assignee or transferee and
the old Note will be returned to Terra Capital. When Notes are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall make the exchange as requested, in the same manner, if the same
requirements are met. To permit registration of transfers and exchanges, Terra Capital shall
execute and the Trustee shall authenticate Notes and each of the Guarantors shall execute a
Guarantee thereon at the Registrar’s or co-registrar’s request. Terra Capital may require payment
of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with
any transfer or exchange pursuant to this Section. Terra Capital shall not be required to make and
the Registrar need not register transfers or exchanges of Notes selected for redemption (except, in
the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or any Notes for
a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest
payment date.

          Prior to the due presentation for registration of transfer of any Note, Terra Capital, the
Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose
name a Note is registered as the absolute owner of such Note for the purpose of receiving payment
of principal of and interest on such Note and for all other purposes whatsoever, whether or not
such Note is overdue, and none of Terra Capital, the Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.

          All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture will
evidence the same debt and will be entitled to the same benefits under this Indenture as the Notes
surrendered upon such transfer or exchange.

     With respect to Global Notes:

     (1) Each Global Note authenticated under this Indenture shall (i) be registered in the
name of the Depository designated for such Global Note or a nominee thereof, (ii) be
deposited with such Depository or a nominee thereof or custodian therefor, (iii) bear
legends as set forth in Section 2.13 and (iv) constitute a single Note for all purposes of
this Indenture.

     (2) Transfers of a Global Note shall be limited to transfers in whole but not in part
to the Depository, its successors or their respective nominees. Interests of beneficial
owners in a Global Note may be transferred or exchanged for Physical Notes in accordance
with the rules and procedures of the Depository and the provisions of Section 2.14. In
addition,

 

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a Global Note is exchangeable for certificated Notes if (i) the Depository
notifies Terra Capital that it is unwilling or unable to continue as a Depository for such
Global Note or if at any time the Depository ceases to be a clearing agency registered under
the Exchange Act, (ii) Terra Capital executes and delivers to the Trustee a notice that such
Global Note shall be so transferable, registrable, and exchangeable, and such transfers
shall be registrable or (iii) there shall have occurred and be continuing a Default. Any
Global Note that is exchangeable for certificated Notes pursuant to the preceding sentence
will be transferred to, and registered and exchanged for, certificated Notes in authorized
denominations, without legends applicable to a Global Note, and registered in such names as
the Depository holding such Global Note may direct. Subject to the foregoing, a Global Note
is not exchangeable, except for a Global Note of like denomination to be registered in the
name of the Depository or its nominee. In the event that a Global Note becomes exchangeable
for certificated Notes, (i) certificated Notes will be issued only in fully registered form
in denominations of $2,000 or integral multiples of $1,000 in excess thereof, (ii) payment
of principal, any repurchase price, and interest on the certificated Notes will be payable,
and the transfer of the certificated Notes will be registrable, at the office or agency of
Terra Capital maintained for such purposes, and (iii) no service charge will be made for any
registration or transfer or exchange of the certificated Notes, although Terra Capital may
require payment of a sum sufficient to cover any tax or governmental charge imposed in
connection therewith.

     (3) Notes issued in exchange for a Global Note or any portion thereof shall have an
aggregate principal amount equal to that of such Global Note or portion thereof to be so
exchanged, shall be registered in such names and be in such authorized denominations as the
Depository shall designate and shall bear the applicable legends provided for herein. Any
Global Note to be exchanged in whole shall be surrendered by the Depository to the Trustee.
With respect to any Global Note to be exchanged in part, either such Global Note shall be so
surrendered for exchange or, if the Trustee is acting as custodian for the Depository or its
nominee with respect to such Global Note, the principal amount thereof shall be reduced, by
an amount equal to the portion thereof to be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the
Trustee shall authenticate and deliver the Note issuable on such exchange to or upon the
order of the Depository or an authorized representative thereof.

     (4) Every Note authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Note or any portion thereof, whether pursuant to this
Section 2.6, Section 2.7, 2.9, 2.14 or otherwise, shall be authenticated and delivered in
the form of, and shall be, a Global Note, unless such Note is registered in the name of a
Person other than the Depository for such Global Note or a nominee thereof. Members of, or
participants in, the Depository (“Participants”) shall have no rights under this Indenture
with respect to any Global Note held on their behalf by the Depository or by the Trustee as
the custodian of the Depository or under such Global Note, and the Depository may be treated
by Terra Capital, the Trustee and any agent of Terra Capital or the Trustee as the absolute
owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent Terra Capital, the Trustee or any agent of Terra Capital or the
Trustee from giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Participants, the
operation of customary practices of

 

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such Depository governing the exercise of the rights of
a holder of a beneficial interest in any Global Note.

          SECTION 2.7. Replacement Notes. If a mutilated Note is surrendered to the Trustee or
Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully
taken, Terra Capital shall issue and the Trustee shall authenticate a replacement Note and the
Guarantors shall execute a Guarantee thereon if the requirements of Section 8-405 of the UCC are
met and the Holder satisfies any other reasonable requirements of the Trustee and Terra Capital.
Such Holder shall furnish an indemnity bond sufficient in the judgment of Terra Capital, the
Guarantors and the Trustee to protect Terra Capital, the Guarantors, the Trustee, the Paying Agent,
the Registrar and any co-registrar from any loss which any of them may suffer if a Note is
replaced. Terra Capital and the Trustee may charge the Holder for their expenses in replacing a
Note.

          Every replacement Note issued pursuant to the terms of this Section shall constitute an
additional obligation of Terra Capital and the Guarantors under this Indenture.

          The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Notes.

          SECTION 2.8. Outstanding Notes. Notes outstanding at any time are all Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for cancellation and those
described in this Section as not outstanding. Subject to the provisions of Section 11.6, a Note
does not cease to be outstanding because Terra Capital or an Affiliate of Terra Capital holds the
Note.

          If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee
and Terra Capital receive proof satisfactory to them that the replaced Note is held by a bona fide
purchaser.

          If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date or, pursuant to Section 8.1(a), within 91 days prior thereto,
money sufficient to pay all principal and interest payable on that redemption or maturity date
with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be,
then on and after such date such Notes (or portions thereof) cease to be outstanding and on and
after such redemption or maturity date interest on them ceases to accrue.

          SECTION 2.9. Temporary Notes. Until definitive Notes are ready for delivery, Terra Capital
may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that Terra Capital considers
appropriate for temporary Notes. Without unreasonable delay, Terra Capital shall prepare and the
Trustee shall authenticate definitive Notes and deliver them in exchange for temporary Notes.

          SECTION 2.10. Cancellation. Terra Capital at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation
and

 

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deliver such canceled Securities to Terra Capital. The Trustee shall from time to time provide
Terra Capital a list of all Securities that have been canceled as requested by Terra Capital.
Terra Capital may not issue new Securities to replace Securities it has redeemed, paid or delivered
to the Trustee for cancellation.

          SECTION 2.11. Defaulted Interest. If Terra Capital defaults in a payment of interest on the
Notes, Terra Capital shall pay defaulted interest (plus interest on such defaulted interest to the
extent lawful) in any lawful manner in accordance with Section 4.1. Terra Capital may pay the
defaulted interest to the Persons who are Holders on a subsequent special record date. Terra
Capital shall fix or cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each Holder a notice that states
the special record date, the payment date and the amount of defaulted interest to be paid.

          SECTION 2.12. CUSIP Numbers. Terra Capital in issuing the Notes may use “CUSIP” numbers (if
then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes or as contained in any notice
of a redemption and that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or omission of such
numbers. Terra Capital will promptly notify the Trustee of any change in the CUSIP numbers.

          SECTION 2.13. Restrictive Legends. Each Global Note and Physical Note that constitutes a Restricted Security or is sold in
compliance with Regulation S shall bear the following legend (the “Private Placement Legend”) on
the face thereof until after the second anniversary of the later of the Issue Date and the last
date on which Terra Capital or any Affiliate of Terra Capital was the owner of such Note (or any
predecessor note) (or such shorter period of time as permitted by Rule 144(k) under the Securities
Act or any successor provision thereunder), or such longer period of time as may be required under
the Securities Act or applicable state securities laws in the opinion of counsel for Terra Capital,
unless otherwise agreed by Terra Capital and the Holder thereof:

     “This security (or its predecessor) has not been registered under the U.S. Securities
Act of 1933, as amended (the “Securities Act”), and, accordingly, may not be offered, sold,
pledged or otherwise transferred within the United States or to, or for the account or
benefit of, U.S. persons, except as set forth in the next sentence. By its acquisition
hereof or of a beneficial interest herein, the Holder:

     (1) Represents that (a) it is a “qualified institutional buyer” (as defined in rule
144A under the Securities Act) (a “QIB”), (b) it is acquiring this security in an offshore
transaction in compliance with Regulation S under the Securities Act, or (c) it is an
institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) (an “IAI”);

     (2) Agrees that it will not resell or otherwise transfer this security except (a) to
the company or any of its subsidiaries, (b) to a person whom the seller reasonably believes
is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting
the requirements of Rule 144A, (c) in an offshore transaction meeting the

 

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requirements of
Rule 903 or 904 of Regulation S under the Securities Act, (d) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (e) to an IAI that, prior to such
transfer, furnishes the Trustee a signed letter containing certain representations and
agreements relating to the transfer of this security (the form of which can be obtained from
the Trustee) and, if such transfer is in respect of an aggregate principal amount of
securities less than $250,000, an opinion of counsel acceptable to the company, if the
company so requests, that such transfer is in compliance with the Securities Act, (f) in
accordance with another exemption from the registration requirements of the Securities Act
(and based upon an opinion of counsel acceptable to the company), or (g) pursuant to an
effective registration statement under the Securities Act and, in each case, in accordance
with the applicable securities laws of any state of the United States or any other
applicable jurisdiction; and

     (3) agrees that it will deliver to each person to whom this security or an interest
herein is transferred a notice substantially to the effect of this legend.

     As used herein, the terms “offshore transaction” and “United States” have the meanings given
to them by Rule 902 of Regulation S under the Securities Act. The indenture governing this
security contains a provision requiring the trustee to refuse to register any transfer of
this security in violation of the foregoing.”

     Each Global Note shall also bear the following legend on the face thereof:

     Unless and until it is exchanged in whole or in part for securities in definitive form,
this security may not be transferred except as a whole by the depository to a nominee of the
depository, or by any such nominee of the depository, or by the depository or nominee of
such successor depository or any such nominee to a successor depository or a nominee of such
successor depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation (“DTC”), to an issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is registered
in the name of Cede & Co. or such other name as is requested by an authorized representative
of DTC (and any payment hereon is made to Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), any transfer, pledge or other use hereof for value
or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.

     Transfers of this global note shall be limited to transfers in whole, but not in part,
to nominees of Cede & Co. or to a successor thereof or such successor’s nominee and
transfers of portions of this global note shall be limited to transfers made in accordance
with the restrictions set forth in Section 2.14 of the Indenture referred to herein.

     SECTION 2.14. Special Transfer Provisions.

          (a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The
following provisions shall apply with respect to the registration of any proposed transfer of

 

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a Security constituting a Restricted Security to any Institutional Accredited Investor which is not a
QIB or to any Non-U.S. Person:

     (i) the Registrar shall register the transfer of any Note constituting a Restricted
Security whether or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the second anniversary of the Issue Date (provided, however, that neither
Terra Capital nor any Affiliate of Terra Capital has held any beneficial interest in such
Note, or portion thereof, at any time on or prior to the second anniversary of the Issue
Date) or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit C hereto and any legal opinions
and certifications required thereby or (2) in the case of a transfer to a Non-U.S. Person,
the proposed transferor has delivered to the Registrar a certificate substantially in the
form of Exhibit D hereto; and

     (ii) if the proposed transferor is a Participant holding a beneficial interest in the
Global Note, upon receipt by the Registrar of (x) the certificate, if any, required by
paragraph (i) above and (y) written instructions given in accordance with the Depository’s
and the Registrar’s procedures,

whereupon (a) the Registrar shall reflect on its books and records the date and (if the transfer
does not involve a transfer of outstanding Physical Notes) a decrease in the principal amount of
such Global Note in an amount equal to the principal amount of the beneficial interest in the
Global Note to be transferred, and (b) Terra Capital shall execute, the Guarantors shall execute
the Guarantees on, and the Trustee shall authenticate and deliver, one or more Physical Notes of
like tenor and amount.

          (b) Transfers to QIBs. The following provisions shall apply with respect to the registration
of any proposed transfer of a Security constituting a Restricted Security to a QIB (excluding
transfers to Non-U.S. Persons):

     (i) the Registrar shall register the Transfer if such Transfer is being made by a
proposed transferor who has checked the box provided for on the form of Note stating, or has
otherwise advised Terra Capital and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised Terra Capital and the
Registrar in writing, that it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it and any such account is
a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information regarding Terra
Capital as it has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided by Rule 144A; and

     (ii) if the proposed transferee is a Participant, and the Notes to be transferred
consist of Physical Notes which after transfer are to be evidenced by an interest in a
Global Note, upon receipt by the Registrar of written instructions given in accordance with
the Depository’s and the Registrar’s procedures, the Registrar shall reflect on its books
and records the date and

 

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an increase in the principal amount of such Global Note in an
amount equal to the principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.

          (c) Private Placement Legend. Upon the transfer, exchange or replacement of Securities not
bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the second anniversary of the Issue Date (provided,
however, that neither Terra Capital nor any Affiliate of Terra Capital has held any beneficial
interest in such Note, or portion thereof, at any time prior to or on the second anniversary of the
Issue Date), or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to Terra Capital and the Trustee to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance with the provisions
of the Securities Act.

          (d) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder
of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture
and in the Private Placement Legend and agrees that it will transfer such Note only as provided in
this Indenture.

          The Registrar shall retain copies of all letters, notices and other written communications
received pursuant to Section 2.6 or this Section 2.14. Terra Capital shall have the right to
inspect and make copies of all such letters, notices or other written communications at any
reasonable time during the Registrar’s normal business hours upon the giving of reasonable written
notice to the Registrar.

          (e) Transfers of Notes Held by Affiliates. Any certificate (i) evidencing a Note that has
been transferred to an Affiliate of Terra Capital within two years after the Issue Date, as
evidenced by a notation on the Assignment Form for such transfer or in the representation letter
delivered in respect thereof or (ii) evidencing a Note that has been acquired from an Affiliate
(other than by an Affiliate) in a transaction or a chain of transactions not involving any public
offering, shall, until two years after the last date on which either Terra Capital or any Affiliate
of Terra Capital was an owner of such Note, in each case, bear a legend in substantially the form
set forth in Section 2.13, unless otherwise agreed by Terra Capital (with written notice thereof to
the Trustee).

ARTICLE 3

REDEMPTION

     SECTION 3.1. Notices to Trustee. If Terra Capital elects to redeem Notes pursuant to
paragraph 5 thereof, it shall notify the Trustee in writing of the redemption date, the principal
amount of Notes to be redeemed and the paragraph of the Notes pursuant to which the redemption will
occur. Terra Capital shall give each notice to the Trustee provided for in this Section at least
45 days before the redemption date unless the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers’ Certificate from Terra Capital to the effect that such
redemption will comply with the provisions herein.

 

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          SECTION 3.2. Selection of Notes To Be Redeemed. If fewer than all the Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed on a pro rata basis or by lot or by
such other method that complies with applicable legal and securities exchange requirements, if any,
and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance
with methods generally used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Notes not previously called for redemption.
Notes and portions of them the Trustee selects shall be in amounts of $2,000 or integral multiples
of $1,000 in excess thereof. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee shall notify Terra
Capital promptly of the Notes or portions of Notes to be redeemed. If any Note is to be redeemed
in part only, the notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon cancellation of the original
Note. In the event Terra Capital is required to make an offer to purchase Notes pursuant to
Section 4.8, 4.13 or 4.15 and the amount available for such offer is not evenly divisible by
$1,000, the Trustee shall promptly refund to Terra Capital any remaining funds, which in no event
will exceed $2,000.

          SECTION 3.3. Notice of Redemption. At least 30 days but not more than 60 days before a date
for redemption of Notes, Terra Capital shall mail a notice of redemption by first-class mail to the
registered address appearing in the Notes Register of each Holder of Notes to be redeemed. The
notice shall identify the Notes to be redeemed and shall state:

     (1) the redemption date;

     (2) the redemption price;

     (3) the name and address of the Paying Agent;

     (4) that Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price;

     (5) if fewer than all the outstanding Notes are to be redeemed, the identification and
principal amounts of the particular Notes to be redeemed;

     (6) that, unless Terra Capital defaults in making such redemption payment, interest on
Notes (or portion thereof) called for redemption ceases to accrue on and after the
redemption date;

     (7) the paragraph of the Notes pursuant to which the Notes called for redemption are
being redeemed;

     (8) the CUSIP number, if any, printed on the Notes being redeemed; and

     (9) that no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the Notes.

 

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          At Terra Capital’s request, the Trustee shall give the notice of redemption in Terra Capital’s
name and at Terra Capital’s sole expense. In such event, Terra Capital shall provide the Trustee
with the information required by this Section.

          SECTION 3.4. Effect of Notice of Redemption. Once notice of redemption is mailed, Notes
called for redemption become due and payable on the redemption date and at the redemption price
stated in the notice. A notice of redemption may not be conditional. Upon surrender to the Paying
Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest
to the redemption date. Such notice if mailed in the manner herein provided shall be conclusively
presumed to have been given, whether or not the Holder receives such notice. Failure to give
notice or any defect in the notice to any Holder shall not affect the validity of the notice to any
other Holder.

          SECTION 3.5. Deposit of Redemption Price. Prior to 11:00 a.m. (New York City time) on the redemption date, Terra Capital shall
deposit with the Trustee or Paying Agent (or, if Parent or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest
(if any) on all Notes or portions thereof to be redeemed on that date other than Notes or portions
of Notes called for redemption which have been delivered by Terra Capital to the Trustee for
cancellation.

          SECTION 3.6. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part (with,
if Terra Capital or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to Terra Capital and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), Terra Capital shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes of
any authorized denomination as requested by such Holder, in aggregate principal amount equal to and
in exchange for the unredeemed portion of the principal of the Note so surrendered, except that if
a Global Note is so surrendered, Terra Capital shall execute, and the Trustee shall authenticate
and deliver to the Depository for such Global Note, without service charge, a new Global Note in
denomination equal to and in exchange for the unredeemed portion of the principal of the Global
Note so surrendered.

ARTICLE 4

COVENANTS

          SECTION 4.1. Payment of Notes. Terra Capital shall promptly pay the principal of and interest
on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal
and interest shall be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all principal and interest
then due. Terra Capital shall pay interest on overdue principal at 1% per annum in excess of the
rate per annum set forth in the Notes, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful. Interest will be computed on a basis of a 360-day
year of twelve 30-day months.

 

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          SECTION 4.2. Corporate Existence. Subject to Article 5 and Section 4.13, Parent shall do or
caused to be done, at its own cost and expense, all things necessary to, and will cause each
Restricted Subsidiary to, preserve and keep in full force and effect the corporate or partnership
existence and rights (charter and statutory), licenses and/or franchises of Parent and each
Restricted Subsidiary; provided, however, that neither Parent nor any Restricted Subsidiary shall
be required to preserve any such rights, licenses or franchises if the Board of Directors shall
reasonably determine that the preservation thereof is no longer desirable in the conduct of the
business of Terra Capital and its Subsidiaries, taken as a whole.

          SECTION 4.3. Maintenance of Office or Agency. Terra Capital shall maintain in the Borough of Manhattan, the City of New York, an office
or agency (which may be an office or agency of the Trustee, Registrar or co-Registrar), where Notes
may be surrendered for registration of transfer or exchange or for presentation for payment and
where notices and demands to or upon Terra Capital in respect of the Notes and this Indenture may
be served. Terra Capital will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time Terra Capital shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or served at the address
of the Trustee’s office located in New York City.

          Terra Capital may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or rescission shall in any
manner relieve Terra Capital of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes. Terra Capital will give prompt written notice
to the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.

          Terra Capital hereby initially designates the Trustee’s office or agency in New York City as
an agency of Terra Capital in accordance with Section 2.3.

          SECTION 4.4. Payment of Taxes and Other Claims. Parent shall, and shall cause each of its
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, all taxes, assessments and governmental charges levied or imposed upon its or its
Subsidiaries’ income, profits or property; provided, however, that none of Parent or its
Subsidiaries shall be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being contested in good
faith by appropriate negotiations or proceedings and for which disputed amounts adequate reserves
have been made in accordance with GAAP.

          SECTION 4.5. Additional Guarantees.

          (a) If Parent or any Restricted Subsidiary Transfers, acquires or creates another Restricted
Subsidiary (other than any Foreign Subsidiary or any Immaterial Subsidiary) after the date of this
Indenture, then that newly acquired or created Restricted Subsidiary shall, within ten Business
Days of the date on which it was acquired or created, execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such
Restricted Subsidiary

 

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shall fully and unconditionally guarantee all of Issuer’s obligations under
the Notes and this Indenture on the terms set forth in this Indenture. Thereafter, such Restricted
Subsidiary shall be a Guarantor for all purposes of this Indenture until released in accordance
with Section 10.6.

          (b) If TNCLP becomes a Wholly Owned Subsidiary, TNCLP and TNLP shall, execute and deliver to
the Trustee a supplemental indenture in form reasonably satisfactory to the
Trustee pursuant to which TNCLP and TNLP shall fully and unconditionally guarantee all of
Issuer’s obligations under the Notes and this Indenture on the terms set forth in Article 10.
Thereafter, each of TNCLP and TNLP shall be a Guarantor for all purposes of this Indenture until
released in accordance with Section 10.6.

          SECTION 4.6. SEC Reports. Whether or not Terra Capital and the Guarantors are then subject to
Section 13(a) or 15(d) of the Exchange Act, Terra Capital and the Guarantors shall electronically
file with the Commission, so long as the Notes are outstanding, the annual reports, quarterly
reports and other periodic reports that Terra Capital and the Guarantors would be required to file
with the Commission pursuant to Section 13(a) or 15(d) if Terra Capital and the Guarantors were so
subject, and such documents shall be filed with the Commission on or prior to the respective dates
(the “Required Filing Dates”) by which Issuer and the Guarantors would be required so to file such
documents if Terra Capital and the Guarantors were so subject, unless, in any case, if such filings
are not then permitted by the Commission.

          If such filings with Commission are not then permitted by the Commission, or such filings are
not generally available on the Internet free of charge, Issuer and the Guarantors will, within 15
days of each Required Filing Date, transmit by mail to noteholders, as their names and addresses
appear in the Note register, without cost to such noteholders, and file with the Trustee copies of
the annual reports, quarterly reports and other periodic reports that Issuer and the Guarantors
would be required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act if Issuer and the Guarantors were subject to such Section 13(a) or 15(d), and promptly upon
written request, supply copies of such documents to any prospective holder or beneficial owner at
Issuer’s cost.

          So long as the rules and regulations of the Commission would allow (including pursuant to any
applicable exemptive relief) the Issuer and the Guarantors to file periodic reports or information
(if they were required by the Exchange Act to file such reports or information) on a consolidated
or combined basis, the Issuer and the Guarantors will be deemed to have satisfied their
requirements in the above paragraphs if Parent files the reports and other information of the types
otherwise so required within the applicable time periods. Parent or the Issuer, as applicable,
also will comply with other provisions of TIA § 314(a).

          SECTION 4.7. Compliance Certificate. Issuer shall deliver to the Trustee within 120 days
after the end of each fiscal year of Issuer an Officers’ Certificate, one of the signers of which
shall be the principal executive, financial or accounting officer of Issuer, stating that in the
course of the performance by the signers of their duties as Officers of Issuer they would normally
have knowledge of any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default, its status and what
action Issuer is taking or proposes to take with respect thereto. Issuer and the Guarantors also
shall comply with TIA Section 314(a)(4).

 

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          SECTION 4.8. Change of Control.

          (a) Upon the occurrence of a Change of Control, each Holder shall have the right to require
Terra Capital to purchase all or a portion (equal to $2,000 or an integral multiple of $1,000 in
excess thereof) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the date fixed for redemption), in accordance with the terms
contemplated in Section 4.8(b).

          (b) Within 30 days following any Change of Control, Terra Capital shall mail a notice to each
Holder, with a copy to the Trustee, stating

     (1) that a Change of Control has occurred and that such Holder has the right to require
Terra Capital to purchase such Holder’s Notes at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record date to receive
interest on an interest payment date that is on or prior to the date fixed for purchase);

     (2) the purchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and

     (3) the instructions as determined by Terra Capital, consistent with this Section 4.8,
that a Holder must follow in order to have its Notes purchased.

          (c) On the purchase date, all Notes purchased by Terra Capital under this Section 4.8 shall be
delivered to the Trustee for cancellation, and Terra Capital shall pay the purchase price plus
accrued and unpaid interest, if any, to the Holders entitled thereto.

          (d) Terra Capital shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in connection with the
repurchase of Notes pursuant to this Section 4.8. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section 4.8, Terra Capital
shall comply with the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the covenant described hereunder by virtue thereof.

          SECTION 4.9. Limitation on Incurrence of Indebtedness.

          (a) Parent shall not, and shall not permit any Restricted Subsidiary to, incur, directly or
indirectly, any Indebtedness; provided that Issuer or any Guarantor may incur Indebtedness if,
immediately after giving effect to such incurrence, the Consolidated Coverage Ratio is at least 2.0
to 1.0 (this proviso, the “Coverage Ratio Exception”).

          (b) The foregoing Section 4.9(a) will not prohibit incurrence of the following Indebtedness
(collectively, “Permitted Indebtedness”):

 

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     (1) the Notes issued on the Issue Date and any related Guarantees;

     (2) Indebtedness of Parent or any Restricted Subsidiary to the extent outstanding on
the Issue Date (other than Indebtedness under the Credit Facility);

     (3) Indebtedness of Parent or any Restricted Subsidiary under the Credit Facility in an
aggregate amount at any time outstanding pursuant to this clause (3) (including amounts
outstanding on the date of this Indenture) not to exceed the greater of:

     (x) $225.0 million; and

     (y) the sum of (x) 70% of the net book value of the inventory of Parent and the
Restricted Subsidiaries and (y) 85% of the net book value of the accounts receivable
of Parent and the Restricted Subsidiaries, in each case determined on a consolidated
basis in accordance with GAAP;

     (4) Refinancing Indebtedness in respect of Indebtedness incurred pursuant to the
Coverage Ratio Exception, clause (1) of this paragraph (including the Exchange Notes and any
Guarantees thereof), clause (2) of this paragraph (other than any Indebtedness owed to
Parent or any of its Subsidiaries) or this clause (4);

     (5) Indebtedness owed by Parent or any Restricted Subsidiary to Parent or any
Restricted Subsidiary; provided that

     (x) any such Indebtedness owed by Issuer shall be subordinated by its terms to
the prior payment in full in cash of all Obligations with respect to the Notes, and
any such Indebtedness owed by any Guarantor (other than to Issuer or any other
Guarantor) shall be subordinated by its terms to the prior payment in full in cash
of all Obligations with respect to the Guarantee of such Guarantor; and

     (y) if such Indebtedness is held by a Person other than Parent or any
Restricted Subsidiary, Parent or such Restricted Subsidiary shall be deemed to have
incurred Indebtedness not permitted by this clause (5);

     (6) (x) the guarantee by Issuer or any Guarantor of Indebtedness of Issuer or a
Guarantor and (y) the guarantee by any Restricted Subsidiary that is not a Guarantor of
Indebtedness of any other Restricted Subsidiary that is not a Guarantor; provided that, in
each case, the Indebtedness being guaranteed is incurred pursuant to the Coverage Ratio
Exception or is Permitted Indebtedness;

     (7) Hedging Obligations;

     (8) industrial revenue bonds or similar tax-exempt Indebtedness, Purchase Money
Indebtedness and Capital Lease Obligations of Parent or any Restricted Subsidiary incurred
to finance the acquisition, construction or improvement of any assets (including capital

 

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expenditures of Parent or any Restricted Subsidiary), and Refinancings thereof, in an
aggregate amount not to exceed $25.0 million at any time outstanding;

     (9) Indebtedness of any Foreign Subsidiary in an aggregate amount not to exceed $25.0
million at any time outstanding;

     (10) Indebtedness represented by letters of credit in order to provide security for
workers’ compensation claims, payment obligations in connection with self-insurance or
similar requirements of Parent or any Restricted Subsidiary in the ordinary course of
business;

     (11) customary indemnification, adjustment of purchase price or similar obligations, in
each case, incurred in connection with the acquisition or disposition of any assets of
Parent or any Restricted Subsidiary (other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such assets for the purpose of financing such
acquisition);

     (12) obligations in respect of performance bonds and completion, guarantee, surety and
similar bonds in the ordinary course of business;

     (13) Indebtedness arising from the honoring by a bank or other financial institution of
a check, draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds; provided that such Indebtedness is
extinguished within five Business Days of incurrence;

     (14) Indebtedness arising in connection with endorsement of instruments for deposit in
the ordinary course of business;

     (15) Indebtedness consisting of take-or-pay obligations contained in supply agreements
relating to products, services or commodities of a type that Parent or any of its
Subsidiaries uses or sells in the ordinary course of business;

     (16) Indebtedness the net proceeds of which are used solely to pay Federal, state or
local taxes arising as a result of any recharacterization of TNCLP or TNLP as an association
taxable as a corporation as a result of changes after the Issue Date in law, regulation or
the interpretation thereof by governmental authorities;

     (17) Acquired Indebtedness; provided that after giving effect to such acquisition or
merger, either

     (i) the Issuer would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Coverage Ratio Exception; or

     (ii) the Consolidated Coverage Ratio of the Issuer and the Restricted Subsidiaries is
greater than immediately prior to such acquisition or merger;

 

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     (18) guarantees by Terra UK of Terra UK Customer Debt; provided that

     (x) the aggregate principal amount of the Indebtedness so guaranteed by Terra
UK with respect to any customer at any time shall not exceed 50% of the aggregate
principal amount of the Terra UK Customer Debt of such customer outstanding at such
time; and

     (y) the aggregate principal amount of Terra UK Customer Debt guaranteed by
Terra UK at any time during any fiscal year shall not exceed (x) £ 15,000,000 minus
(y) the aggregate amount of payments made by Terra UK under all such guarantees
during such fiscal year; and

     (19) additional Indebtedness in an aggregate amount not to exceed the greater of (x)
$45.0 million and (y) 3% of the Total Assets at any time outstanding.

          (c) For purposes of determining compliance with this Section 4.9, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness
described in clauses (1) through (19) above or is entitled to be incurred pursuant to the Coverage
Ratio Exception, Issuer shall, in its sole discretion, classify such item of Indebtedness and may
divide and classify such Indebtedness in more than one of the types of Indebtedness described
(except that Indebtedness outstanding under the Credit Facility on the Issue Date shall be deemed
to have been incurred under clause (3) above) and may later reclassify such item into any one or
more of the categories of Indebtedness described in clauses (3) through (18) above (provided that
at the time of reclassification it meets the criteria in such category or categories). The maximum
amount of Indebtedness that Parent or any Restricted Subsidiary may incur pursuant to this Section
4.9 will not be deemed to be exceeded solely as the result of fluctuations in the exchange rates of
currencies. In determining the amount of Indebtedness outstanding under one of the clauses above,
the outstanding principal amount of any particular Indebtedness of any Person shall be counted only
once and any obligation of such Person or any other Person arising under any guarantee, Lien,
letter of credit or similar instrument supporting such Indebtedness shall be disregarded so long as
it is permitted to be incurred by the Person or Persons incurring such obligation.

          (d) Notwithstanding the foregoing, Parent shall not, and shall not permit Issuer or any other
Guarantor to, incur any Indebtedness that purports to be by its terms (or by the terms of any
agreement or instrument governing such Indebtedness) subordinated to any other Indebtedness of
Parent, Issuer or of such other Guarantor, as the case may be, unless such Indebtedness is also by
its terms made subordinated to the Notes or the Guarantee of such Guarantor, as applicable, to at
least the same extent as such Indebtedness is subordinated to such other Indebtedness of Issuer or
such Guarantor, as the case may be.

          SECTION 4.10. Limitation on Restricted Payments.

          (a) Parent shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, declare or make a Restricted Payment if

     (1) a Default shall have occurred and is continuing or would result therefrom;

 

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     (2) Issuer could not incur at least $1.00 of additional Indebtedness pursuant to the
Coverage Ratio Exception; or

     (3) the aggregate amount of such Restricted Payment together with all other Restricted
Payments (the amount of any Restricted Payments made in assets other than cash to be valued
at its Fair Market Value) declared or made since the Issue Date (other than any Restricted
Payment described in clause (2), (3), (4), (5), (6) or (8) of Section 4.10(b)) would exceed
the sum (the “Basket”) of:

     (i) 50% of the Consolidated Net Income accrued during the period (treated as
one accounting period) from December 31, 2006 to the end of the most recent fiscal
quarter prior to the date of such Restricted Payment for which internal financial
statements are available (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); plus

     (ii) the aggregate Net Cash Proceeds received by Parent from the issuance and
sale (other than to a Subsidiary of Parent) of Qualified Stock subsequent to the
Issue Date; plus

     (iii) the amount by which Indebtedness or Disqualified Stock incurred or issued
subsequent to the Issue Date is reduced on Parent’s consolidated balance sheet upon
the conversion or exchange (other than by a Subsidiary of Parent) into Qualified
Stock (less the amount of any cash, or the Fair Market Value of any other asset,
distributed by Parent or any Restricted Subsidiary upon such conversion or
exchange); provided that such amount shall not exceed the aggregate Net Cash
Proceeds received by Parent or any Restricted Subsidiary from the issuance and sale
(other than to a Subsidiary of Parent) of such Indebtedness or Disqualified Stock;
plus

     (iv) to the extent not included in the calculation of the Consolidated Net
Income referred to in (i), an amount equal to, without duplication;

     (x) 100% of the aggregate net proceeds (including the Fair Market Value
of assets other than cash) received by Parent or any Restricted Subsidiary
upon the sale or other disposition of any Investment (other than a Permitted
Investment) made by Parent or any Restricted Subsidiary since the Issue
Date; plus

     (y) the net reduction in Investments (other than Permitted Investments)
in any Person resulting from dividends, repayments of loans or advances or
other Transfers of assets subsequent to the Issue Date, in each case to
Parent or any Restricted Subsidiary from such Person; plus

     (z) to the extent that the Basket was reduced as the result of the
designation of an Unrestricted Subsidiary, the portion (proportionate to Parent’s equity interest in such Subsidiary) of the Fair Market Value of
the net

 

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assets of such Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is redesignated, or liquidated or merged into, a Restricted
Subsidiary;

provided that the foregoing shall not exceed, in the aggregate, the amount of all
Investments which previously reduced the Basket.

     (b) The provisions of Section 4.10(a) shall not prohibit the following:

     (1) dividends paid within 90 days after the date of declaration thereof if at such date
of declaration such dividend would have been permitted under this Indenture;

     (2) any repurchase, redemption, retirement or other acquisition of Capital Stock or
Subordinated Obligations made in exchange for, or out of the proceeds of the substantially
concurrent issuance and sale (other than to a Subsidiary of Parent) of, Qualified Stock or,
with respect to any such Subordinated Obligations, in exchange for or out of the proceeds of
the substantially concurrent incurrence and sale (other than to a Subsidiary of Parent) of
Refinancing Indebtedness thereof; provided that (x) no such exchange or issuance and sale
shall increase the Basket and (y) no Default has occurred and is continuing or would occur
as a consequence thereof;

     (3) the purchase, redemption, acquisition, cancellation or other retirement for a
nominal value per right of any rights granted to all the holders of Common Stock of Parent
pursuant to any shareholders’ rights plan adopted for the purpose of protecting shareholders
from unfair takeover tactics; provided that any such purchase, redemption, acquisition,
cancellation or other retirement of such rights shall not be for the purpose of evading the
limitations of this Section (all as determined in good faith by the Board of Directors);

     (4) payments by Parent or any Restricted Subsidiary in respect of Indebtedness of
Parent or any Restricted Subsidiary owed to Parent or another Restricted Subsidiary;

     (5) repurchases of Capital Stock deemed to occur upon the exercise of stock options or
warrants if such Capital Stock represents a portion of the exercise price thereof and
repurchases of Capital Stock deemed to occur upon the withholding of a portion of the
Capital Stock granted or awarded to an employee to pay for the taxes payable by such
employee upon such grant or award;

     (6) if no Default has occurred and is continuing or would occur as a consequence
thereof, the declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued after the Issue Date;
provided that, at the time of the issuance of such Designated Preferred Stock and after
giving pro forma effect thereto, Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Coverage Ratio Exception;

     (7) repurchases of the Capital Stock of the Parent pursuant to a stock buyback program
of the Parent so long as before and after giving effect to such repurchases the Consolidated Leverage Ratio is less than 3.0 to 1.0; provided that any such repurchases of
Capital

 

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Stock shall not be exceed $25.0 million in any twelve month period and shall not
exceed $75.0 million in the aggregate; or

     (8) Restricted Payments in an aggregate amount since the Issue Date not to exceed the
greater of $45.0 million and 3% of Total Assets at the time made.

          SECTION 4.11. Limitation on Liens. Parent shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, incur any Lien of any kind on any asset of Parent or any
Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary), whether owned at the
Issue Date or thereafter acquired, or any income or profits therefrom or assign or convey any right
to receive income therefrom, except Permitted Liens, unless the Notes and the Guarantees are
secured on an equal and ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien; provided that if the obligations so secured are
subordinated by their terms to the Notes or a Guarantee, the Lien securing such obligations will
also be so subordinated by its terms to the Notes and the Guarantees at least to the same extent.

          SECTION 4.12. Limitation on Transactions with Affiliates. (a) Parent shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, in one transaction or series of
related transactions, transfer any of its assets to, or purchase any assets from, or enter into any
contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any
affiliate of Parent (an “Affiliate Transaction”), unless the terms thereof are no less favorable to
Parent or such Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm’s-length dealings with a Person that is not such an affiliate; provided that the
Board of Directors must approve each Affiliate Transaction that involves aggregate payments or
other assets or services with a Fair Market Value in excess of $10.0 million. This approval must
be evidenced by a board resolution that states that the Board of Directors has determined that the
transaction complies with the foregoing provisions; provided, further that if Parent or any
Restricted Subsidiary enters into an Affiliate Transaction that involves aggregate payments or
other assets or services with a Fair Market Value in excess of $20.0 million, then prior to the
consummation of such Affiliate Transaction, Parent must obtain a favorable opinion from an
Independent Financial Advisor that it has determined such Affiliate Transaction to be fair, from a
financial point of view, to the Holders, and deliver that opinion to the Trustee.

          (b) The provisions of clause (a) above will not prohibit the following:

     (1) transactions exclusively between or among (a) Parent and one or more Restricted
Subsidiaries or (b) Restricted Subsidiaries; provided, in each case, that no affiliate of
Parent (other than another Restricted Subsidiary) owns Capital Stock in any such Restricted
Subsidiary;

     (2) customary director, officer and employee compensation (including bonuses) and other
benefits (including retirement, health, stock option and other benefit plans) and
indemnification arrangements, in each case approved by the Board of Directors;

     (3) the entering into of a tax sharing agreement, or payments pursuant thereto, between
Parent and/or one or more Subsidiaries, on the one hand, and any other Person with which
Parent or such Subsidiaries are required or
permitted to file a consolidated tax return or

 

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with which Parent or such Subsidiaries are part of a consolidated group for tax purposes, on
the other hand, which payments by Parent and the Restricted Subsidiaries are not in excess
of the tax liabilities that would have been payable by them on a stand-alone basis;

     (4) Restricted Payments which are made in accordance with Section 4.10 and Investments
constituting Permitted Investments;

     (5) any transaction with an affiliate where the only consideration paid by Parent or
any Restricted Subsidiary is Qualified Stock;

     (6) the provision of management, financial and operational services by Parent and its
Subsidiaries to affiliates of Parent in which Parent or any Restricted Subsidiary has an
Investment and the payment of compensation for such services; provided that the Board of
Directors has determined that the provision of such services is in the best interests of
Parent and the Restricted Subsidiaries;

     (7) transactions between Parent or any Subsidiary and any Securitization Entity in
connection with a Qualified Securitization Transaction, in each case provided that such
transactions are not otherwise prohibited by this Indenture;

     (8) transactions with a Person that is an affiliate solely because Parent or any
Restricted Subsidiary owns Capital Stock in such Person; provided that no affiliate of
Parent (other than a Restricted Subsidiary) owns Capital Stock in such Person; or

     (9) purchases and sales of raw materials or inventory in the ordinary course of
business on market terms.

          SECTION 4.13. Limitation on Asset Sales.

          (a) Parent shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, consummate any Asset Sale unless:

     (i) Parent or such Restricted Subsidiary receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the assets included in such Asset
Sale;

     (ii) except in the case of a Permitted Asset Swap, at least 75% of the total
consideration received in such Asset Sale consists of cash, Temporary Cash Investments or
assets referred to in clause (c) below, in each case, valued at the Fair Market Value
thereof, or a combination of the foregoing; and

     (iii) any Designated Non-cash Consideration received by Parent or any Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all
other Designated Non-cash Consideration received pursuant to this provision that is at
that time outstanding, not to exceed 2% of Total Assets at the time of the receipt of such
Designated Non-

 

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cash Consideration, with the fair market value of each item of Designated
Non-cash Consideration being measured at the time received and without giving effect to
subsequent changes in value.

          (b) For purposes of Section 4.13(a)(ii) above, the following shall be deemed to be cash:

     (x) the amount (without duplication) of any Indebtedness (other than Subordinated
Obligations) of Parent or such Restricted Subsidiary that is expressly assumed by the
Transferee in such Asset Sale and with respect to which Parent or such Restricted
Subsidiary, as the case may be, is unconditionally released by the holder of such
Indebtedness; and

     (y) the amount of any obligations received from such Transferee that are within 60 days
repaid, converted into or sold or otherwise disposed of for cash or Temporary Cash
Investments (to the extent of the cash or Temporary Cash Investments actually so received).

          (c) If at any time any non-cash consideration received by Parent or any Restricted Subsidiary
in connection with any Asset Sale is repaid, converted into or sold or otherwise disposed of for
cash or Temporary Cash Investments (other than interest received with respect to any such non-cash
consideration), then the date of such repayment, conversion, sale or other disposition shall be
deemed to constitute the date of an Asset Sale hereunder and the Net Available Proceeds thereof
shall be applied in accordance with this Section 4.13.

          (d) If Parent or any Restricted Subsidiary engages in an Asset Sale, Parent or a Restricted
Subsidiary shall, no later than 365 days following the consummation thereof, apply an amount equal
to all or any of the Net Available Proceeds therefrom as follows:

     (i) to repay borrowings owing under the Credit Facility in accordance with the Credit
Facility;

     (ii) to repay amounts owing under Indebtedness (other than Subordinated Obligations)
that is secured by a Lien, which Lien is permitted by the Indenture, and to correspondingly
reduce commitments with respect thereto; and/or

     (iii) to make (i) an investment in or expenditure for assets (including Capital Stock
of any Person) that replace the assets that were the subject of the Asset Sale or in assets
(including Capital Stock of any Person) that will be used in the Permitted Business and (ii)
capital expenditures that will be used in the Permitted Business (or, in each case of (i)
and (ii), enter into a binding commitment for any such investment or expenditure); provided
that such binding commitment shall be treated as a permitted application of the Net
Available Proceeds from the date of such commitment until and only until the earlier of (x)
the date on which such investment or expenditure is consummated and (y) the 180th day
following the expiration of the aforementioned 365-day period. If the investment or
expenditure contemplated by such
binding commitment is not consummated on or before the 180th day, such commitment shall
be deemed not to have been a permitted application of Net Available Proceeds.

 

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          (e) The amount of Net Available Proceeds not applied or invested as provided in Section
4.13(d) will constitute “Excess Proceeds.”

          (f) If at any time the aggregate amount of Excess Proceeds not theretofore subject to a Net
Proceeds Offer (as defined below) totals at least $20.0 million, Issuer shall, not later than 10
Business Days after the end of the period during which Issuer is required to apply such Excess
Proceeds pursuant to Section 4.13(d) (or, if Issuer so elects, at any time within such period),
make an offer (a “Net Proceeds Offer”) to purchase from the Holders of Notes (determined on a pro
rata basis according to the accreted value or principal amount, as the case may be, of the Notes)
that may be purchased out of the Excess Proceeds (rounded down to the nearest multiple of $1,000)
on such date, at a purchase price equal to 100% of the principal amount of such Notes, plus accrued
and unpaid interest, if any, to the date of purchase. Upon completion of a Net Proceeds Offer the
amount of Excess Proceeds remaining after application pursuant to such Net Proceeds Offer (a “Net
Proceeds Deficiency”) (including payment of the purchase price for Notes duly tendered) may be used
by Issuer for general corporate purposes (to the extent not otherwise prohibited by this
Indenture).

          (g) Within 30 days after Issuer becomes obligated to make a Net Proceeds Offer, Issuer shall
be obligated to deliver to the Trustee and send, by first-class mail to each Holder, at the address
appearing in the Notes Register, a written notice stating that the Holder may elect to have his
Securities purchased by Issuer either in whole or in part (subject to prorationing as hereinafter
described in the event the Net Proceeds Offer is oversubscribed) in integral multiples of $1,000 of
principal amount, at the applicable purchase price. The notice, which shall govern the terms of
the Net Proceeds Offer, shall include such disclosures as are required by law and shall specify (i)
that the Net Proceeds Offer is being made pursuant to this Section 4.13; (ii) the purchase price
(including the amount of accrued interest, if any) for each Note and the purchase date not less
than 30 days nor more than 60 days after the date of such notice (the “Purchase Date”); (iii) that
any Note not tendered or accepted for payment will continue to accrue interest in accordance with
the terms thereof; (iv) that, unless Issuer defaults on making the payment, any Note accepted for
payment pursuant to the Net Proceeds Offer shall cease to accrue interest on and after the Purchase
Date; (v) that Holders electing to have Securities purchased pursuant to a Net Proceeds Offer will
be required to surrender their Notes to the Paying Agent at the address specified in the notice at
least three Business Days prior to the Purchase Date and must complete any form letter of
transmittal proposed by Issuer and acceptable to the Trustee and the Paying Agent; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent receives, not later than
one Business Day prior to the Purchase Date, a telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Securities the Holder delivered for purchase,
the Note certificate number (if any) and a statement that such Holder is withdrawing its election
to have such Notes purchased; (vii) that if Notes in a principal amount in excess of the aggregate
principal amount which Issuer has offered to purchase are tendered pursuant to the Net Proceeds
Offer, Issuer shall purchase Notes on a pro rata basis among the Notes tendered (with such
adjustments as may be deemed appropriate by Issuer so that only Notes in denominations of $2,000 or
integral multiples of $1,000 in excess thereof shall be acquired); (viii) that Holders whose Notes
are purchased only in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Notes surrendered; and (ix) the instructions that Holders must follow in order to
tender their Notes.

 

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          (h) Not later than the date upon which written notice of a Net Proceeds Offer is delivered to
the Trustee as provided below, Issuer shall deliver to the Trustee an Officers’ Certificate as to
(i) the amount of the Net Proceeds Offer (the “Net Proceeds Offer Amount”), (ii) the allocation of
the Net Available Proceeds from the Asset Sales pursuant to which such Net Proceeds Offer is being
made, and (iii) the compliance of such allocation with the provisions of Section 4.13(a). Upon the
expiration of the period for which the Net Proceeds Offer remains open (the “Net Proceeds Offer
Period”), Issuer shall deliver to the Trustee for cancellation the Notes or portions thereof which
have been properly tendered to and are to be accepted by Issuer. Not later than 11:00 a.m. (New
York City time) on the Purchase Date, Issuer shall irrevocably deposit with the Trustee or with a
paying agent (or, if Issuer is acting as Paying Agent, segregate and hold in trust) an amount in
cash sufficient to pay the Net Proceeds Offer Amount for all Notes properly tendered to and
accepted by Issuer. The Trustee shall, on the Purchase Date, mail or deliver payment to each
tendering Holder in the amount of the purchase price.

          (i) Holders electing to have a Note purchased will be required to surrender the Note, together
with all necessary endorsements and other appropriate materials duly completed, to Issuer at the
address specified in the notice at least three Business Days prior to the Purchase Date. Holders
will be entitled to withdraw their election in whole or in part if the Trustee or Issuer receives
not later than one Business Day prior to the Purchase Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note (which shall be $1,000 or an
integral multiple thereof) which was delivered for purchase by the Holder, the aggregate principal
amount of such Note (if any) that remains subject to the original notice of the Net Proceeds Offer
and that has been or will be delivered for purchase by Issuer and a statement that such Holder is
withdrawing his election to have such Note purchased. If at the expiration of the Net Proceeds
Offer Period the aggregate principal amount of Notes surrendered by Holders exceeds the Net
Proceeds Offer Amount, Issuer shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by Issuer so that only securities in denominations of
$2,000, or integral multiples of $1,000 in excess thereof, shall be purchased). Holders whose
Notes are purchased only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.

          (j) A Note shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the surrendering Holder.

          (k) In the event of the Transfer of substantially all (but not all) of the assets of Parent
and the Restricted Subsidiaries as an entirety to a Person in a transaction covered by and effected
in accordance with Section 5.1 the Transferee shall be deemed to have sold for cash at Fair Market
Value the assets of Parent and the Restricted Subsidiaries not so Transferred for purposes of this
Section 4.13, and shall comply with the provisions of this Section 4.13 with respect to such deemed
sale as if it were an Asset Sale (with such Fair Market Value being deemed to be Net Available
Proceeds for such purpose).

          (l) Issuer shall comply, to the extent applicable, with the requirements of Section 14(d) of
the Exchange Act and any other securities laws or regulations in connection with any purchase of Notes pursuant to this Indenture. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Indenture, Issuer shall comply
with the applicable securities

 

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laws and regulations and will not be deemed to have breached its
obligations under this Indenture by virtue thereof.

          SECTION 4.14. Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries.

          Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
create or otherwise cause or permit to exist or become effective any consensual encumbrance or
consensual restriction on the ability of any Restricted Subsidiary to:

     (a) pay dividends or make any other distributions on its Capital Stock to Parent or any
other Restricted Subsidiary or pay any Indebtedness owed to Parent or any other Restricted
Subsidiary,

     (b) make any loans or advances to, or guarantee any Indebtedness of, Parent or any
other Restricted Subsidiary, or

     (c) Transfer any of its assets to Parent or any other Restricted Subsidiary,
except:

     (1) any encumbrance or restriction (A) pursuant to an agreement in effect at or
entered into on the Issue Date (including this Indenture and the Credit Facility),
as such encumbrance or restriction is in effect on the Issue Date and (B) in the
Credit Facility having the effect of restricting Issuer or any Restricted Subsidiary
from taking any of the actions described in clauses (a), (b) or (c) above with
respect to, Parent or any intermediate holding company between Parent and Issuer;

     (2) restrictions on the Transfer of assets subject to any Lien permitted under
the Indenture imposed by the holder of such Lien;

     (3) restrictions on the Transfer of assets imposed under any agreement to sell
such assets permitted under this Indenture pending the closing of such sale;

     (4) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the assets of any Person, other than
the Person or the assets of the Person so acquired;

     (5) customary provisions in partnership agreements, limited liability company
organizational governance documents, joint venture agreements and other similar
agreements entered into in the ordinary course of business that restrict the
Transfer of ownership interests in or the payment of dividends or distributions from
such partnership, limited liability company, joint venture or similar Person;

     (6) Purchase Money Indebtedness and Capital Lease Obligations incurred pursuant
to clause (8) of the definition of “Permitted Indebtedness” that impose restrictions
of the nature described in clause (c) above on the assets acquired;

 

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     (7) any encumbrances or restrictions imposed by any amendments or Refinancings
of the contracts, instruments or obligations referred to in clause (1), (4) or (6)
above; provided that such amendments or Refinancings are, in the good faith judgment
of the Board of Directors, no more materially restrictive with respect to such
encumbrances and restrictions than those prior to such amendment or Refinancing;

     (8) covenants to maintain net worth, total assets or liquidity and similar
financial responsibility covenants under contracts with customers or suppliers in
the ordinary course of business;

     (9) any such encumbrance or restriction consisting of customary provisions in
leases governing leasehold interests to the extent such provisions restrict the
transfer of the lease or the property leased thereunder; and

     (10) any restriction imposed by applicable law.

          SECTION 4.15. Limitation on Sale and Leaseback Transactions.

          Parent shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction; provided that Parent or any Restricted Subsidiary may enter into a Sale and
Leaseback Transaction if:

     (1) Parent or such Restricted Subsidiary could have

     (x) incurred Indebtedness in an amount equal to the Attributable Debt relating
to such Sale and Leaseback Transaction pursuant to Section 4.9, and

     (y) incurred a Lien to secure such Indebtedness pursuant to Section 4.1l;

     (2) the gross cash proceeds of such Sale and Leaseback Transaction are at least equal
to the Fair Market Value of the asset that is the subject of such Sale and Leaseback
Transaction; and

     (3) the transfer of the asset in such Sale and Leaseback Transaction is permitted by,
and Issuer applies the proceeds of such transaction in compliance with Section 4.13.

          SECTION 4.16. [Reserved].

          SECTION 4.17. Conduct of Business. Parent shall not, and shall not permit any Restricted Subsidiary to, engage in any business
other than the Permitted Business.

          SECTION 4.18. Maintenance of Properties; Insurance; Compliance with Law. (a) Subject to, and
in compliance with, the provisions of Article Twelve, the Company shall, and shall cause each of
its Restricted Subsidiaries to, at all times cause all material assets used or useful in the
conduct of their respective businesses to be maintained and kept in reasonably satisfactory
condition, repair and working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements

 

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thereto; provided, however, that nothing in this Section 4.18(a) shall
prevent the Company or any of its Restricted Subsidiaries from discontinuing the operation and
maintenance of any of such material assets if such discontinuance is, in the reasonable judgment of
the Company, desirable in the conduct of the business of the Company and its Subsidiaries taken as
a whole.

          (b) The Company shall, and shall cause each of its Restricted Subsidiaries to, at all times
maintain insurance with respect to such of its assets with responsible and reputable insurers,
against such risks, casualties and contingencies and in such types and amounts, and with such
deductibles, retentions and co-insurance provisions, as are consistent with sound business practice
for businesses owning similar assets in the same general area in which the Company or such
Restricted Subsidiary operates.

          (c) The Company shall, and shall cause each of its Restricted Subsidiaries to, comply with all
statutes, laws, ordinances or government rules and regulations to which they are subject the
non-compliance with which would, individually or in the aggregate, materially adversely affect the
business, financial condition or results of operations of the Company and its Restricted
Subsidiaries taken as a whole.

          SECTION 4.19. Covenant Suspension

          (a) If on any date following the Issue Date (i) the Notes have Investment Grade Ratings from
both Rating Agencies and (ii) no Default has occurred and is continuing under the Indenture (the
occurrence of the events described in the foregoing clauses (i) and (ii) being collectively
referred to as a “Covenant Suspension Event”), the Issuer and the Restricted Subsidiaries will not
be subject to the covenants (the “Suspended Covenants”) described under:

          (1) Section 4.9;

          (2) Section 4.10

          (3) Section 4.12;

          (4) Section 4.13;

          (5) Section 4.14;

          (6) Section 4.15;

          (7) Section 4.5;

          (8) Section 5.1(d)(1);

          (9) Section 4.17; and

          (10) Section 4.8.

 

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          (b) In the event that Parent and the Restricted Subsidiaries are not subject to the Suspended
Covenants under this Indenture for any period of time as a result of the foregoing, and on any
subsequent date (the "Reversion Date") (a) one or both of the Rating Agencies withdraw their
Investment Grade Rating or downgrade the rating assigned to the Notes below an Investment Grade
Rating or (b) Parent or any of its affiliates enters into an agreement to effect a transaction that
would result in a Change of Control and one or more of the Rating Agencies indicate that if
consummated, such transaction (alone or together with any related recapitalization or refinancing
transactions) would cause such Rating Agency to withdraw its Investment Grade Rating or downgrade
the ratings assigned to the Notes below an Investment Grade Rating, then Parent and the Restricted
Subsidiaries will thereafter again be subject to the Suspended Covenants under the Indenture with
respect to future events. The period beginning on the day of a Covenant Suspension Event and
ending on a Reversion Date is called a “Suspension Period.”

          (c) On each Reversion Date, all Indebtedness incurred, or Disqualified Stock or Preferred
Stock issued, during the Suspension Period will be deemed to have been outstanding on the Issue
Date, so that it is classified as permitted under Section 4.9(b)(2). Calculations made after the
Reversion Date of the amount available to be made as Restricted Payments under Section 4.10 will be
made as though the covenant described under Section 4.10 had been in effect since the Issue Date
and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension
Period will reduce the amount available to be made as Restricted Payments under the first paragraph
of Section 4.10 (but will not reduce any amounts available to be made as Restricted Payments under
the second paragraph of Section 4.10). However, no Default or Event of Default will be deemed to
have occurred on the Reversion Date (or thereafter) under any Suspended Covenant solely as a result
of any actions taken by Parent or its Restricted Subsidiaries, or events occurring, during the
Suspension Period. For purposes of the Section 4.13, on the Reversion Date, the unutilized Excess
Proceeds amount will be reset to zero.

ARTICLE 5

SUCCESSOR COMPANY

          SECTION 5.1. Merger, Consolidation and Sale of Assets.

          (a) Parent will not, in a single transaction or series of related transactions, consolidate or
merge with or into any Person, or transfer (or cause or permit any Restricted Subsidiary of
Parent to Transfer) all or substantially all of Parent’s assets (determined on a consolidated
basis for Parent and its Subsidiaries) whether as an entirety or substantially as an entirety to
any Person, unless

          (1) either

     (i) Parent is the surviving or continuing corporation; or

     (ii) the Person (if other than Parent) formed by such consolidation or into
which Parent is merged or the Transferee of such assets (the “Parent Surviving
Entity”):

 

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     (x) is a corporation or limited liability company organized and validly
existing under the laws of the United States or any State thereof or the
District of Columbia; and

     (y) expressly assumes, by supplemental indenture (in form and substance
satisfactory to the Trustee) executed and delivered to the Trustee, all of
the Obligations of Parent under its Guarantee and the performance of every
covenant under Parent’s Guarantee, this Indenture and the Registration
Rights Agreement on the part of Parent to be performed or observed; and

          (2) each of the conditions specified in Section 5.1(d) is satisfied.

For purposes of the foregoing, the Transfer in a single transaction or series of related
transactions of all or substantially all of the assets of one or more Restricted Subsidiaries of
Parent, the Capital Stock of which constitutes all or substantially all of the assets of Parent
(determined on a consolidated basis for Parent and its Subsidiaries), shall be deemed to be the
Transfer of all or substantially all of the assets of Parent.

          Upon any consolidation or merger in which Parent is not the continuing corporation, or any
Transfer of all or substantially all of the assets of Parent in accordance with the foregoing, the
Parent Surviving Entity shall succeed to, and be substituted for, and may exercise every right and
power of, Parent under its Guarantee, this Indenture and the Registration Rights Agreement with the
same effect as if such Parent Surviving Entity had been named as such.

          (b) Issuer shall not, in a single transaction or series of related transactions, consolidate
or merge with or into any Person, or Transfer (or cause or permit any Restricted Subsidiary of
Issuer to Transfer) all or substantially all of Issuer’s assets (determined on a consolidated basis
for Issuer and its Subsidiaries) whether as an entirety or substantially as an entirety to any
Person, unless

          (1) either

     (i) Issuer is the surviving or continuing corporation; or

     (ii) the Person (if other than Issuer) formed by such consolidation or into
which Issuer is merged or the Transferee of such assets (the “Issuer Surviving
Entity”):

     (x) is a corporation or limited liability company organized and validly
existing under the laws of the United States or any State thereof or the
District of Columbia; and

     (y) expressly assumes, by supplemental indenture (in form and substance
satisfactory to the Trustee) executed and delivered to the Trustee, the due
and punctual payment of the principal of and premium, if any, and interest
on all of the Notes and the performance of every covenant under the

 

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Notes,
this Indenture and the Registration Rights Agreement on the part of Issuer
to be performed or observed; and

          (2) each of the conditions specified in Section 5.1(d) is satisfied.

For purposes of the foregoing, the Transfer in a single transaction or series of related
transactions of all or substantially all of the assets of one or more Restricted Subsidiaries of
Issuer, the Capital Stock of which constitutes all or substantially all of the assets of Issuer
(determined on a consolidated basis for Issuer and its Subsidiaries), shall be deemed to be the
Transfer of all or substantially all of the assets of Issuer

          Upon any consolidation or merger in which Issuer is not the continuing corporation or any
Transfer of all or substantially all of the assets of Issuer in accordance with the foregoing, the
Issuer Surviving Entity shall succeed to, and be substituted for, and may exercise every right and
power of, Issuer under the Notes, this Indenture and the Registration Rights Agreement with the
same effect as if such Issuer Surviving Entity had been named as such.

          (c) No Guarantor (other than Parent) will, and Parent will not cause or permit any such
Guarantor to, consolidate with or merge with or into any Person unless

          (1) either

     (i) such Guarantor shall be the surviving or continuing corporation; or

     (ii) the Person (if other than such Guarantor) formed by such consolidation or
into which such Guarantor is merged shall expressly assume, by supplemental
indenture (in form and substance satisfactory to the Trustee) executed and delivered
to the Trustee, all of the obligations of such Guarantor under its Guarantee and the
performance of every covenant under such Guarantor’s Guarantee, this Indenture and
the Registration Rights Agreement on the part of such Guarantor to be performed or
observed; and

     (2) each of the conditions specified in Section 5.1 (other than clause (1) thereof) is
satisfied.

The requirements of this paragraph (c) shall not apply to (x) a consolidation or merger of any
Guarantor with and into Issuer or any other Guarantor, so long as Issuer or a Guarantor survives
such consolidation or merger, or (y) a Transfer of any Guarantor that complies with Section 4.13.

          (d) The following additional conditions shall apply to each transaction described in paragraph
(a), (b) or (c), except that clause (1) below shall not apply to a transaction described in
paragraph (c):

     (1) immediately after giving effect to such transaction and the assumption contemplated
above (including giving effect to any Indebtedness incurred or anticipated to be incurred

 

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in
connection with or in respect of such transaction), Parent (or the Parent Surviving Entity,
if applicable)

     (x) could incur at least $1.00 of additional Indebtedness pursuant to the
Coverage Ratio Exception; or

     (y) the Consolidated Coverage Ratio of the Issuer and the Restricted
Subsidiaries is greater than immediately prior to such acquisition or merger; and

     (2) immediately before and immediately after giving effect to such transaction and the
assumption contemplated above (including giving effect to any Indebtedness incurred or
anticipated to be incurred and any Lien granted in connection with or in respect of the
transaction), no Default has occurred and is continuing; and

     (3) Parent shall have delivered to the Trustee an Officers’ Certificate and an Opinion
of Counsel, each stating that such transaction and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply with the applicable
provisions of this Indenture, that all conditions precedent in this Indenture relating to
such transaction have been satisfied and such supplemental indenture are enforceable.

          Opinions of Counsel required to be delivered under this Section or elsewhere in this Indenture
may have qualifications customary for opinions of the type required, and counsel delivering such
Opinions of Counsel may rely on certificates of Terra Capital or government or other officials
customary for opinions of the type required, including certificates certifying as to matters of
fact.

          The successor entity pursuant to Section 5.1(a), (b) or (c) shall be the successor to Parent,
Issuer or the applicable Guarantor, as the case may be, and shall succeed thereto and be
substituted thereon, and may exercise every right and power thereof under this Indenture, but the
predecessor entity in the case of a Transfer shall not be released from the obligation to pay the
principal of and interest on the Notes.

ARTICLE 6

DEFAULTS AND REMEDIES

          SECTION 6.1. Events of Default. Any of the following shall constitute an Event of Default:

     (i) default for 30 days in the payment when due of interest on any Note;

     (ii) default in the payment when due of principal on any Note, whether upon maturity,
acceleration, optional redemption, required repurchase or otherwise;

     (iii) failure to perform or comply with Section 4.8;

     (iv) failure to perform or comply with any covenant, agreement, warranty or obligation
in this Indenture or the Notes (other than any specified in clause (i), (ii) or (iii) above)

 

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which failure continues for 60 days after written notice thereof has been given to Terra
Capital by the Trustee or to Terra Capital and the Trustee by the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes;

     (v) default under any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness for money borrowed by Parent
or any Restricted Subsidiary, whether such Indebtedness now exists or is created after the
Issue Date, which

     (x) is caused by a failure to pay such Indebtedness at Stated Maturity (after
giving effect to any grace period related thereto) (a “Payment Default”); or

     (y) results in the acceleration of such Indebtedness prior to its Stated
Maturity;

and in each case, the principal amount of any such Indebtedness as to which a Payment
Default or acceleration shall have occurred, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $25.0 million or more;

     (vi) one or more final and non-appealable judgments, orders or decrees for the payment
of money of $25.0 million or more, individually or in the aggregate, shall be entered
against Parent or any Restricted Subsidiary or any of their respective properties and which
final and non-appealable judgments, orders or decrees are not covered by third party
indemnities or insurance as to which coverage has not been disclaimed and are not paid,
discharged, bonded or stayed within 60 days after their entry;

     (vii) a court having jurisdiction in the premises enters (x) a decree or order for
relief in respect of Issuer, Parent or any of its Significant Subsidiaries in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (y) a decree or order adjudging Issuer, Parent or any
of its Significant Subsidiaries a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in respect of
Issuer, Parent or any of its Significant Subsidiaries under any applicable federal or state
law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Issuer, Parent or any of its Significant Subsidiaries or of any
substantial part of its property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period 60 consecutive days;

     (viii) Terra Capital, Parent or any Significant Subsidiary:

     (A) commences a voluntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or any other case
or proceeding to be adjudicated a bankrupt or insolvent; or

 

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     (B) consents to the entry of a decree or order for relief in respect of Issuer,
Parent or any of its Significant Subsidiaries in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against Issuer, Parent or any of its Significant Subsidiaries; or

     (C) files a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law; or

     (D) consents to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of Issuer, Parent or any of its Significant Subsidiaries or of any
substantial part of its property; or

     (E) makes an assignment for the benefit of creditors; or

     (F) admits in writing its inability to pay its debts generally as they become
due; or

     (G) takes corporate action in furtherance of any such action; or

     (ix) the Guarantee of Parent or any Guarantor that is a Significant Subsidiary ceases
to be in full force and effect (other than in accordance with the terms of such Guarantee
and this Indenture) or is declared null and void and unenforceable or is found invalid or
Parent or any Guarantor denies or disaffirms its obligations under its Guarantee (other than
by reason of release of a Guarantor from its Guarantee in accordance with the terms of this
Indenture and the Guarantee).

          The term “Bankruptcy Law” means Title 11, United States Code, as amended, or any similar
federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee,
assignee, liquidator, custodian or similar official under any Bankruptcy Law.

          Terra Capital shall deliver to the Trustee, within 30 days after the occurrence thereof,
written notice in the form of an Officers’ Certificate of any Event of Default under clause (v) of
this Section 6.1 and any event which with the giving of notice or the lapse of time would become an
Event of Default under clause (iv) or (vi) of this Section 6.1, its status and what action Terra
Capital is taking or proposes to take with respect thereto.

          SECTION 6.2. Acceleration. If an Event of Default occurs and is continuing (other than an Event of Default described
in clause (vii) or (viii) of Section 6.1 with respect to Terra Capital, Issuer, Parent or any
Guarantor that is a Significant Subsidiary), the Trustee or the Holders of at least 25% in
principal amount of the outstanding Notes may declare the principal of and accrued but unpaid
interest on all the Notes to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable

 

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immediately. If an Event of Default described in clause (vii) or
(viii) of Section 6.1 occurs with respect to Issuer, Parent or any Guarantor that is a Significant
Subsidiary, the principal of and interest on all the Notes will ipso facto become and be
immediately due and payable without any declaration or other act on the part of the Trustee or any
Holders of the Notes. The Holders of a majority in aggregate principal amount of the outstanding
Notes by notice to the Trustee may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair any right
consequent thereto.

          SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in
exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive
of any other remedy. All available remedies are, to the extent permitted by law, cumulative.

          SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount
of the Notes then outstanding by notice to the Trustee may waive any past or existing Default and
its consequences except (i) a Default in the payment of the principal of or interest on a Note or
(ii) a Default in respect of a provision that under Section 9.2 cannot be amended without the
consent of each Holder affected. When a Default is waived, it is deemed cured, and any Event of
Default arising therefrom shall be deemed to have been cured, but no such waiver shall extend to
any subsequent or other Default or impair any consequent right.

          SECTION 6.5. Control by Majority. The Holders of a majority in principal amount of the
outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the rights of any
other Holder (it being understood that the Trustee shall have no duty to make such determination)
or that would involve the Trustee in personal liability; provided, however, that the Trustee may
take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be
entitled to indemnification from the Holders satisfactory to it in its sole discretion against all
losses and expenses caused by taking or not taking such action.

          SECTION 6.6. Limitation on Suits. A Holder may not pursue any remedy with respect to this
Indenture or the Notes unless:

     (1) such Holder has previously given the Trustee notice that an Event of Default is
continuing;

     (2) Holders of at least 25% in principal amount of the outstanding Notes have requested
the Trustee to pursue the remedy;

 

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     (3) such Holders have offered the Trustee reasonable security or indemnity against
any loss, liability or expense;

     (4) the Trustee has not complied with such request within 60 days after the receipt
thereof and the offer of security or indemnity; and

     (5) the Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day period.

          A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over another Holder.

          SECTION 6.7. Rights of Holders To Receive Payment. Notwithstanding any other provision of
this Indenture, the right of any Holder to receive payment of principal, premium (if any) or
interest on the Notes held by such Holder, on or after the respective due dates therefor, or to
bring suit for the enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

          SECTION 6.8. Collection Suit by Trustee. If an Event of Default specified in Section 6.1(i)
or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against Terra Capital for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.7.

          SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders allowed in any judicial proceedings relative to Issuer, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing similar functions,
and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and
any other amounts due the Trustee under Section 7.7.

          SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this
Article 6, it shall pay out the money or property in the following order, subject to applicable
law:

     FIRST: to the Trustee for amounts due under Section 7.7;

     SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest,
ratably, without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal and interest, respectively; and

     THIRD: to Terra Capital.

 

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          The Trustee may, upon prior written notice to Terra Capital, fix a record date and payment
date for any payment to Holders pursuant to this Section. At least 15 days before such record
date, Terra Capital shall mail to each Holder and the Trustee a notice that states the record date,
the payment date and amount to be paid.

          SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in aggregate principal amount of the outstanding
Notes.

ARTICLE 7

TRUSTEE

          SECTION 7.1. Duties of Trustee.

          (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care and skill in their
exercise as a prudent Person would exercise or use under the circumstances in the conduct of such
Person’s own affairs.

          (b) Except during the continuance of an Event of Default:

     (1) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and

     (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the requirements
of this Indenture.

          (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

     (1) this paragraph does not limit the effect of paragraph (b) of this Section;

 

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     (2) the Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and

     (3) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Sections 6.2
and 6.5.

          (d) Every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section and to the
provisions of the TIA.

          SECTION 7.2. Rights of Trustee. Subject to Section 7.1,

     (a) The Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, Officers’ Certificate, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.

     (b) Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers’ Certificate.

     (c) Before the Trustee acts or refrains from acting, the Trustee may consult with
counsel, and the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.

     (d) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders pursuant to
this Indenture, unless such Holders shall have offered to the Trustee reasonable security or
indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction.

     (e) Prior to the occurrence of an Event of Default hereunder and after the cure or
waiver of all Events of Default, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, Officers’ Certificate, or other request,
consent, order, approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding; provided that, if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigations, in the opinion of the Trustee, is not
reasonably assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities
as a condition to proceeding; the

 

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reasonable expenses of every such examination shall be
paid by Terra Capital or, if advanced by the Trustee, shall be repaid by Terra Capital on
demand.

     (f) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.

     (g) Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, or where information is required or necessary to be furnished by Terra
Capital in order for the Trustee to act, the Trustee (unless otherwise evidence by herein
specifically prescribed), shall not be liable for any action it takes or omits to take in
good faith in reliance upon an Officers’ Certificate, or for any action taken or omitted to
be taken by it in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture.

     (h) The Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any covenants, conditions or agreements on the part of Terra Capital, except
as otherwise specifically set forth in this Indenture, but the Trustee may require of Terra
Capital full information and advice as to the performance of the covenants, conditions and
agreements contained herein.

     (i) Except for (i) a default under Section 6.1(i) or 6.1(ii), (ii) the failure of
Parent or Terra Capital to file any financial statements, documents or certificates
specifically required to be filed with the Trustee pursuant to the provisions of this
Indenture or (iii) any other event of which the Trustee has “actual knowledge” and which
event constitutes a Default under this Indenture, the Trustee shall not be deemed to have
notice of any default or event unless specifically notified in writing by Terra Capital or
the Holders of not less than 25% in aggregate principal amount of the Notes then
outstanding; as used herein, the term “actual knowledge” means the actual fact of knowing,
without a duty to make any investigation with regard thereto.

     (j) The Trustee shall not be required to give any note, bond or surety in respect of
the execution of the trusts and powers under this Indenture.

     (k) The permissive rights of the Trustee to perform acts enumerated in this Indenture
shall not be construed as a duty.

     (l) The Trustee shall not be liable for any interest on any money received by it except
as the Trustee may agree in writing with Terra Capital.

     (m) Money held in trust by the Trustee need not be segregated from other funds except
to the extent required by law.

 

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     (n) Delivery of reports, information and documents to the Trustee under Section 4.6 is
for informational purposes only and the receipt of the foregoing shall not constitute
constructive notice of any information contained therein or determinable from information
contained therein, including the Company’s compliance with any of their covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

          SECTION 7.3. Individual Rights of Trustee. The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may otherwise deal with Parent or its
respective Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.

          SECTION 7.4. Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for Terra Capital’s use of the proceeds from the Notes, and it shall not be responsible
for any statement of Terra Capital in this Indenture or in any document issued in connection with
the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

          SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing and if it is known to
a Responsible Officer of the Trustee, the Trustee shall mail to each Holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption provisions of such
Note, if any), the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the interests of Holders.

          SECTION 7.6. Reports by Trustee to Holders. As promptly as practicable after each January 1
beginning with the January 1 following the date of this Indenture, and in any event prior to July
15 in each year, the Trustee shall mail to each Holder a brief report dated as of May 15 that
complies with TIA § 313(a). The Trustee also shall comply with TIA § 313(b). Prior to delivery to
the Holders, the Trustee shall deliver to Terra Capital a copy of any report it delivers to Holders
pursuant to this Section 7.6.

          SECTION 7.7. Compensation and Indemnity. Terra Capital shall pay to the Trustee from time to time such reasonable compensation for
its services as Terra Capital and the Trustee shall from time to time agree in writing. The
Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express
trust. Terra Capital shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to such compensation
for its services, except any such expense, disbursement or advance as may arise from its
negligence, willful misconduct or bad faith. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants
and experts. The Trustee shall provide Terra Capital reasonable notice of any expenditure not in
the ordinary course of business. Terra Capital shall indemnify each of the Trustee and any
predecessor Trustees against any and all loss, damage, claim, liability or expense (including
attorneys’ fees and expenses) (other than taxes applicable to the Trustee’s compensation hereunder)
incurred by it in connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify Terra Capital promptly of any claim
for which it may seek indemnity.

 

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Failure by the Trustee to so notify Terra Capital shall not
relieve Terra Capital of its obligations hereunder. Terra Capital shall defend the claim and the
Trustee shall cooperate in the defense of such claim. The Trustee may have separate counsel at its
own expense. If, however, representation in any defense by Terra Capital and its counsel would in
the opinion of counsel to the Trustee create a conflict of interest, Terra Capital shall pay the
expense of separate counsel to the Trustee. Terra Capital need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own
willful misconduct, negligence or bad faith. Terra Capital need not pay for any settlement made
without its written consent.

          To secure Terra Capital’s payment obligations in this Section, the Trustee shall have a lien
prior to the Notes on all money or property held or collected by the Trustee other than money or
property held in trust to pay principal of and interest on particular Notes.

          Terra Capital’s payment obligations pursuant to this Section shall survive the discharge of
this Indenture and the resignation or removal of the Trustee. When the Trustee incurs expenses
after the occurrence of an Event of Default specified in Section 6.1(vii) or (viii) with respect to
Terra Capital, the expenses are intended to constitute expenses of administration under the
Bankruptcy Law.

          SECTION 7.8. Replacement of Trustee. The Trustee may resign at any time upon 30 days notice
to Terra Capital. The Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. Terra Capital
shall remove the Trustee if:

	 	(1)	 	the Trustee fails to comply with Section 7.10;
	 
	 	(2)	 	the Trustee is adjudged bankrupt or insolvent;
	 
	 	(3)	 	a receiver or other public officer takes charge of the Trustee or its property; or
	 
	 	(4)	 	the Trustee otherwise becomes incapable of acting.

          If the Trustee resigns, or is removed by Terra Capital or by the Holders of a majority in
principal amount of the outstanding Notes and such Holders do not reasonably promptly appoint a
successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in
such event being referred to herein as the retiring Trustee), Terra Capital shall promptly appoint
a successor Trustee.

          A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to Terra Capital. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.7.

 

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          If a successor Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee or the Holders of 10% in principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

          If the Trustee fails to comply with Section 7.10, any Holder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

          Notwithstanding the replacement of the Trustee pursuant to this Section, Terra Capital’s
obligations under Section 7.7 shall continue for the benefit of the retiring Trustee.

          SECTION 7.9. Successor Trustee by Merger. If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee, so long as such corporation is eligible
under this Article 7 and TIA § 310(a).

          In case at the time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to the Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall
have.

          SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the
requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b); provided,
however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or participation in other
securities of Terra Capital are outstanding if the requirements for such exclusion set forth in TIA
§ 310(b)(1) are met.

          SECTION 7.11. Preferential Collection of Claims Against Terra Capital. The Trustee shall
comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee
who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

ARTICLE 8

DISCHARGE OF INDENTURE; DEFEASANCE

          SECTION 8.1. Discharge of Liability on Notes; Defeasance.

          (a) When (i) Terra Capital delivers to the Trustee all outstanding Notes (other than Notes
replaced pursuant to Section 2.7) for cancellation or (ii) all outstanding Notes have become due
and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to

 

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Article 3, and Terra Capital irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Notes, including interest thereon, and if in either
case Terra Capital pays all other sums payable hereunder by Terra Capital, then this Indenture
shall, subject to Section 8.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of Terra Capital accompanied by an Officers’
Certificate and an Opinion of Counsel that all conditions precedent provided for herein relating to
satisfaction and discharge of this Indenture have been complied with and at the cost and expense of
Terra Capital.

          (b) Subject to Sections 8.1(c) and 8.2, Terra Capital at any time may terminate (i) all its
obligations under the Notes and this Indenture (“legal defeasance option”) or (ii) its obligations
under Sections 4.4 through 4.19, inclusive, and the operation of Sections 6.1(iv), 6.1(v), 6.1(vi),
6.1(vii) (but only with respect to Significant Subsidiaries), 6.1(viii) (but only with respect to
Significant Subsidiaries), 6.1(ix) and 5.1(d)(1) and 5.1(d)(2) (“covenant defeasance option”).
Terra Capital may exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.

          If Terra Capital exercises its legal defeasance option, payment of the Notes may not be
accelerated because of an Event of Default. If Terra Capital exercises its covenant defeasance
option, payment of the Notes may not be accelerated due to a failure to comply with any of Sections
4.4 through 4.19, inclusive, or the operation of Section 6.1(iv), 6.1(v), 6.1(vi), 6.1(vii) (but
only with respect to Significant Subsidiaries), 6.1(viii) (but only with respect to Significant
Subsidiaries) or 6.1(ix). If Terra Capital exercises its legal defeasance option or its covenant
defeasance option, each Guarantor will be released from all of its obligations under Article 10.

          Upon satisfaction of the conditions set forth herein and upon request of Terra Capital, the
Trustee shall acknowledge in writing the discharge of those obligations that Terra Capital
terminates.

          (c) Notwithstanding clauses (a) and (b) above, Terra Capital’s obligations in Sections 2.3,
2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.3, 8.4, 8.5 and 8.6 shall survive until the Notes have been paid in
full. Thereafter, Terra Capital’s obligations in Sections 7.7, 8.4 and 8.5 shall survive.

          SECTION 8.2. Conditions to Defeasance. Terra Capital may exercise its legal defeasance option
or its covenant defeasance option only if:

     (1) Terra Capital irrevocably deposits in trust (the “defeasance trust”) with the
Trustee money or U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will provide cash
(without reinvestment) at such times and in such amounts as will be sufficient to pay
principal and interest on the Notes (except Notes replaced pursuant to Section 2.7) to
redemption or maturity, as the case may be;

     (2) Terra Capital delivers to the Trustee a certificate from a nationally recognized
firm of independent accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times and in such

 

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amounts
as will be sufficient to pay principal and interest when due on all outstanding Notes
(except Notes replaced pursuant to Section 2.7) to maturity or redemption, as the case may
be;

     (3) 91 days pass after the deposit is made and during the 91-day period no Default
specified in Section 6.1(vi) or (vii) with respect to Terra Capital occurs which is
continuing at the end of the period;

     (4) no default exists under any Indebtedness of Parent or any Restricted Subsidiary;

     (5) Terra Capital delivers to the Trustee an Opinion of Counsel to the effect that the
trust resulting from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940;

     (6) Terra Capital shall have delivered to the Trustee an Opinion of Counsel stating
that the Holders will not recognize income, gain or loss for Federal income tax purposes as
a result of such deposit and defeasance and will be subject to Federal income tax on the
same amounts and in the same manner and at the same times as would have been the case if
such deposit and defeasance had not occurred (and, in the case of legal defeasance only,
such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or change
in applicable Federal income tax law);

     (7) Terra Capital delivers to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent to the defeasance and discharge of the
Notes as contemplated by this Article 8 have been complied with; and

     (8) Terra Capital shall have paid or duly provided for payment under terms mutually
satisfactory to Terra Capital and the Trustee all amounts then due to the Trustee pursuant
to Section 7.7.

          Opinions of Counsel required to be delivered under this Section may have qualifications
customary for opinions of the type required and counsel delivering such Opinions of Counsel may
rely on certificates of Terra Capital or government or other officials customary for opinions of
the type required, including certificates certifying as to matters of fact.

          Before or after a deposit, Terra Capital may make arrangements satisfactory to the Trustee for
the redemption of Notes at a future date in accordance with Article 3.

          SECTION 8.3. Application of Trust Money. The Trustee shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited
money and the money from U.S. Government Obligations either directly or through the Paying Agent
(including Terra Capital acting as its own Paying Agent as the Trustee may determine) and in
accordance with this Indenture to the payment of principal of and interest on the Notes.

          SECTION 8.4. Repayment to Terra Capital. The Trustee and the Paying Agent shall notify Terra
Capital of any excess money or securities held by them at any time and shall

 

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promptly turn over to
Terra Capital upon request any excess money or securities held by them at any time.

          Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay
to Terra Capital upon written request any money held by them for the payment of principal or
interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must
look to Terra Capital for payment as general creditors.

          SECTION 8.5. Indemnity for Government Obligations. Terra Capital shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited
U.S. Government Obligations or the principal and interest received on such U.S. Government
Obligations other than any such tax, fee or other charge which by law is for the account of the
Holders of the defeased Notes; provided that the Trustee shall be entitled to charge any such tax,
fee or other charge to such Holders’ account.

          SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations
in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, Terra Capital’s obligations under this Indenture and the Notes and the
Guarantors’ obligations under this Indenture and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this
Article 8; provided, however, that (a) if Terra Capital has made any payment of interest on or
principal of any Notes following the reinstatement of its obligations, Terra Capital shall be
subrogated to the rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent and (b) unless otherwise required
by any legal proceeding or any order or judgment of any court or governmental authority, the
Trustee or Paying Agent shall return all such money and U.S. Government Obligations to Terra
Capital promptly after receiving a written request therefor at any time, if such reinstatement of
Terra Capital’s obligations has occurred and continues to be in effect.

ARTICLE 9

AMENDMENTS AND WAIVERS

          SECTION 9.1. Without Consent of Holders. Terra Capital and the Trustee may amend this
Indenture or the Notes without notice to or consent of any Holder:

     (1) to cure any ambiguity, defect or inconsistency;

     (2) to provide for the assumption by a successor Person of the obligations of Parent,
Issuer or any Guarantor under this Indenture in accordance with Article 5;

     (3) to provide for uncertificated Notes in addition to or in place of certificated
Notes (provided that the uncertificated Notes are issued in registered form for purposes of

 

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Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described
in Section 163(f)(2)(B) of the Code);

     (4) to add a Guarantor;

     (5) to release Parent or a Guarantor from its Guarantee when permitted by this
Indenture;

     (6) to add to the covenants of Parent or Terra Capital for the benefit of the Holders
or to surrender any right or power herein conferred upon Parent or Terra Capital;

     (7) to comply with any requirement of the SEC in connection with the qualification of
this Indenture under the TIA; or

     (8) to make any other change that does not materially adversely affect the rights of
any Holder.

          The consent of the Holders is not necessary under this Indenture to approve the particular
form of any proposed amendment or waiver. It is sufficient if such consent approves the substance
of the proposed amendment or waiver.

          After an amendment or waiver under this Section becomes effective, Terra Capital is required
to mail to Holders a notice briefly describing such amendment or waiver. However, the failure to
give such notice to all Holders, or any defect therein, shall not impair or affect the validity of
the amendment under this Section.

          SECTION 9.2. With Consent of Holders. Terra Capital and the Trustee may amend this Indenture,
the Notes with the consent of the Holders of a majority of the aggregate principal amount of the
Notes then outstanding (including consents obtained in connection with a tender offer or exchange
for the Notes) and any past default or compliance with any provision may also be waived with the
consent of the Holders of a majority in principal amount of the Notes then outstanding. However,
without the consent of each Holder of outstanding Notes affected thereby, no amendment may:

     (1) reduce the principal amount of or change the fixed maturity of any Note;

     (2) alter the provisions with respect to redemption or repurchase provisions of any
Note or this Indenture in a manner adverse to the Holders of the Notes (other than the
provisions of this Indenture relating to any offer to purchase required under Section 4.8);

     (3) waive a redemption or purchase payment due with respect to any Note;

     (4) reduce the rate of or change the time for payment of interest on any Note;

     (5) waive a Default in the payment of principal or interest on the Notes (except that
Holders of at least a majority in aggregate principal amount of the then outstanding Notes

 

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may (x) rescind an acceleration of the Notes that resulted from a nonpayment default and (y)
waive the payment default that resulted from such acceleration);

     (6) make the principal of or interest on any Note payable in money other than United
States Dollars;

     (7) make any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of or interest
on the Notes;

     (8) make the Notes or any Guarantee subordinated by their or its terms in right of
payment to any other Indebtedness;

     (9) release Parent or any Guarantor that is a Significant Subsidiary from its Guarantee
except in compliance with this Indenture; or

     (10) make any change in the amendment and waiver provisions of this Indenture.

          It shall not be necessary for the consent of the Holders under this Section to approve the
particular form of any proposed amendment or waiver. It is sufficient if such consent approves the
substance of the proposed amendment or waiver.

          After an amendment or waiver under this Section becomes effective, Terra Capital shall mail to
Holders a notice briefly describing such amendment or waiver. The failure to give such notice to
all Holders, or any defect therein, shall not impair or affect the validity of an amendment or
waiver.

          SECTION 9.3. Compliance with Trust Indenture Act. Every amendment to this Indenture or the
Notes shall comply with the TIA as then in effect.

          SECTION 9.4. Revocation and Effect of Consents and Waivers. A consent to an amendment or a
waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or
portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation
of the consent or waiver is not made on the Note. An amendment or waiver becomes effective once
the requisite number of consents are received by Terra Capital or the Trustee. After an amendment
or waiver becomes effective, it shall bind every Holder.

          Terra Capital may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action described above or
required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall be valid or effective
for more than 120 days after such record date.

 

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          SECTION 9.5. Notation on or Exchange of Notes. If an amendment changes the terms of a Note,
the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Note regarding the changed terms and return it to the Holder.

          Alternatively, if Terra Capital or the Trustee so determines, Terra Capital in exchange for
the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Note shall not affect the validity of
such amendment.

          SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign any amendment authorized
pursuant to this Article 9 (other than Section 9.1(4)) if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.1) shall be fully protected
in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment
complies with the provisions of this Article 9.

ARTICLE 10

GUARANTEES

          SECTION 10.1. Guarantees. Each Guarantor hereby unconditionally and irrevocably guarantees,
jointly and severally, to each Holder and to the Trustee and its successors and assigns as primary
obligor and not merely as a surety, on a senior basis, the performance and punctual payment when
due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of Terra Capital
under this Indenture and the Notes whether for payment of principal of or interest on the Notes,
expenses, indemnification or otherwise (all such obligations guaranteed by the Guarantors being
herein called the “Guaranteed Obligations”). The Guarantors will agree to pay, in addition to the
amount stated above, any and all expenses (including reasonable counsel fees and expenses) incurred
by the Trustee or the Holders in enforcing any rights under the Guarantees. Each Guarantor further
agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice or further assent from such Guarantor and that such Guarantor will remain bound under this
Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation.

          Each Guarantor waives presentation to, demand of, payment from and protest to Terra Capital of
any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor
waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of
each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any right or remedy against Terra Capital or any other
Person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or
renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms
or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security
held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of
any Holder or the Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (f) any change in the ownership of such Guarantor.

 

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          Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment,
performance and compliance when due (and not a guarantee of collection) and waives any right to
require that any resort be had by any Holder or the Trustee to any security held for payment of the
Guaranteed Obligations.

          Except as expressly set forth in Sections 8.2, 10.2 and 10.6, the obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination
for any reason, including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever
or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor
herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes
or any other agreement, by any waiver or modification of any thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in any manner or to
any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such
Guarantor as a matter of law or equity.

          Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of Terra Capital or otherwise.

          In furtherance of the foregoing and not in limitation of any other right which any Holder or
the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of
Terra Capital to pay any Guaranteed Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply with any Guaranteed
Obligation, each Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such Guaranteed Obligations, (ii) accrued and unpaid
interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Guaranteed Obligations of Terra Capital to the Holders and the Trustee.

          Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of
any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations.
Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations hereby may be
accelerated as provided in Article 6 for the purposes of such Guarantor’s Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect
of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of
Guaranteed Obligations as provided in Article 6, the Obligations (whether or not due and payable)
shall forthwith become due and payable by such Guarantor for the purposes of this Section.

          Each Guarantor also agrees to pay any and all costs and expenses (including reasonable
attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under this Section.

 

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          SECTION 10.2. Limitation on Liability. Any term or provision of this Indenture to the
contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by
any Guarantor shall not exceed the
maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates
to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally. To effectuate the foregoing
intention, the obligations of each Guarantor (other than the Guarantee by Parent and each other
parent company of Issuer) shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations
hereunder, result in the obligations of such Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal, state or foreign law. Each Guarantor
that makes a payment or distribution under a Guarantee shall be entitled to a contribution from
each other Guarantor in an amount pro rata based on the net assets of each Guarantor.

          SECTION 10.3. Successors and Assigns. This Article 10 shall be binding upon each Guarantor
and its successors and assigns and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or
the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Notes
shall automatically extend to and be vested in such transferee or assignee, all subject to the
terms and conditions of this Indenture.

          SECTION 10.4. No Waiver. Neither a failure nor a delay on the part of either the Trustee or
the Holders in exercising any right, power or privilege under this Article 10 shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any other rights,
remedies or benefits which either may have under this Article 10 at law, in equity, by statute or
otherwise.

          SECTION 10.5. Modification. No modification, amendment or waiver of any provision of this
Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or
further notice or demand in the same, similar or other circumstances.

          SECTION 10.6. Release of Guarantor. A Guarantor will, by execution and delivery to the
Trustee of a supplemental indenture satisfactory to the Trustee, be automatically and
unconditionally released from its Guarantee upon either of the following:

     (x) any sale, exchange or transfer by Parent or any Restricted Subsidiary to any Person
that is not an Affiliate of Parent of all of the Capital Stock of, or all or substantially
all the assets of, such Restricted Subsidiary, which sale, exchange or transfer is made in
accordance with the provisions of this Indenture; or

 

 

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     (y) the designation of such Restricted Subsidiary as an Unrestricted Subsidiary or
as an Immaterial Subsidiary in accordance with the provisions of this Indenture;

provided, in each such case, Parent has delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture
relating to such transactions have been complied with and that such release is authorized and
permitted under this Indenture.

          SECTION 10.7. Execution of Supplemental Indenture for Future Guarantors. Each Subsidiary
which is required to become a Guarantor pursuant to Section 4.5 shall, and Terra Capital shall
cause each such Subsidiary to, promptly execute and deliver to the Trustee a supplemental indenture
in the form of Exhibit F hereto pursuant to which such Subsidiary shall become a Guarantor under
this Article 10 and shall guarantee the Guaranteed Obligations. Concurrently with the execution
and delivery of such supplemental indenture, Terra Capital shall deliver to the Trustee an Opinion
of Counsel to the effect that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors’ rights
generally and to the principles of equity, whether considered in a proceeding at law or in equity,
the Guarantee of such Guarantor is a valid and legally binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms.

ARTICLE 11

MISCELLANEOUS

          SECTION 11.1. Trust Indenture Act Controls. If any provision of this Indenture limits,
qualifies or conflicts with another provision which is required to be included in this Indenture by
the TIA, the required provision shall control. If this Indenture excludes any provision of the TIA
that is required to be included, such provision shall be deemed included herein.

          SECTION 11.2. Notices. Any notice or communication shall be in writing and delivered in
person, by overnight courier or facsimile (if to Terra Capital, with receipt confirmed by an
Officer) or mailed by first-class mail addressed as follows:

          If to Terra Capital or any Guarantor:

TERRA INDUSTRIES INC.

Terra Centre

600 Fourth Street

P.O. Box 6000

Sioux City, Iowa 51102

Attention: Chief Financial Officer

 

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          If to the Trustee:

c/o U.S. BANK NATIONAL ASSOCIATION

60 Livingston Avenue

EP-MN-WS3C

St. Paul, Minnesota 55107-2292

Attention: Corporate Trust Administration

          Terra Capital or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

          Any notice or communication mailed or sent by overnight courier or facsimile to a Holder shall
be sent to the Holder at the Holder’s address as it appears on the registration books of the
Registrar and shall be sufficiently given if so sent within the time prescribed.

          Failure to send a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders. If a notice or communication is sent in the manner
provided above, it is duly given, whether or not the addressee receives it.

          Where this Indenture provides for notice in any manner, such notice may be waived in writing
by the Person entitled to receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice.

          SECTION 11.3. Communication by Holders with Other Holders. Holders may communicate pursuant
to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes.
Terra Capital, the Trustee, the Registrar and anyone else shall have the protection of TIA §
312(c).

          SECTION 11.4. Certificate and Opinion as to Conditions Precedent. Upon any request or
application by Terra Capital to the Trustee to take or refrain from taking any action under this
Indenture, Terra Capital shall furnish to the Trustee to the extent required by the TIA or this
Indenture:

     (1) an Officers’ Certificate (which in connection with the original issuance of the
Notes need only be executed by one Officer for Terra Capital) in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the proposed action
have been complied with; and

     (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent have been
complied with.

          SECTION 11.5. Statements Required in Certificate or Opinion. Each certificate or opinion with
respect to compliance with a covenant or condition provided for in this Indenture shall include:

 

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     (1) a statement that the individual making such certificate or opinion has read such
covenant or condition;

     (2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;

     (3) a statement that, in the opinion of such individual, he has made such examination
or investigation as is necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and

     (4) a statement as to whether or not, in the opinion of such individual, such covenant
or condition has been complied with; provided that an Opinion of Counsel can rely as to
matters of fact on an Officers’ Certificate or a certificate of a public official.

          SECTION 11.6. When Notes Disregarded. In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by Terra
Capital or by any Person directly or indirectly controlling or controlled by or under direct or
indirect common control with Parent shall be disregarded and deemed not to be outstanding, except
that, for the purpose of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be
considered in any such determination.

          SECTION 11.7. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable
rules for action by or a meeting of Holders. The Trustee shall provide Terra Capital reasonable
notice of such rules. The Registrar and the Paying Agent may make reasonable rules for their
functions.

          SECTION 11.8. Legal Holidays. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.

          SECTION 11.9. Governing Law. This Indenture and the Notes shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to applicable
principles of conflict of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.

          SECTION 11.10. No Recourse Against Others. No recourse for the payment of the principal of or
interest on any of the Notes or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of Terra Capital or any Guarantor in
this Indenture, or in any of the Notes or the Guarantees or because of the creation of any
Indebtedness represented hereby and thereby, shall be had against any incorporator, stockholder,
officer, director, employee or controlling person of Parent or any of its Subsidiaries. Each
Holder, by accepting a Note, waives and releases all such liability. The waiver and release shall
be part of the consideration for the issuance of the Notes.

 

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          SECTION 11.11. Successors. All agreements of Terra Capital in this Indenture and the Notes
shall bind Terra Capital’s successors. All agreements of the Trustee in this Indenture shall bind
its successors.

          SECTION 11.12. Multiple Originals. The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.

          SECTION 11.13. Table of Contents; Headings. The table of contents, cross-reference sheet and
headings of the Articles and Sections of this Indenture have been 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 11.14. Severability Clause. In case any provision in this Indenture or in the Notes
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.

 

 

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

	 	 	 	 	 
	 	TERRA CAPITAL, INC.

 	 
	 	By:  	John W. Huey
 	 
	 	 	Name:  	John W. Huey 	 
	 	 	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/ John W. Huey
 	 
	 	 	Name:  	John W. Huey 	 
	 	 	Title:  	Vice President 	 
	 

E-1

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Trustee

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

I-2exv10w1

 

 

Exhibit 10.1

TERRA CAPITAL, INC.

$330,000,000 7% Senior Notes Due 2017

REGISTRATION RIGHTS AGREEMENT

New York, New York

February 2, 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”) its 7%
Senior Notes Due 2017 (the “Notes”) upon the terms set forth in a purchase agreement of
even date herewith (the “Purchase Agreement”) relating to the initial placement of the
Notes (the “Initial Placement”). 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 and the
Security Documents (as defined in the Indenture). To induce the Initial Purchaser to enter into
the Purchase Agreement and to satisfy a condition of your obligations thereunder, the Issuers agree
with you for your benefit and the benefit of the holders from time to time of the Securities and
New Securities (including the Initial Purchaser) (each a “Holder” and, together, the
“Holders”), as follows:

      1.    Definitions. Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:

          “Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

          “Affiliate” of any specified Person shall mean any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, “control” of a Person shall mean the power, direct or
indirect, to direct or cause the direction of the management and policies of such Person

 

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whether by
contract or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative
to the foregoing.

          “Broker-Dealer” shall mean any broker or dealer registered as such under the Exchange
Act.

          “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday
or a day on which banking institutions or trust companies are authorized or obligated by law to
close in New York City.

          “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.

          “ Exchange Offer Registration Period ” shall mean the 180 day period following
the consummation of the Registered Exchange Offer, exclusive of any period during which any stop
order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement.

          “Exchange Offer Registration Statement” shall mean a registration statement of the
Issuers on an appropriate form under the Act with respect to the Registered Exchange Offer, all
amendments and supplements to such registration statement, including post-effective amendments
thereto, in each case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

          “Exchanging Dealer” shall mean any Holder (which may include any Initial Purchaser)
that is a Broker-Dealer and elects to exchange for New Securities any Securities that it acquired
for its own account as a result of market-making activities or other trading activities (but not
directly from any Issuer or any Affiliate of any Issuer ) for New Securities.

          “Final Memorandum” shall have the meaning set forth in the Purchase Agreement.

          “Guarantees” shall have the meaning set forth in the preamble hereto.

          “Guarantors” shall have the meaning set forth in the preamble hereto.

          “Holder” shall have the meaning set forth in the preamble hereto.

          “Indenture” shall have the meaning set forth in the preamble hereto.

 

-3-

          “Initial Placement” shall have the meaning set forth in the preamble hereto.

          “Initial Purchaser” shall have the meaning set forth in the preamble hereto.

          “Issuers” shall have the meaning set forth in the preamble hereto.

          “Losses” shall have the meaning set forth in Section 6(d) hereof.

          “Majority Holders” shall mean the Holders of a majority of the aggregate principal
amount of Securities and New Securities registered under a Registration Statement.

          “Managing Underwriters” shall mean the investment banker or investment bankers and
manager or managers that shall administer an underwritten offering.

          “New Securities” shall mean debt securities of the Issuers identical in all material
respects to the Securities (except that the liquidated damages provisions and the transfer
restrictions shall be modified or eliminated, as appropriate) and to be issued under the Indenture
or the New Securities Indenture.

          “New Securities Indenture” shall mean an indenture among the Issuers and the New
Securities Trustee, identical in all material respects to the Indenture (except that liquidated
damages provisions will be modified or eliminated, as appropriate).

          “New Securities Trustee” shall mean a bank or trust company reasonably satisfactory to
the Initial Purchaser, as trustee with respect to the New Securities under the New Securities
Indenture.

          “Notes” shall have the meaning set forth in the preamble hereto.

          “Parent” shall have the meaning set forth in the preamble hereto.

          “Person” shall mean an individual, partnership, corporation, trust or unincorporated
organization, or a government agency or a political subdivision thereof.

          “Prospectus” shall mean the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon Rule 430A under
the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities covered by such Registration
Statement, and all amendments and supplements thereto and all material incorporated by reference
therein.

          “Purchase Agreement” shall have the meaning set forth in the preamble hereto.

 

-4-

          “Registered Exchange Offer” shall mean the proposed offer of the Issuers to issue and
deliver to the Holders of the Securities that are not prohibited by any law or policy of the
Commission from participating in such offer, in exchange for the Securities, a like aggregate
principal amount of the New Securities.

          “Registration Statement” shall mean any Exchange Offer Registration Statement or Shelf
Registration Statement that covers any of the Securities or the New Securities pursuant to the
provisions of this Agreement, any amendments and supplements to such registration statement,
including post-effective amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.

          “Securities” shall have the meaning set forth in the preamble hereto.

          “Shelf Registration” shall mean a registration effected pursuant to Section 3 hereof.

          “Shelf Registration Period” shall have the meaning set forth in Section 3(c) hereof.

          “Shelf Registration Statement” shall mean a “shelf” registration statement of the
Issuers pursuant to the provisions of Section 3 hereof which covers some or all of the Securities
or New Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any
similar rule that may be adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference therein.

          “Trustee” shall have the meaning set forth in the preamble hereto.

          “underwriter” shall mean any underwriter of Securities or New Securities in connection
with an offering thereof under a Shelf Registration Statement.

          2. Registered Exchange Offer. (a) The Issuers shall prepare and, not later than 90
days following the date of the original issuance of the Securities (or if such 90th day is not a
Business Day, the next succeeding Business Day), shall file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The Issuers shall use their
reasonable best efforts to cause the Exchange Offer Registration Statement to become effective
under the Act within 120 days of the date of the original issuance of the Securities (or if such
120th day is not a Business Day, the next succeeding Business Day).

          (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Issuers shall
promptly commence the Registered Exchange Offer and shall use their reasonable best efforts to
issue the New Securities within 150 days of the date of original issuance

 

-5-

of the Securities (or if
such 150th day is not a Business Day, the next succeeding Business Day), it being the objective of
such Registered Exchange Offer to enable each Holder electing to exchange Securities for New
Securities (assuming that such Holder is not an Affiliate of any Issuers, acquires the New
Securities in the ordinary course of such Holder’s business, has no arrangements with any Person to
participate in the distribution of the New Securities and is not prohibited by any law or policy of
the Commission from participating in the Registered Exchange Offer) to trade such New Securities
from and after their receipt without any limitations or restrictions under the Act and without
material restrictions under the securities laws of a substantial proportion of the several states
of the United States.

          (c) In connection with the Registered Exchange Offer, the Issuers shall:

          (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal and related
documents;

          (ii) keep the Registered Exchange Offer open for not less than 20 Business Days after
the date notice thereof is mailed to the Holders (or, in each case, longer if required by
applicable law);

          (iii) use their reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented and amended as required under the Act in
order to ensure that it is available for sales of New Securities by Exchanging Dealers
during the Exchange Offer Registration Period;

          (iv) utilize the services of a depositary for the Registered Exchange Offer with an
address in the Borough of Manhattan in New York City, which may be the Trustee, the New
Securities Trustee or an Affiliate of either of them;

          (v) permit Holders to withdraw tendered Securities at any time prior to the close of
business, New York time, on the last Business Day on which the Registered Exchange Offer is
open;

          (vi) if requested by the Commission, prior to effectiveness of the Exchange Offer
Registration Statement, provide a supplemental letter to the Commission (A) stating that the
Issuers are conducting the Registered Exchange Offer in reliance on the position of the
Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan
Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that
the Issuers have not entered into any arrangement or understanding with any Person to
distribute the New Securities to be received in the Registered Exchange Offer and that, to
the best of the Issuers’ information and belief, each Holder participating in the Registered
Exchange Offer is acquiring the New Securities

 

-6-

in the ordinary course of business and has no
arrangement or understanding with any Person to participate in the distribution of the New
Securities; and

          (vii) comply in all respects with all applicable laws.

          (d) As soon as practicable after the close of the Registered Exchange Offer, the Issuers
shall:

          (i) accept for exchange all Securities tendered and not validly withdrawn pursuant to
the Registered Exchange Offer;

          (ii) deliver to the Trustee for cancellation in accordance with Section 4(s) all
Securities so accepted for exchange; and

          (iii) use its reasonable best efforts to cause the New Securities Trustee promptly to
authenticate and deliver to each Holder of Securities a principal amount of New Securities
equal to the principal amount of the Securities of such Holder so accepted for exchange.

          (e) Each Holder is hereby deemed to acknowledge and agree that any Broker-Dealer and any such
Holder using the Registered Exchange Offer to participate in a distribution of the New Securities
(x) could not under Commission policy as in effect on the date of this Agreement rely on the
position of the Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon
Capital Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the Commission’s letter
to Shearman & Sterling dated July 2, 1993 and similar no-action letters; and (y) must comply with
the registration and prospectus delivery requirements of the Act in connection with any secondary
resale transaction which must be covered by an effective registration statement containing the
selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K
under the Act if the resales are of New Securities obtained by such Holder in exchange for
Securities acquired by such Holder directly from any Issuer or one of its Affiliates. Accordingly,
each Holder participating in the Registered Exchange Offer shall be required to represent to the Issuers that, at
the time of the consummation of the Registered Exchange Offer:

          (i) any New Securities received by such Holder will be acquired in the ordinary course
of business;

          (ii) such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Securities or the New Securities within the meaning
of the Act; and

          (iii) such Holder is not an Affiliate of any Issuer.

 

-7-

          (f) If any Initial Purchaser determines that it is not eligible to participate in the
Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an
unsold allotment, at the request of such Initial Purchaser, the Issuers shall issue and deliver to
such Initial Purchaser or the Person purchasing New Securities registered under a Shelf
Registration Statement as contemplated by Section 3 hereof from such Initial Purchaser, in exchange
for such Securities, a like principal amount of New Securities. The Issuers shall use their
reasonable best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such
New Securities as for New Securities issued pursuant to the Registered Exchange Offer.

          3. Shelf Registration. (a) If (i) due to any change in law or applicable interpretations
thereof by the Commission’s staff, the Issuers determine upon advice of their outside counsel that
they are not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof;
(ii) for any other reason the Registered Exchange Offer is not consummated within 150 days of the
date hereof; (iii) any Initial Purchaser so requests in writing with respect to Securities that are
not eligible to be exchanged for New Securities in the Registered Exchange Offer and that are held
by it following consummation of the Registered Exchange Offer; (iv) any Holder (other than an
Initial Purchaser) notifies the Issuers in writing that it is not eligible to participate in the
Registered Exchange Offer; or (v) in the case of any Initial Purchaser that participates in the
Registered Exchange Offer or acquires New Securities pursuant to Section 2(f) hereof, such Initial
Purchaser does not receive freely tradeable New Securities in exchange for Securities constituting
any portion of an unsold allotment (it being understood that (x) the requirement that an Initial
Purchaser deliver a Prospectus containing the information required by Item 507 or 508 of Regulation
S-K under the Act in connection with sales of New Securities acquired in exchange for such
Securities shall not result in such New Securities being not “freely tradeable”; and (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of New
Securities acquired in the Registered Exchange Offer in exchange for Securities acquired as a
result of market-making activities or other trading activities shall not result in such New
Securities being not “freely tradeable”), the Issuers shall effect a Shelf Registration
Statement in accordance with subsection (b) below; provided, however that the Issuers shall only be
required to register Securities under the Shelf Registration Statement for persons who have
identified themselves to the Issuers as Holders thereof.

          If in the judgment of the Company’s Board of Directors exercised reasonably and in good faith
the use of the Shelf Registration Statement and the disclosure required to be made therein would
materially interfere with a valid business purpose of the Issuers, the Company may deliver a
notice to such effect to the Holders, and upon receipt of such notice, the Holders shall cease
distribution of the Securities or New Securities under a Shelf Registration Statement for the
period of time (the “Shelf Delay Period”) set forth in such notice (which shall not be
greater than 60 days). Notwithstanding the foregoing, there shall not be more than one Shelf Delay
Period declared in any one calendar year. The Company shall use

 

-8-

its reasonable efforts to minimize
the length of any Shelf Delay Period and shall promptly notify the Holders upon the termination
thereof.

          (b) The Issuers shall as promptly as practicable (but in no event more than 30 days after so
required or requested pursuant to this Section 3) file with the Commission and thereafter shall use
their reasonable best efforts to cause to be declared effective under the Act within 60 days after
so required or requested pursuant to this Section 3 a Shelf Registration Statement relating to the
offer and sale of the Securities or the New Securities, as applicable, by the Holders thereof from
time to time in accordance with the methods of distribution elected by such Holders and set forth
in such Shelf Registration Statement; provided, however, that nothing in this Section 3(b) shall
require the filing of a Shelf Registration Statement prior to the deadline for filing the Exchange
Offer Registration Statement set forth in Section 2(a); provided, further, that no Holder (other
than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the
provisions of this Agreement applicable to such Holder; and provided, further, that with respect to
New Securities received by an Initial Purchaser in exchange for Securities constituting any portion
of an unsold allotment, the Issuers may, if permitted by current interpretations by the
Commission’s staff, file a post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Item 507 or 508 of Regulation S-K, as applicable, in
satisfaction of their obligations under this subsection with respect thereto, and any such Exchange
Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the
provisions herein applicable to, a Shelf Registration Statement.

          (c) The Issuers shall use their reasonable best efforts to keep the Shelf Registration
Statement continuously effective, supplemented and amended as required by the Act, in order to
permit the Prospectus forming part thereof to be usable by Holders for a period of two years from
the date of the initial sale of the Notes or such shorter period that will terminate when all the
Securities or New Securities, as applicable, covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement (in any such case, such period being called the
“Shelf Registration Period”). The Issuers shall not be obligated to amend or supplement
such Shelf Registration Statement more than once per calendar quarter to reflect additional
Holders. The Issuers shall be deemed not to have used their reasonable best efforts to keep the
Shelf Registration Statement effective during the requisite period if any of them voluntarily takes
any action that would result in Holders of Securities or New Securities covered thereby not being
able to offer and sell such Securities or New Securities during that period, unless (A) such action
is required by applicable law or (B) such action is taken by such Issuer in good faith and for
valid business reasons (not including avoidance of such Issuer’s obligations hereunder), including
the acquisition or divestiture of assets, so long as the Issuers promptly thereafter comply with
the requirements of Section 4(k) hereof, if applicable.

 

-9-

          (d) The Issuers shall cause the Shelf Registration Statement and the related Prospectus and
any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement
or such amendment or supplement, (i) to comply in all material respects with the applicable
requirements of the Act and the rules and regulations of the Commission; and (ii) not to contain
any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

          4. Additional Registration Procedures. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following
provisions shall apply:

          (a) The Issuers shall:

          (i) furnish to you, not less than five Business Days prior to the filing thereof with
the Commission, a copy of the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, and each amendment thereto and each amendment or
supplement, if any, to the Prospectus included therein (including all documents incorporated
by reference therein after the initial filing) and shall use their reasonable best efforts
to reflect in each such document, when so filed with the Commission, such comments as you
reasonably propose;

          (ii) if permitted by the SEC, include the information set forth in Annex A hereto on
the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the
forepart of the Exchange Offer Registration Statement in a section setting forth details of
the Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of
the Prospectus contained in the Exchange Offer Registration Statement, and in Annex D hereto
in the letter of transmittal delivered pursuant to the Registered Exchange Offer;

          (iii) if requested by an Initial Purchaser, include the information required by Item
507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the Exchange
Offer Registration Statement; and

          (iv) in the case of the Shelf Registration Statement, include the names of the Holders
that propose to sell Securities or New Securities pursuant to the Shelf Registration
Statement as selling security holders.

          (b) The Issuers shall ensure that:

          (i) any Registration Statement, any amendment thereto, any Prospectus forming part
thereof and any amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder; and

 

 

 -10-

          (ii) any Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading.

          (c) The Issuers shall advise you, the Holders of Securities or New Securities covered by any
Shelf Registration Statement and any Exchanging Dealer under any Exchange Offer Registration
Statement that has provided in writing to the Issuers a telephone or facsimile number and address
for notices, and, if requested by you or any such Holder or Exchanging Dealer, shall confirm such
advice in writing (which notice pursuant to clauses (ii)-(v) of this Section 4(c) shall be
accompanied by an instruction to suspend the use of the Prospectus until the Issuers shall have
remedied the basis for such suspension):

          (i) when a Registration Statement or any amendment thereto has been filed with the
Commission and when the Registration Statement or any post-effective amendment thereto has
become effective;

          (ii) of any request by the Commission for any amendment or supplement to the
Registration Statement or the Prospectus or for additional information;

          (iii) of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that purpose;

          (iv) of the receipt by any Issuer of any notification with respect to the suspension of
the qualification of the securities included therein for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and

          (v) of the happening of any event that requires any change in the Registration
Statement or the Prospectus so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.

          (d) The Issuers shall use their reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of any Registration Statement or the qualification of the securities
included therein for sale in any jurisdiction at the earliest possible time.

          (e) The Issuers shall furnish to each Holder of Securities or New Securities covered by any
Shelf Registration Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including all
material incorporated

 

 

 -11-

therein by reference, and, if the Holder so requests in writing, all exhibits
thereto (including exhibits incorporated by reference therein).

          (f) The Issuers shall, during the Shelf Registration Period, deliver to each Holder of
Securities or New Securities covered by any Shelf Registration Statement, without charge, as many
copies of the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder may reasonably
request. The Issuers consent to the use in accordance with the terms of this Agreement of the
Prospectus or any amendment or supplement thereto by each of the selling Holders of securities in
connection with the offering and sale of the securities covered by the Prospectus, or any amendment
or supplement thereto, included in the Shelf Registration Statement.

          (g) The Issuers shall furnish to each Exchanging Dealer which so requests, without charge, at
least one copy of the Exchange Offer Registration Statement and any post-effective amendment
thereto, including all material incorporated by reference therein, and, if the Exchanging Dealer so
requests in writing, all exhibits thereto (including exhibits incorporated by reference therein).

          (h) The Issuers shall promptly deliver to each Initial Purchaser, each Exchanging Dealer and
each other Person required to deliver a Prospectus during the Exchange Offer Registration Period,
without charge, as many copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as any such Person may reasonably request. The
Issuers consent to the use of the Prospectus or any amendment or supplement thereto by any Initial
Purchaser, any Exchanging Dealer and any such other Person that may be required to deliver a
Prospectus following the Registered Exchange Offer in connection with the offering and sale of the
New Securities covered by the Prospectus, or any amendment or supplement thereto, included in the
Exchange Offer Registration Statement.

          (i) Prior to the Registered Exchange Offer or any other offering of Securities or New
Securities pursuant to any Registration Statement, the Issuers shall arrange, if necessary, for the
qualification of the Securities or the New Securities for sale under the laws of such U.S.
jurisdictions as any Holder shall reasonably request and will maintain such qualification in effect
so long as required; provided that in no event shall any Issuer be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or to take any action that would
subject it to service of process in suits, other than those arising out of the Initial Placement,
the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any
such jurisdiction where it is not then so subject.

          (j) The Issuers shall cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing New Securities or Securities to be issued

 

 

 -12-

or sold pursuant to any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may reasonably request.

          (k) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above,
the Issuers shall (unless they shall have invoked a Shelf Delay Period with respect to such
occurrence) promptly prepare a post-effective amendment to the applicable Registration Statement or
an amendment or supplement to the related Prospectus or file any other required document so that,
as thereafter delivered, the Prospectus will not include an 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. In such circumstances, the period of
effectiveness of the Exchange Offer Registration Statement provided for in Section 2 and the Shelf
Registration Statement provided for in Section 3(b) shall each be extended by the number of days
from and including the date of the giving of a notice of suspension pursuant to Section 4(c) to and
including the date when the Initial Purchaser, the Holders and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section 4.

          (l) Not later than the effective date of any Registration Statement, the Issuers shall provide
a CUSIP number for the Securities or the New Securities, as the case may be, registered under such
Registration Statement and provide the Trustee with printed certificates for such Securities or New
Securities, in a form eligible for deposit with The Depository Trust Company.

          (m) The Issuers shall comply with all applicable rules and regulations of the Commission and
shall make generally available to their security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement satisfying the provisions of
Section 11(a) of the Act and Rule 158 thereunder.

          (n) The Issuers shall cause the Indenture or the New Securities Indenture, as the case may be,
to be qualified under the Trust Indenture Act in a timely manner.

          (o) The Issuers may require each Holder of securities to be sold pursuant to any Shelf
Registration Statement to furnish to the Issuers such information regarding the Holder and the
distribution of such securities as the Issuers may from time to time reasonably require for
inclusion in such Registration Statement. The Issuers may exclude from such Shelf Registration
Statement the Securities or New Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.

          (p) In the case of any Shelf Registration Statement, the Issuers shall enter into such
agreements (including if requested by the Holders of a majority in principal amount of the
Securities, an underwriting agreement in customary form) and take all other appropriate actions in
order to expedite or facilitate the registration or the disposition of the Securities or New
Securities and in connection therewith, if an underwriting agreement is entered into,

 

 

 -13-

cause the same to contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 (or such other provisions and procedures acceptable to the Majority
Holders and the Managing Underwriters, if any, with respect to all parties to be indemnified
pursuant to Section 6).

          (q) In the case of any underwritten Shelf Registration Statement, the Issuers shall:

          (i) make reasonably available for inspection by the Holders of Securities or New
Securities to be registered thereunder, any underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent
retained by the Holders or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Issuers and their subsidiaries;

          (ii) cause the officers, directors and employees of any Issuer to supply all relevant
information reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with any such Shelf Registration Statement as is customary
for similar due diligence examinations; provided, however, that any information that is
designated in writing by any Issuer, in good faith, as confidential at the time of delivery
of such information shall be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection with a court
proceeding or required by law, or such information becomes available to the public generally
or through a third party without an accompanying obligation of confidentiality;

          (iii) make such representations and warranties to the Holders of Securities or New
Securities registered thereunder and the underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in primary underwritten offerings and
covering matters including, but not limited to, those set forth in the Purchase Agreement;

          (iv) obtain opinions of counsel to the Issuers and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and the underwriters, if any,
covering such matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Holders and
underwriters;

          (v) obtain “cold comfort” letters and updates thereof from the independent certified
public accountants of Parent (and, if necessary, any other independent certified public
accountants of any Issuer or any subsidiary of any Issuer or of any business acquired by any
Issuer for which financial statements and financial data are,

 

 

 -14-

or are required to be, included in the Registration Statement), addressed to each
selling Holder registered thereunder and the underwriters, if any, in customary form and
covering matters of the type customarily covered in “cold comfort” letters in connection
with primary underwritten offerings; and

          (vi) deliver such documents and certificates as may be reasonably requested by the
Majority Holders and the Managing Underwriters, if any, including those to evidence
compliance with Section 4(k) and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Issuers.

The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(q) shall be performed
at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto;
and (B) each closing under any underwriting or similar agreement as and to the extent required
thereunder.

          (r) In the case of any Exchange Offer Registration Statement, the Issuers shall, upon
reasonable request by the Initial Purchaser:

          (i) make reasonably available for inspection by the Initial Purchaser, and any
attorney, accountant or other agent retained by the Initial Purchaser, all relevant
financial and other records, pertinent corporate documents and properties of the Issuers and
their subsidiaries;

          (ii) cause the officers, directors and employees of any Issuer to supply all relevant
information reasonably requested by any Initial Purchaser or any such attorney, accountant
or agent in connection with any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is designated in
writing by any Issuer, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by such Initial Purchaser or any such attorney,
accountant or agent, unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality;

          (iii) make such representations and warranties to the Initial Purchaser, in form,
substance and scope as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not limited to, those set forth
in the Purchase Agreement;

          (iv) obtain opinions of counsel to the Issuers and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the Initial
Purchaser and their counsel), addressed to the Initial Purchaser,

 

 

 -15-

covering such matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the Initial Purchaser or
their counsel;

          (v) obtain “cold comfort” letters and updates thereof from the independent certified
public accountants of Parent (and, if necessary, any other independent certified public
accountants of any Issuer or any subsidiary of any Issuer or of any business acquired by any
Issuer for which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to the Initial Purchaser, in customary
form and covering matters of the type customarily covered in “cold comfort” letters in
connection with primary underwritten offerings, or if requested by the Initial Purchaser or
their counsel in lieu of a “cold comfort” letter, an agreed-upon procedures letter under
Statement on Auditing Standards No. 35, covering matters requested by the Initial Purchaser
or their counsel; and

          (vi) deliver such documents and certificates as may be reasonably requested by the
Initial Purchaser or their counsel, including those to evidence compliance with Section 4(k)
and with conditions customarily contained in underwriting agreements.

The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this Section 4(r) shall be
performed at the close of the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.

          (s) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by
Holders to the Issuers (or to such other Person as directed by the Issuers) in exchange for the New
Securities, the Issuers shall mark, or caused to be marked, on the Securities so exchanged that
such Securities are being canceled in exchange for the New Securities. In no event shall the
Securities be marked as paid or otherwise satisfied.

          (t) The Issuers will use their reasonable best efforts (i) if the Securities have been rated
prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities
or the New Securities, as the case may be, covered by a Registration Statement; or (ii) if the
Securities were not previously rated, to cause the Securities or New Securities covered by a
Registration Statement to be rated with at least one nationally recognized statistical rating
agency, if so requested by Majority Holders with respect to the related Registration Statement or
by any Managing Underwriters.

          (u) In the event that any Broker-Dealer shall underwrite any Securities or New Securities or
participate as a member of an underwriting syndicate or selling group or “assist in the
distribution” (within the meaning of the Rules and the By-Laws of the National Association of
Securities Dealers, Inc.) thereof, whether as a Holder or as an underwriter, a

 

 

 -16-

placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Issuers
will assist such Broker-Dealer in complying with the requirements of such Rules.

          (v) The Issuers shall use their reasonable best efforts to take all other steps necessary to
effect the registration of the Securities or the New Securities, as the case may be, covered by a
Registration Statement.

          5. Registration Expenses. The Issuers shall bear all expenses incurred in connection
with the performance of their obligations under Sections 2, 3 and 4 hereof and, in the event of any
Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements
of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse
the Initial Purchaser for the reasonable fees and disbursements of counsel acting in connection
therewith.

          6. Indemnification and Contribution. (a) Each of the Issuers jointly and severally
agrees to indemnify and hold harmless each Holder of Securities or New Securities, as the case may
be, covered by any Registration Statement (including each Initial Purchaser and, with respect to
any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer), the
directors, officers, employees and agents of each such Holder and each Person who controls any such
Holder 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 they or any of them 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 Registration Statement as originally filed or in any amendment thereof, or in the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under which they were made
not misleading, and jointly and severally agrees to reimburse 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 case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Issuers by or on behalf of any such Holder specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which the Issuers may
otherwise have.

          Each of the Issuers also jointly and severally agrees to indemnify or contribute as provided
in Section 6(d) to Losses of each underwriter of Securities or New Securities, as the case may be,
registered under a Shelf Registration Statement, their directors, officers, employees

 

 

 -17-

or agents and
each Person who controls such underwriter on substantially the same
basis as that of the indemnification of the Initial Purchaser and the selling Holders provided
in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 4(p) hereof.

          (b) Each Holder of securities covered by a Registration Statement (including each Initial
Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h), each
Exchanging Dealer) severally and not jointly agrees to indemnify and hold harmless the Issuers,
each of their respective directors, each of their respective officers who signs such Registration
Statement and each Person who controls any Issuer within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Issuers to each such Holder,
but only with reference to written information relating to such Holder furnished to the Company by
or on behalf of such Holder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any liability which any such
Holder may otherwise have.

          (c) Promptly after receipt by an indemnified party under this Section 6 or notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 6, 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 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

 

 

 -18-

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 expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such Initial Purchaser and
controlling persons, which firm shall be designated in writing by Citigroup. 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 6 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 6 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, then each
applicable indemnifying party shall have a joint and several obligation to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively “Losses”) to
which such indemnified party may be subject in such proportion as is appropriate to reflect the
relative benefits received by such indemnifying party, on the one hand, and such indemnified party,
on the other hand, from the Initial Placement and the Registration Statement which resulted in such
Losses; provided, however, that in no case shall the Initial Purchaser or any subsequent Holder of
any Security or New Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a New Security,
applicable to the Security that was exchangeable into such New Security, as set forth on the cover
page of the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the securities purchased by such underwriter
under the Registration Statement which resulted in such Losses. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations. Benefits received by the
Issuers shall be deemed to be equal to the sum of (x) the total net proceeds from the

 

 

 -19-

Initial
Placement (before deducting expenses) as set forth on the cover page of the Final
Memorandum and (y) the total amount of liquidated damages which the Issuers were not required
to pay as a result of registering the securities covered by the Registration Statement which
resulted in such Losses. Benefits received by the Initial Purchaser shall be deemed to be equal to
the total purchase discounts and commissions as set forth on the cover page of the Final
Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of
receiving Securities or New Securities, as applicable, registered under the Act. Benefits received
by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions,
as set forth on the cover page of the Prospectus forming a part of the Registration Statement which
resulted in such Losses. Relative fault shall be determined by reference to, among other things,
whether any alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of
the parties and their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation (even if the Holders were treated
as one entity for such purpose) or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions of this paragraph
(d), no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each Person who controls a Holder within the
meaning of either the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each Person who controls
any Issuer within the meaning of either the Act or the Exchange Act, each officer of any Issuer who
shall have signed the Registration Statement and each director of any Issuer shall have the same
rights to contribution as the Issuers, subject in each case to the applicable terms and conditions
of this paragraph (d).

          (e) The provisions of this Section 6 will remain in full force and effect, regardless of any
investigation made by or on behalf of any Holder or the Issuers or any of the officers, directors
or controlling Persons referred to in this Section 6, and will survive the sale by a Holder of
securities covered by a Registration Statement.

          7. Underwritten Registrations. (a) If any of the Securities or New Securities, as the
case may be, covered by any Shelf Registration Statement are to be sold in an underwritten
offering, the Managing Underwriters shall be selected by the Majority Holders.

          (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration
Statement, unless such Person (i) agrees to sell such Person’s Securities or New Securities, as the
case may be, on the basis reasonably provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements; and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting

 

 

 -20-

agreements and other documents reasonably required under the terms of such underwriting
arrangements.

          8. No Inconsistent Agreements. No Issuer has, as of the date hereof, entered into,
nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.

          9. Amendments and Waivers. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Issuers have obtained the
written consent of the Majority Holders; provided that, with respect to any matter that directly or
indirectly affects the rights of any Initial Purchaser hereunder, the Issuers shall obtain the
written consent of each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the
foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders whose Securities or New Securities, as the
case may be, are being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders, may be given by the Majority Holders, determined on
the basis of Securities or New Securities, as the case may be, being sold rather than registered
under such Registration Statement.

          10. Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier
guaranteeing overnight delivery:

     (a) if to a Holder, at the most current address given by such holder to the Issuers in
accordance with the provisions of this Section 10, which address initially is, with respect
to each Holder, the address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Citigroup Inc.;

     (b) if to you, initially at the address set forth in the Purchase Agreement; and

     (c) if to the Issuers, initially at the address of the Company set forth in the
Purchase Agreement.

          All such notices and communications shall be deemed to have been duly given when received.
The Initial Purchaser or the Issuers by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.

          11. Successors. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties, including, without the need for an

 

 

 -21-

express assignment or any consent by the Issuers thereto, subsequent Holders of Securities and
New Securities. The Issuers hereby agree to extend the benefits of this Agreement to any Holder of
Securities or New Securities, and any such Holder may specifically enforce the provisions of this
Agreement as if an original party hereto.

          12. Counterparts. This Agreement may be in signed counterparts, each of which shall
an original and all of which together shall constitute one and the same agreement.

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

          14. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed in the
State of New York.

          15. Severability. In the event that any one of more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.

          16. Securities Held by the Issuers, etc. Whenever the consent or approval of Holders
of a specified percentage of principal amount of Securities or New Securities is required
hereunder, Securities or New Securities, as applicable, held by any Issuer or its Affiliates (other
than subsequent Holders of Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New Securities) shall not be
counted in determining whether such consent or approval was given by the Holders of such required
percentage.

 

 

          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 Issuers and the Initial Purchaser.

	 	 	 	 	 
	 	

Very truly yours,

TERRA CAPITAL, INC.

 	 
	 	By:  	/s/ John W. Huey
 	 
	 	 	Name:  	John W. Huey 	 
	 	 	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/ John W. Huey
 	 
	 	 	Name:  	John W. Huey 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

 -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

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