NITROGEN FIXING BACTERIA

Nitrogen is essential for all life on this planet, but most of it is in the air, making up about 78% of the earth's atmosphere.
Bacteria are the only organisms capable of taking gaseous nitrogen and combining it with hydrogen to make ammonia. So nitrogen-fixing bacteria are an essential part of all ecosystems. Mostly they are free-living soil organisms, but some plants have developed an association with bacteria which infect their roots and , in return for sugars from the plant, fix nitrogen which can be used by the plant for growth. The most important belong to the genus Rhizobium, which infects the roots of both trees and herbaceous plants in the bean family (Fabaceae or Leguminosae).
The bacteria live in nodules on the plant root. The reduction of nitrogen to ammonia can only occur in the absence of oxygen. The sheath of plant cells around the bacteroids keeps oxygen out.

In http://hcs.osu.edu/hcs300/bact.htm