1
Exhibit 10(l)
AMENDING AGREEMENT
------------------
THIS AMENDING AGREEMENT made effective the 27th day of August, 1998.
BETWEEN:
INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED,
a Canada corporation, having its registered office at
Esterhazy, Saskatchewan
(hereinafter referred to as "IMC")
OF THE FIRST PART
- and -
POTASH CORPORATION OF SASKATCHEWAN INC., a Saskatchewan
corporation, having its registered office at Saskatoon,
Saskatchewan
(hereinafter referred to as "PCS")
OF THE SECOND PART
WHEREAS:
A. As of January 31, 1978 IMC and Potash Corporation of Saskatchewan
(hereinafter referred to as "PC") entered into a Restated Mining and
Processing Agreement (hereinafter called the "Restated Mining and
Processing Agreement") relative to the mining and processing by IMC of
potash ore owned or controlled by PC, at the Esterhazy Facilities;
B. IMC, PC and Potash Corporation of Saskatchewan Mining Limited
(hereinafter referred to as "PCS Mining") entered into an assignment
agreement as of January 31, 1979 whereby PCS Mining acquired from PC all
right, title and interest of PC in and to the Restated Mining and
Processing Agreement;
C. IMC and PCS entered into a Novation Agreement as of November 16, 1989
whereby PCS assumed all the rights and obligations of PCS Mining under the
Restated Mining and Processing Agreement and IMC released PCS Mining from
all obligations under the Restated Mining and Processing Agreement;
D. IMC and PCS entered into an agreement to amend the Restated Mining and
Processing Agreement on December 21, 1990 to clarify the rights and
obligations of the parties in the event IMC constructs Satellite
Facilities to contend with excess flooding (the Restated Mining and
Processing Agreement as so amended being herein referred to as the
"Agreement");
E. Effective as of February 22, 1995 IMC changed its name from International
Minerals & Chemical Corporation (Canada) Limited to International Minerals
& Chemical (Canada) Global Limited;
2
F. IMC and PCS desire to amend the Agreement to move from a non-calendar
fiscal year, as currently provided in the Agreement, to a calendar fiscal
year; and
G. IMC and PCS have agreed to amend certain provisions of the Agreement in
the manner hereinafter set forth.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, IMC and PCS agree that the Agreement
is hereby amended as follows:
1. The definition of "Expansion Costs" in subsection 1.01(g) is deleted and
replaced with the following:
'"Expansion Costs": Capital Expenditures incurred for the expansion of
the capacity of the Esterhazy Facilities to produce in excess of 4.2
million Tons of Finished Potash Products per Fiscal Year or in excess of
2.1 million Tons of Finished Potash Products per Fiscal Year where the
Fiscal Year is the Stub Year, pursuant to this Processing Agreement.
Expansion Costs shall not include any Satellite Facility Costs.'
2. The definition of "Fiscal Year" in subsection 1.01(i) is deleted and
replaced with the following:
'"Fiscal Year" shall mean:
(i) at any time on or before June 30, 1998, a period of twelve (12)
consecutive months commencing July 1 and ending June 30;
(ii) between July 1, 1998 and December 31, 1998, the period of six
(6) consecutive months commencing July 1 and ending December 31; and
(iii) at any time on or after January 1, 1999, a period of twelve
(12) consecutive months commencing January 1 and ending December 31.'
3. A new subsection 1.01(t) is added as follows:
'"Stub Year": That Fiscal Year commencing July 1, 1998 and ending
December 31, 1998.'
4. The last complete sentence of subsection 3.01(a) is deleted in its
entirety and replaced with the following:
"Should PCS require Finished Potash Products in excess of such quantities
during any Fiscal Year after the Fiscal Year ending June 30, 1978, IMC
will provide such excess requirements to the extent that any portion of
the capacity of 4,200,000 Tons of Finished Potash Products for the Fiscal
Year (2,100,000 Tons of Finished Potash Products where the Fiscal Year is
the Stub Year) is unused and available for such purpose, and if PCS shall
participate in any expansion of the Esterhazy Facilities beyond such
capacity of 4,200,000 Tons (or 2,100,000 Tons where the Fiscal Year is the
Stub Year) in accordance with Section 6.01(b), then IMC will provide such
excess requirements to the extent that any portion of such expanded
capacity is unused and available for such purpose."
3
5. Subsection 3.01(c) is deleted and replaced with the following:
"(c) Subject to the provisions of this Article III, for the Fiscal Year
commencing July 1, 1977 and for each succeeding Fiscal Year during the
term of this Processing Agreement, IMC will mine and process and PCS will
commit to have mined and processed by and will take delivery from IMC
pursuant to this Processing Agreement of not less than 500,000 Tons per
Fiscal Year (250,000 Tons where the Fiscal Year is the Stub Year) of
Finished Potash Products and, at the option of PCS exercised by notice
given in accordance with Section 3.02 below, up to a maximum of 1,050,000
Tons of Finished Potash Products per Fiscal Year (525,000 Tons where the
Fiscal Year is the Stub Year), provided that if the actual annual capacity
of the Esterhazy Facilities at the commencement of any Fiscal Year is less
than 4,200,000 Tons of Finished Potash Products, or if the potash
producing license or licenses issued to IMC and PCS under a potash
allocation system then in effect in Saskatchewan aggregate less than
4,200,000 Tons of Finished Potash Products, IMC will mine and process, and
PCS will commit to have mined and processed by and will take delivery from
IMC pursuant to this Processing Agreement of a number of tons of Finished
Potash Products not to exceed PCS's proportionate share of the actual
annual capacity or said aggregate of such potash producing license or
licenses, which proportionate share shall be 26.316% of any Tonnage up to
3,800,000 Tons (1,900,000 Tons where the Fiscal Year is the Stub Year) and
12.5% of any Tonnage over 3,800,000 Tons (1,900,000 Tons where the Fiscal
Year is the Stub Year) up to 4,200,000 Tons (2,100,000 Tons where the
Fiscal Year is the Stub Year).
Notwithstanding anything to the contrary in this Processing Agreement,
while a potash allocation system is in effect in Saskatchewan, IMC shall
not be obligated to produce the requirements of PCS in excess of the
quantity of Finished Potash Products which PCS is licensed to produce, nor
shall IMC be obligated to produce for PCS any quantity of Finished Potash
Products which PCS may be licensed to produce in excess of the
requirements which IMC is obligated to produce for PCS under this Section
3.01."
6. Clause 3.02(a)(i) shall be deleted and replaced with the following:
"(i) If the total quantity of Finished Potash Products requested by PCS
for such Fiscal Year is equal to the amount of Finished Potash Products
committed to be taken by PCS during the current Fiscal Year in accordance
with notice given under this Section 3.02, plus or minus not more than
25%, then such notice shall be given by the first day of the third month
immediately preceding the first day of such Fiscal Year; or"
7. Clause 3.02(a)(ii) shall be deleted and replaced with the following:
"(ii) If the total quantity of Finished Potash Products requested by PCS
for such Fiscal Year is equal to the amount of Finished Potash Products
committed to be taken by PCS during the current Fiscal Year in accordance
with notice given under this Section 3.02, plus or minus more than 25% and
up to 50%, then such notice shall be given by the first day of the sixth
month immediately preceding the first day of such Fiscal Year; or"
8. Clause 3.02(a)(iii) shall be deleted and replaced with the following:
"(iii) If the total quantity of Finished Potash Products requested by PCS
for such Fiscal Year is equal to the amount of Finished Potash Products
committed to be taken by PCS during the current Fiscal Year in
4
accordance with notice given under this Section 3.02, plus or minus more
than 50%, then such notice shall be given by the first day of the ninth
month immediately preceding the first day of such Fiscal Year."
9. A new clause 3.02(a)(v) is added as follows:
"(v) Notwithstanding anything contained in clauses 3.02(a)(i), (ii) and
(iii), IMC and PCS hereby acknowledge and agree that where the Fiscal Year
is the Stub Year, during such Fiscal Year PCS's requirements for Finished
Potash Products shall be an aggregate of 350,000 Tons and PCS shall be
deemed to have furnished IMC with notice of such requirement for Finished
Potash Products in accordance with this Section 3.02."
10. A new clause 3.02(a)(vi) is added as follows:
"(vi) Notwithstanding anything contained in clauses 3.02(a)(i), (ii) and
(iii), IMC and PCS hereby acknowledge and agree that for the first six
months of that Fiscal Year commencing January 1, 1999 and ending December
31, 1999, PCS's requirements for Finished Potash Products shall be an
aggregate of 350,000 Tons and PCS shall be deemed to have furnished IMC
with notice of such requirement for Finished Potash Products in accordance
with this Section 3.02."
11. A new clause 3.02(a)(vii) is added as follows:
"(vii) Notwithstanding anything contained in clauses 3.02(a)(i), (ii) and
(iii), IMC and PCS hereby acknowledge and agree that for the last six
months of that Fiscal Year commencing January 1, 1999 and ending December
31, 1999, PCS's requirements for Finished Potash Products shall be not
more than an aggregate of 450,000 Tons and not less than an aggregate of
250,000 Tons, and PCS shall provide IMC with notice of its requirements
for Finished Potash Products for such six month period, on or before
November 15, 1998."
12. A new clause 3.02(a)(viii) is added as follows:
"(viii) Notwithstanding anything contained in clause 3.02(a)(iv), IMC and
PCS acknowledge and agree that unless IMC otherwise consents, the
aggregate Tons of Finished Potash Products specified in any notice given
to IMC by PCS pursuant to clauses 3.02(a)(i), (ii) and (iii) for that
Fiscal Year commencing January 1, 2000 and ending December 31, 2000 shall
not be more than 975,000 Tons."
13. The last sentence of subsection of 3.05(b) is deleted in its entirety and
replaced with the following:
"The aforesaid $36,000,000 (Canadian) limitation shall be reduced,
effective July 1, 1979 and on each July 1 thereafter to and including July
1, 1998, by $750,000 (Canadian), and commencing December 31, 1999 and on
each December 31 thereafter by $750,000 (Canadian)."
14. The third complete sentence of section 4.02 following the section heading
is deleted in its entirety and replaced with the following:
5
"By the last day of the second month immediately following the end of each
Fiscal Year, IMC shall furnish to PCS schedules reflecting in reasonable
detail Actual Costs and Added Costs by principal elements of costs and
Capital Expenditures by capital projects together with the opinion of its
independent public accountants."
15. Clause 4.03(i) is deleted and replaced with the following:
"(i) one-twelfth (except where the Fiscal Year is the Stub Year, in which
case the appropriate fraction shall be one-sixth) of PCS's share of
estimated total production for the applicable Fiscal Year as shown in
IMC's Base Annual Production Schedule multiplied by the Planned Average
Per Ton Production Cost of total production under the Base Annual
Production Schedule for such Fiscal Year plus any amount payable in
accordance with subsection 4.01(i) or subsection 4.01(a) per such Ton,
and"
16. Clause 4.03(ii) and the remaining part of section 4.03 which follows
clause 4.03(ii) is deleted and replaced with the following:
"(ii) one-twelfth (except were the Fiscal Year is the Stub Year, in which
case the appropriate fraction shall be one-sixth) of all Added Costs as
estimated by IMC to be payable by PCS pursuant to this Processing
Agreement for such Fiscal Year.
As soon as practicable after each quarter of each such Fiscal Year (or
each half where such Fiscal Year is the Stub Year), the actual Tonnage
produced and the Actual Costs per Ton shall be computed and determined by
IMC for the preceding quarter of such Fiscal Year (or such half, as the
case may be) and a written statement setting forth such computations by
expense element classification together with Added Costs payable by PCS
pursuant to this Processing Agreement for such preceding quarter (or half,
as the case may be) shall be furnished promptly to PCS. Within thirty
(30) days after such statement has been so furnished such payments shall
be made by IMC to PCS or PCS to IMC as shall be required to adjust the
amount theretofore paid by PCS to the amount to which should have been
paid (on the basis of Actual Costs and Added Costs) by PCS with respect to
Finished Potash Products mined and processed for PCS during such preceding
quarter (or preceding half, as the case may be). Within thirty (30) days
after the audit referred to in Section 4.02, a final adjustment for the
Fiscal Year will be made by IMC and a written statement thereof shall be
submitted to PCS. Within thirty (30) days thereafter payment shall be
made by IMC or PCS as shall be required for the final adjustment shown in
such statement."
17. Section 4.04 is deleted and replaced with the following:
"Section 4.04. IMC to Furnish Base Annual Production Schedule and Planned
Average Per Ton Production Cost. The Base Annual Production Schedule and
the Planned Average Per Ton Production Cost, determined by IMC on a
quarterly (or three (3) consecutive month basis where such Fiscal Year is
the Stub Year) and a Fiscal Year basis supported by estimated Actual Costs
by expense element classification, will be furnished by IMC to PCS a
reasonable time prior to the commencement of each Fiscal Year. PCS will
be advised promptly by IMC of any significant expected changes in the Base
Annual Production Schedule and the Planned Average Per Ton Production Cost
whenever such changes occur or are anticipated to occur."
6
18. The last complete sentence of Section 5.01 is deleted in its entirety and
replaced with the following:
"The proportionate share of PCS of Capital Expenditures hereunder shall be
a percentage determined by dividing the total Tonnage of Finished Potash
Products processed for PCS or PCS and AMAX, as the case may be, during the
thirty-six (36) month period immediately preceding the Fiscal Year in
which the Capital Expenditures are made with the total Tonnage of Finished
Potash Products processed at the Esterhazy Facilities during such
thirty-six (36) month period."
19. Clause 5.03(d)(i) is amended by adding after the expression "five hundred
thousand (500,000) Tons of Finished Potash Products per Fiscal Year" the
following:
"(two hundred and fifty thousand (250,000) Tons where such Fiscal Year is
the Stub Year)".
7
20. Article VII is deleted in its entirety and replaced with the following:
"ARTICLE VII
TERM OF PROCESSING AGREEMENT
7.01(a) This Processing Agreement shall continue in effect until December
31, 2001, and, unless terminated by PCS as herein provided, for five (5)
additional consecutive periods of five (5) years each.
7.01(b) PCS may terminate this Processing Agreement as of December 31,
2001, or at the end of any five (5) year period thereafter by giving IMC
six (6) months' written notice prior to December 31, 2001 or the
expiration of any such additional five (5) year period.
7.01(c) Notwithstanding the provisions of subsection 7.01(a), and in
addition to any right that IMC may have in accordance with this Processing
Agreement to terminate this Processing Agreement, IMC may, at any time
after December 31, 2011, by giving to PCS one (1) year's prior written
notice of its intention to do so, terminate all mining and processing with
the Esterhazy Facilities. If IMC provides this notice, this Processing
Agreement shall terminate on the December 31 next following the expiry of
the said one (1) year notice.
7.01(d) If PCS has not terminated this Processing Agreement in accordance
with subsection 7.01(b) and IMC has not terminated this Processing
Agreement in accordance with subsection 7.01(c), so that this Processing
Agreement is in effect on December 31, 2026, and if thereafter IMC shall
continue to manage and operate the Esterhazy Facilities, IMC will, at the
timely request of PCS, continue to perform for PCS, as an independent
contractor, the services generally set forth in subsection 3.01(a) to the
extent that there is capacity to do so at the Esterhazy Facilities which
is unused and available for such purpose from time to time and PCS will
pay IMC for such services as set forth in Article IV. It is understood
and agreed by the parties that after the expiration of the term of this
Processing Agreement PCS shall have no other rights as set forth in this
Processing Agreement, including without limitation, the right to
participate in any expansion of the Esterhazy Facilities and the right to
have a minimum annual quantity of potash mined and processed for it."
21. In the event of any conflict or inconsistency between the terms of this
agreement and the Agreement, the terms of this agreement shall prevail.
22. This agreement shall be governed by and interpreted in accordance with
the laws in force from time to time in the Province of Saskatchewan and
shall, for all purposes, be deemed to have been made in the Province of
Saskatchewan.
23. This agreement may be executed in counterparts and all such counterparts
shall be read together and shall constitute one agreement, and shall be
binding upon all parties when executed by all parties.
24. This agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns, as permitted
under the Agreement.
25. As used in this agreement, including the recitals hereto, all capitalized
terms shall have the meaning subscribed to them in the Agreement.
8
26. The Agreement is hereby confirmed in all other respects.
IN WITNESS WHEREOF, International Minerals & Chemical (Canada) Global Limited
and Potash Corporation of Saskatchewan Inc. have caused this agreement to be
executed and delivered by the respective officers thereunto duly authorized as
of the day and year first above written.
INTERNATIONAL MINERALS & CHEMICAL
(CANADA) GLOBAL LIMITED
Per: /s/________________________
Per: /s/________________________
POTASH CORPORATION OF SASKATCHEWAN
INC.
Per: /s/________________________
Per: /s/________________________