Exhibit 10.15
Execution Copy
AMENDMENT NO. 2 TO JOINT OPERATING AGREEMENT
THIS AMENDMENT NO. 2 TO JOINT OPERATING AGREEMENT
("Amendment"), dated as of November 30, 1993, is entered into
between FREEPORT-McMORAN RESOURCE PARTNERS, Limited Partnership, a
Delaware limited partnership ("Freeport"), IMC FERTILIZER, INC., a
Delaware corporation ("IMC") and HOMESTAKE SULPHUR COMPANY, a
Delaware corporation ("Homestake"). Capitalized terms used herein
without definition shall have the meanings given them in the Joint
Operating Agreement (as defined below).
W I T N E S S E T H:
WHEREAS:
A. Freeport, IMC and Homestake (by assignment from Felmont
Oil Corporation ) are parties to that certain Joint Operating
Agreement dated as of May 1, 1988, as amended ("Joint Operating
Agreement").
B. Freeport, IMC and Homestake desire to amend certain
provisions of the Joint Operating Agreement as set forth herein.
NOW, THEREFORE, Freeport, IMC and Homestake hereby agree as
follows:
1. Amendment of Joint Operating Agreement.
1.1 Definitions. Article I of the Joint Operating Agreement
is hereby amended by adding thereto the following defined terms:
1.38 "Closure Cost" shall mean the total cost of abandonment
and reclamation of the Property and the Joint Assets,
including costs required by government or other legal
authority.
1.39 "Closure Cost Estimate" shall mean the estimate of the
Closure Cost as updated from time to time pursuant to Section
20.03 hereof.
1.40 "Closure Cost Share" shall mean, with respect to any
Party at any time, an amount of money equal to the product
obtained by multiplying (i) the Closure Cost Estimate at such
time, by (ii) a percentage equal to the percentage
constituting such party's Participating Interest at such time.
1.41 "Net Cash Flow" shall mean net cash flow from continuing
operations determined in accordance with generally accepted
accounting principles except that net cash flow to a Party, or
its Affiliate, as applicable, which is from any entity
partially owned by such Party or Affiliate and accounted for
under the equity method, shall be included only to the extent
of net cash distributions received.
1.42 "Financial Assurance' shall mean, with respect to any
Party, any one of the following:
(a) A representation by such Party to the other Parties
certified by such Party's chief financial officer,
that such Party's Net Cash Flow, during the period
comprising the four fiscal quarters immediately
preceding the quarter in which the notice was
given, was an amount in excess of the amount
obtained by multiplying by 2 such Party's Closure
Cost Share as of the end of such period; or
(b) A written commitment by an Affiliate of such Party,
made to the other Parties, to guarantee such
Party's payment of its Closure Cost Share, provided
such Affiliate's chief financial officer can
certify that the Affiliate's Net Cash Flow, during
the period comprising the four fiscal quarters
immediately preceding the quarter in which the
notice was given, was an amount in excess of the
amount obtained by multiplying by 2 such Party's
Closure Cost Share as of the end of such period; or
(c) A performance bond or letter of credit issued by a
Non-Party in an amount equal to such Party's
Closure Cost Share as of the time of issuance of
such bond or letter, provided the issuing Non-Party
and the terms of draw-down are acceptable to each
of the other Parties; or
(d) Such other form of assurance as shall be agreed to
by all Parties.
1.43 "Funding Party" shall have the meaning prescribed for
such term in Section 20.03 hereof.
1.44 "Previously Non-Funding Party" shall have the meaning
prescribed for such term in Section 20.03 hereof.
1.45 "Interim Closure Fund" shall mean, with respect to any
Funding Party, an account funded by that Funding Party and
maintained by Operator prior to January 1, 2006 to fund that
Funding Party's Closure Cost Share.
1.46 "Closure Fund" shall mean, with respect to any Party, an
account funded by that Party and maintained by Operator on and
after January 1, 2006 to fund that Party's Closure Cost Share.
1.47 "Initial Funding Date" shall have the meaning prescribed
for such term in Section 20.03 hereof.
1.48 "Remaining Tonnage" shall mean, with respect to any
Funding Party, the number of tons obtained by multiplying (i)
Operator's estimate of the commercially producible tonnage of
sulphur reserves remaining to be produced from the Mine on the
Property as of the Initial Funding Date, by (ii) the
percentage equal to the percentage constituting that
Participating Interest of the Funding Party as of such time.
1.2 Amendment to Section 20.03 of the Joint Operating
Agreement. Section 20.03 of the Joint Operating Agreement is
amended to read in its entirety as follows:
20.03 Reclamation and Abandonment Security. On or before
February 1, 1994, Operator shall submit to Non-Operators a
Closure Cost Estimate dated as of such date. On or before
each subsequent February 1 during the term of this Agreement:
(i) Operator shall deliver to Non-Operators written notice
stating whether Operator has become aware of any changed
circumstance that would significantly affect the then current
Closure Cost Estimate and describing any such circumstance,
and (ii) if on or before the immediately preceding December 1
Operator has become aware of any changed circumstance that
would significantly affect the then current Closure Cost
Estimate or any one or more of the Non-Operators requests in
writing an updated Closure Cost Estimate, Operator shall
submit to Non-Operators an updated Closure Cost Estimate dated
as of that February 1. As described in more detail
hereinafter in this Section 20.03, the Closure Cost Estimate
shall serve as the basis upon which the Parties shall provide
funds to be applied against each Party's Closure Cost Share.
If at any time prior to January 1, 2006 a Party should
require assurance as to the ability of each Party to pay its
Closure Cost Share, the Party requiring such assurance shall
so notify the other Parties. Within 30 days after the date
upon which such notice was transmitted to the Parties, each
Party (including the Party giving the notice) shall provide
Financial Assurance to the other Parties.
If prior to January 1, 2006 a Party fails to provide
requested Financial Assurance as required above, then Operator
shall promptly establish for such Party (a "Funding Party") an
Interim Closure Fund. Such Interim Closure Fund shall be
funded by a per ton charge collected by Operator from the
Funding Party (through Operator's monthly statement or billing
to the Funding Party) on each ton of sulphur produced
hereunder for the account of the Funding Party during the
period beginning on the first day of the month following the
month in which the Funding Party failed to provide requested
Financial Assurance as required above (the "Initial Funding
Date") and ending on the earlier of January 1, 2006 or the
date of release of the Interim Closure Fund to the Funding
Party in accordance with the further provisions of this
Section 20.03. Such per ton charge shall be equal to the
dollar amount obtained by dividing the Funding Party's Closure
Cost Share as of the Initial Funding Date by the Funding
Party's Remaining Tonnage as of such time. The per ton charge
shall be revised from time to time (but not more than twice
per year) by the operator to take into account changes in the
Closure Cost Estimate, changes in the Remaining Tonnage,
changes in the Funding Party's Participating Interest, and
earnings accrued on amounts previously collected from the
Funding Party and maintained in the Interim Closure Fund.
Each Interim Closure Fund shall be invested in U.S.
government securities or certificates of deposit of banks
mutually agreed to among the Parties. Each Interim Closure
Fund shall be released to the applicable Funding Party only
upon the occurrence of one of the following events: (i) the
Funding Party provides Financial Assurance to each of the
other Parties; or (ii) such release is expressly agreed to by
all of the Parties.
In the case of each Party for which no Interim Closure
Fund is maintained as of January 1, 2006 ( a "Previously Non-
Funding Party") Operator shall establish a Closure Fund. Each
such Previously Non-Funding Party's Closure Fund shall be
funded by a monthly charge to be collected by Operator from
the Previously Non-Funding Party (through Operator's monthly
statement or billing to the Previously Non-Funding Party) for
the month of January 2006 and for each month during the term
of this Agreement thereafter until the Closure Cost has been
paid in full. The amount of such monthly charge shall be equal
to the dollar amount obtained by dividing the Previously Non-
Funding Party's Closure Cost Share as of January 1, 2006 by
Operator's estimate of the number of months of the remaining
productive life of the Mine on the Property as of such date.
In the case of each Funding Party for which an Interim
Closure Fund is maintained as of January 1, 2006, such Interim
Closure Fund shall on such date automatically convert to, and
thereafter be, such Funding Party's Closure Fund. Each such
Funding Party's Closure Fund shall be funded by a monthly
charge to be collected by Operator from the Funding Party
(through Operator's monthly statement or billing to the
Funding Party) for the month of January 2006 and for each
month during the term of this agreement thereafter until the
Closure Cost has been paid in full. The amount of such
monthly charge shall be equal to the dollar amount obtained by
(i) subtracting the number of dollars in such Funding Party's
Interim Closure Fund immediately prior to such Fund's
conversion to a Closure Fund on January 1, 2006 from such
Funding Party's Closure Cost Share as of January 1, 2006 and
(ii) dividing the difference by Operator's estimate of the
number of months of the remaining productive life of the Mine
on the Property as of such date.
The monthly charge to be collected from each Funding
Party, if any, and the monthly charge to be collected from
each Previously Non-Funding Party, if any, to fund the Closure
Funds shall each be revised from time to time (but not more
than twice per year) by Operator to take into account changes
in the Closure Cost Estimate, changes in the estimate of the
remaining productive life of the Mine on the Property, changes
in the Participating Interest of the Funding Party or the
Previously Non-Funding Party (as the case may be), and
earnings accrued on amounts previously collected and
maintained in the applicable Closure Fund.
The Closure Fund of each Party (irrespective of such
Party's status as a Funding Party or Previously Non-Funding
Party) shall be: (i) invested in U.S. government securities or
certificates of deposit of banks mutually agreed to among the
Parties; and (ii) unavailable for refund to such Party except
as hereinafter provided in this Section 20.03.
At such time as the Closure Cost is finally determined,
Operator shall compare the dollar amount of each Party's
Closure Cost Share as of such time against the dollar amount
balance of such Party's Closure Fund at such time (inclusive
of earnings on deposits therein). If the comparison indicates
that such Party's Closure Cost Share exceeds such Party's
Closure Fund balance, Operator shall cause the entire Closure
Fund balance to be applied against the Closure Cost and shall
invoice such Party for the amount by which the Party's Closure
Cost Share exceeds such balance. The invoiced Party's shall
pay such invoice in full promptly following such Party's
receipt thereof. If the comparison indicates that such
Party's Closure Fund balance exceeds such Party's Closure Cost
Share, Operator shall cause to be promptly refunded to such
Party from such Party's Closure fund the amount by which such
Closure Fund balance exceeds such Closure Cost Share, and
shall cause the entire Closure Fund balance remaining after
such refund to be applied against the Closure Cost.
Operator also shall cause to be paid to each Party all
interest or other amounts earned following such time as the
Closure Cost is finally determined and the comparisons
provided for in the immediately preceding paragraph are
completed on that Party's Closure Fund balance to the extent
the Closure Fund balance is not disbursed at such time to pay
the Closure Cost; provided that operator in its sole
discretion may from time to time set-off such interest and
other amounts payable to a Party against any amount by which
that Party's Closure Cost Share exceeds that Party's Closure
Fund balance. Subject to Operator's right to set-off as just
described, payment of any such interest and other amounts
earned shall be made not less than quarterly by the 15th day
of each calendar quarter following the quarter in which such
interest or other amounts were earned.
2. Conditions Precedent to Effectiveness of this
Amendment. This Amendment shall become effective as of the date
first above written when each of the Parties has delivered to the
others duly executed counterparts hereof.
3. Absence of Waiver. The Parties agree that the
amendments set forth in Section 1 hereof shall be limited precisely
as written and shall not be deemed to:
(a) be a consent to any waiver or modification of any
other term or condition of the Joint Operating Agreement;
(b) be a consent to, or waiver of, any default under the
Joint Operating Agreement;
(c) impose upon any Party any obligation, express or
implied, to consent to any further amendment or modification of the
Joint Operating Agreement; or
(d) prejudice any right or remedy which any Party may
now have under the Joint Operating Agreement or may have in the
future under or in connection with the Joint Operating Agreement
including, without limitation, any right or remedy resulting from
any default.
4. Representations. Each Party hereby represents and
warrants to the other Parties that:
(a) It is a corporation (or in the case of Freeport a
limited partnership) duly organized and validly existing under the
laws of the State of Delaware;
(b) The execution, delivery and performance of this
Amendment by it are within its corporate (or in the case of
Freeport partnership) powers, have been duly authorized by all
necessary corporate (or in the case of Freeport partnership)
action, have received all necessary consents and approvals (if any
shall be required), and do not and will not contravene or conflict
with any provision of law or of its charter or by-laws, or of any
agreement binding upon it or its property; and
(c) This Amendment is its legal, valid and binding
obligation, enforceable against it in accordance with this
Amendment's terms.
5. Miscellaneous
(a) Section headings used in this Amendment are for
convenience of reference only and shall not affect the construction
of this Agreement.
(b) This Amendment may be executed in any number of
counterparts and by the different Parties on separate counterparts
and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the
same agreement.
(c) This Amendment is a contract made under and governed
by the laws of the State of Louisiana, without giving effect to
principles of conflicts of laws.
(d) All obligations and rights of the Parties that are
expressed herein, shall be in addition to and not in limitation of
those provided by applicable law.
(e) Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be effective and valid
under applicable law; but if any provision of this Amendment shall
be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Amendment.
(f) This Amendment shall be binding upon each of the
Parties and their respective successors and assigns, and shall
inure to the benefit of their respective successors and assigns.
IN WITNESS WHEREOF, the Parties hereto have caused this
Amendment to be executed as of the date first above written.
FREEPORT-McMORAN RESOURCE PARTNERS,
Limited Partnership
By:_______________________________________
Title:______________________________________
IMC FERTILIZER, INC.
By:______________________________________
Title:____________________________________
HOMESTAKE SULPHUR COMPANY
By:_____________________________________
Title:___________________________________
