Case Documents

PUBLIC VERSION CT- COMPETITION TRIBUNAL

IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, and the Competition Tribunal Rules, SOR/94-290;

AND IN THE MATTER OF the proposed acquisition by Agrium Inc. of C.F. Industries Holdings, Inc.;

AND IN THE MATTER OF the filing and registration of a consent agreement pursuant to section 105 of the Competition Act.

B E T W E E N :

THE COMMISSIONER OF COMPETITION Applicant – and – AGRIUM INC. Respondent CONSENT AGREEMENT IN RELATION TO THE ACQUISITION BY AGRIUM INC. OF C.F. INDUSTRIES HOLDINGS, INC.

PUBLIC VERSION WHEREAS Agrium Inc. (“Agrium”) proposes to acquire up to all of the issued and outstanding securities of C.F. Industries Holdings, Inc. (“CF”) (the “Transaction”);

AND WHEREAS the Commissioner of Competition (the “Commissioner”) has concluded that the Transaction is likely to result in a substantial lessening and/or prevention of competition in the wholesale supply of Urea in the provinces of Alberta and Saskatchewan, or parts thereof, and Ammonia in the province of Alberta, or parts thereof;

AND WHEREAS the Commissioner has concluded that the implementation of this Consent Agreement (the “Agreement”) is necessary to ensure that any substantial lessening and/or prevention of competition would not result from the Transaction;

AND WHEREAS Agrium does not admit but will not for the purposes of the enforcement of any provision of this Agreement, or in any subsequent proceeding, including in any proceedings under section 106 of the Competition Act, in relation to this Agreement contest: (i) the Commissioner’s conclusion that the Transaction is likely to result in a substantial lessening and/or prevention of competition in the wholesale supply of Urea in the provinces of Alberta and Saskatchewan, or parts thereof, and Ammonia in the province of Alberta, or parts thereof; and (ii) the Commissioner’s conclusion that the implementation of this Agreement is necessary to ensure that any substantial lessening and/or prevention of competition would not result from the Transaction;

AND WHEREAS in order to address the Commissioner’s concerns, Agrium has agreed to divest a 50% interest in Agrium’s fertilizer manufacturing facility and interests in the Ammonia and Urea storage facilities located in Carseland, Alberta, and to supply an additional annual volume of 60,000 Tonnes of Urea to a Purchaser (as defined herein);

AND WHEREAS the Commissioner is satisfied that the implementation of this Agreement will be sufficient to ensure that any likely substantial lessening and/or prevention of competition would not result from the completion of the Transaction;

AND WHEREAS Agrium attorns to the jurisdiction of the Tribunal for the purposes of this Agreement and any proceeding initiated by the Commissioner relating to this Agreement;

AND WHEREAS the Commissioner and Agrium agree to the immediate registration of this Agreement with the Competition Tribunal;

NOW THEREFORE Agrium and the Commissioner agree as follows: I. DEFINITIONS [1] For the purposes of this Agreement, unless something in the subject matter or context is inconsistent therewith, the following capitalized terms have the following meanings:

(a) “Act” means the Competition Act, R.S.C., 1985, c. C-34, as amended; 2

PUBLIC VERSION (b) “Affiliate” means an affiliated corporation, partnership or sole proprietorship within the meaning of section 2(2) of the Act;

(c) “Agreement” means this Consent Agreement entered into between Agrium and the Commissioner pursuant to section 105 of the Act, including the appendices hereto;

(d) “Agrium” means Agrium Inc., its directors, officers, employees, agents, representatives, successors, and assigns; and its joint ventures, subsidiaries, divisions, groups and Affiliates, and the respective directors, officers, employees, agents, representatives, predecessors, successors and assigns of each;

(e) “Agrium/Terra Transaction” means the purchase by Terra of the Divestiture Assets from Agrium pursuant to the terms of the Purchase Agreement, and the execution of a legally binding Supply Agreement between Terra and Agrium in respect of which the conditions precedent shall have been satisfied or waived and such agreement shall be in effect;

(f) “Alternate Purchaser Initial Sale Period” means the period set out in Confidential Appendix “C”, or such longer period as directed by the Commissioner;

(g) “Ammonia” means anhydrous ammonia or NH3; (h) “Business Day” means a day other than a Saturday, Sunday or statutory holiday in the Provinces of Alberta or Ontario;

(i) “Carseland Facility” means the fertilizer production facility operated by Agrium, located in Carseland, Alberta;

(j) “CF” means C.F. Industries Holdings, Inc. and its Affiliates, successors and assigns;

(k) “CF Sales Force” means those employees of CF engaged in the sale and marketing of Ammonia and Urea in Western Canada immediately prior to the Closing Date;

(l) “Closing Date” means the date upon which Agrium acquires more than 15% of the issued and outstanding shares of CF;

(m) “Commissioner” means the Commissioner of Competition appointed pursuant to section 7 of the Act or any person designated by the Commissioner to act on her behalf;

(n) “Confidential Information” means competitively sensitive or proprietary information not independently known to a Person from sources other than the entity to which the information pertains or a Person who is under confidentiality

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PUBLIC VERSION obligations to that other Person, including, without limiting the generality of the foregoing, manufacturing, operations and financial information, operating costs and revenues, customer lists, price lists, marketing methods, patents, technologies, processes or other trade secrets;

(o) “Controlled Release Facilities” means all Miscellaneous Interests, Tangibles, Intangibles and Lands relating exclusively to Agrium’s controlled release product facilities as more fully described in the Purchase Agreement attached at Confidential Appendix “A” hereto;

(p) “Divest” or “Divested” means to implement the Divestiture; (q) “Divestiture” means the sale, transfer, assignment, or other disposal of the Divestiture Assets, such that Agrium will have no direct or indirect interest in the Divestiture Assets, except as permitted herein or upon the consent of the Commissioner;

(r) “Divestiture Assets” means an undivided 50% interest in the Carseland Facility, which shall consist of the Lands and all Miscellaneous Interests, Tangibles and Intangibles relating to, located in or on, or used in the operation of the Carseland Facility (specifically excluding the Excluded Assets), including, but not limited to:

(i) the Ammonia production and storage functions of the Carseland Facility, including a MW Kellogg designed production plant currently capable of Ammonia production capacity of approximately 1,500 Tonnes per day and a 36,000 Tonne capacity cold storage facility;

(ii) the Urea production functions of the Carseland Facility, including a Stamicarbon designed plant currently capable of granulated Urea production of approximately 2,000 Tonnes per day;

(iii) the dry storage functions of the Carseland Facility, including a 400 metre long dry storage facility equipped with a high-capacity reclaim system currently capable of storing approximately 60,000 Tonnes of granulated Urea; and

(iv) the rail and truck loading functions of the Carseland Facility, all as more particularly described in the Purchase Agreement attached at Confidential Appendix “A” attached hereto;

(s) “Divestiture Trustee” means the Person appointed pursuant to Part IX of this Agreement and any employees, agents or other Persons acting for or on behalf of the Divestiture Trustee;

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PUBLIC VERSION (t) “Divestiture Trustee Sale” means the Divestiture to be conducted by the Divestiture Trustee pursuant to Part IX of this Agreement;

(u) “Divestiture Trustee Sale Period” means the period set out in Confidential Appendix “C”, within which the Divestiture Trustee is empowered to sell the Divestiture Assets, or such longer period as directed by the Commissioner;

(v) “Excluded Assets” means the assets described as Excluded Assets in the Purchase Agreement attached at Confidential Appendix “A” hereto, including (as more particularly described in the Purchase Agreement):

(i) Agrium's Controlled Release Facilities; (ii) all rights and obligations respecting the supply of Ammonia to Orica Canada Inc.'s Carseland, Alberta facility from the Carseland Facility and from Agrium's Joffre, Alberta facility or elsewhere, including ownership of the Ammonia pipeline located at the Carseland Facility supplying Orica Canada Inc.'s operations;

(iii) all excess supply of electricity generated at the TCPL facility located at the Carseland Facility; and

(iv) all finished product inventory located at the Carseland Facility as of the closing of the Agrium/Terra Transaction;

(w) “Hold Separate Assets” means the Carseland Facility; (x) “Hold Separate Manager” means the Person appointed pursuant to Part IV of this Agreement to manage the operation of the Hold Separate Assets;

(y) “Hold Separate Period” means the period between the expiry of the Initial Sale Period and latest of the following dates: the date of completion of the Divestiture; the date of execution of a legally binding Operating Agreement; and the date of execution of a legally binding Supply Agreement, all in accordance with the terms of this Agreement. For greater certainty, the Hold Separate Period may include the Alternative Purchaser Initial Sale Period and the Divestiture Trustee Sale Period;

(z) “Initial Sale Period” means the period set out in Confidential Appendix “C”, or such longer period as directed by the Commissioner;

(aa) “Intangibles” means all know-how, inventions, and trade secrets, including business methodologies and processes, utilized in the operation of the Carseland Facility;

(bb) “Lands” means all real property described in the Purchase Agreement attached at Confidential Appendix “A”, including:

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PUBLIC VERSION (i) all freehold or fee simple right, title and interest of Agrium; (ii) all right, title and interest of Agrium in and to any leases; (iii) all rights (whether fee simple or pursuant to orders, licences, leases, easements, rights of way or otherwise) to enter upon, use and occupy the surface of any lands and all other interests appurtenant to the Lands; and

(iv) all rights to acquire any of the rights described in (i), (ii) or (iii) above, subject to any Permitted Encumbrances thereon; (cc) “Medicine Hat Facility” means the fertilizer production facility owned by Canadian Fertilizer Ltd., located at Medicine Hat, Alberta;

(dd) “Miscellaneous Interests” means all: (i) contracts for the provision or receipt of goods or services, rights under leases of personal property, or any other contracts, agreements and documents or any rights in relation thereto;

(ii) licences, permits, approvals, consents and authorizations; (iii) all computer hardware and software, including all rights under licences and other agreements or instruments relating thereto;

(iv) books, maps, records, documents, including manufacturing data, production records, geological, engineering, geophysical, data processing, plant, environmental and other reports, files, data, interpretations, information, tapes, disks, computer programs, papers or other records; and

(v) all extensions, renewals, replacements or amendments of the foregoing items described in items (i) to (iv) above;

(ee) “Monitor” means the Person appointed pursuant to Part V of this Agreement, and any employees, agents or other Persons acting for or on behalf of the Monitor;

(ff) “Operating Agreement” means an agreement between Agrium (or a Divestiture Trustee on behalf of Agrium, as the case may be) and a Purchaser governing the operation of the Carseland Facility, and for greater certainty, may take the form of the agreement attached as Schedule “B” to Confidential Appendix “A”;

(gg) “Permitted Encumbrances” means easements, rights of way, liens or other encumbrances and rights defined as Permitted Encumbrances in the Purchase Agreement attached at Confidential Appendix “A”;

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PUBLIC VERSION (hh) “Person” means any individual, partnership, limited partnership, firm, corporation, association, trust, unincorporated organization or other entity, whether acting alone or in concert with another Person;

(ii) “Purchase Agreement” means the agreement between Agrium and Terra for the sale to Terra of the Divestiture Assets, in the form attached at Confidential Appendix “A”, including the Operating Agreement attached thereto as Schedule “B”;

(jj) “Purchaser” means the Person that acquires the Divestiture Assets from Agrium pursuant to this Agreement, and enters into a legally binding Operating Agreement and Supply Agreement with Agrium (or a Divestiture Trustee on behalf of Agrium, as the case may be);

(kk) “Remedial Agreement” means any agreement between Agrium and a Purchaser, or between a Divestiture Trustee (on behalf of Agrium) and a Purchaser or a Third Party (to effect the assignment of assets or rights of Agrium related to the Divestiture Assets to the benefit of a Purchaser), that has been approved by the Commissioner and that is specifically referenced in this Agreement as constituting a Remedial Agreement;

(ll) “Supply Agreement” means an agreement, for a five (5) year term, between Agrium (or a Divestiture Trustee on behalf of Agrium, as the case may be) and a Purchaser for the supply by Agrium of an annual volume of 60,000 Tonnes of Urea from the Carseland Facility or, upon the agreement of the Purchaser and Agrium, a different Agrium production facility or facilities located in Alberta or Saskatchewan, where such annual volume is in addition to the supply of Urea received pursuant to any acquisition by such Purchaser of the Divestiture Assets;

(mm) “Tangibles” means all tangible property, including apparatus, plant, buildings, improvements, machinery, equipment, facilities, supplies, raw materials, fixtures, furniture, furnishings, parts, vehicles and other items of tangible personal property owned or leased by Agrium in connection with the development, operation or maintenance of the Carseland Facility, or the treatment, storage, transportation, marketing or production therefrom, including all extensions, additions and accretions to the foregoing;

(nn) “Terra” means Terra Industries Inc., its directors, officers, employees, agents, representatives, successors, and assigns; and its joint ventures, subsidiaries, divisions, groups and Affiliates, and the respective directors, officers, employees, agents, representatives, predecessors, successors and assigns of each;

(oo) “Third Party” means any non-governmental Person other than Agrium or the Purchaser;

(pp) “Tonnes” means metric tonnes; 7

PUBLIC VERSION (qq) “Transaction” means the transaction as defined in the recitals; (rr) “Tribunal” means the Competition Tribunal established by the Competition Tribunal Act, R.S.C. 1985, c.19 (2 nd Supp.), as amended; and (ss) “Urea” means (NH2)2CO in granular form. All other terms defined in this Agreement have the meanings established elsewhere in this Agreement.

II. APPLICATION [2] The provisions of this Agreement shall apply to: (a) Agrium, and Agrium shall cause each of its Affiliates to carry out their respective obligations under this Agreement;

(b) each officer, director, employee, agent or other Person acting for or on behalf of Agrium with respect to any of the matters referred to in this Agreement;

(c) all other Persons acting in concert or participating with one or more of those listed in (a) or (b) above, with respect to the matters referred to in this Agreement, who shall have received actual notice of this Agreement;

(d) the Commissioner; (e) the Hold Separate Manager; (f) the Monitor; (g) the Divestiture Trustee; and (h) the Purchaser and the Purchaser’s heirs, successors, legal representatives and assigns.

III. GENERAL OBLIGATIONS OF AGRIUM [3] During the Initial Sale Period, Agrium shall: (a) complete the Divestiture to Terra pursuant to the Purchase Agreement in the form attached at Confidential Appendix “A”; and

(b) enter into a legally binding Supply Agreement with Terra in the form attached at Confidential Appendix “B”,

all in accordance with Part VII of this Agreement.

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PUBLIC VERSION [4] In the event that Agrium fails to effect either of paragraphs 3(a) or 3(b) above, Agrium shall, during the Alternate Purchaser Initial Sale Period:

(a) complete the Divestiture to a Purchaser; (b) enter into a legally binding Operating Agreement with such Purchaser; and (c) enter into a legally binding Supply Agreement with such Purchaser, all in accordance with Part VIII of this Agreement. [5] In the event that, prior to the expiry of the Alternate Purchaser Initial Sale Period, Agrium fails to complete the Divestiture to a Purchaser, enter into a legally binding Operating Agreement with such Purchaser, or enter into a legally binding Supply Agreement with such Purchaser, the Commissioner may appoint a Divestiture Trustee to: complete the Divestiture, enter into a legally binding Operating Agreement and enter into a legally binding Supply Agreement with a Purchaser in accordance with Part IX of this Agreement.

IV. HOLD SEPARATE [6] In the event that Agrium fails to complete the Divestiture to Terra pursuant to the Purchase Agreement or enter into a legally binding Supply Agreement with Terra during the Initial Sale Period in accordance with paragraph 3 above, the Commissioner shall appoint, immediately upon the expiry of the Initial Sale Period, a Hold Separate Manager who shall manage and operate the Hold Separate Assets independently of Agrium, as specified herein, during the Hold Separate Period. Agrium shall transfer to the Hold Separate Manager all rights, powers and authority necessary to perform his duties and responsibilities under this Agreement.

[7] Agrium shall be responsible for all fees and expenses properly charged or incurred by the Hold Separate Manager in the course of carrying out his duties and responsibilities under this Agreement, provided that the Hold Separate Manager shall not be authorized to make capital expenditures that are outside of the ordinary course of business except for those capital expenditures which, in the opinion of the Hold Separate Manager, acting reasonably, are necessary to maintain the viability, competitiveness and saleability of the Hold Separate Assets.

[8] Agrium shall: (a) take all reasonable steps to ensure that, from and after the expiry of the Initial Sale Period, the Hold Separate Assets are independent of Agrium, including transferring to the Hold Separate Manager all rights, powers and authority necessary for him to perform his duties and responsibilities under this Agreement; and

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PUBLIC VERSION (b) not exercise any direction or control, direct or indirect, over the management or operations of the Hold Separate Assets, except to the extent that Agrium must exercise such direction and control to assure compliance with this Agreement and except as otherwise provided in this Agreement.

[9] The Hold Separate Manager shall be responsible for the management of the Hold Separate Assets and shall report directly to the Monitor. The Hold Separate Manager shall not have access to any Confidential Information of Agrium other than that relating to the Hold Separate Assets. During the term of this Agreement, the Hold Separate Manager shall not be involved in any way in the operations of the other businesses of Agrium.

[10] The Hold Separate Manager shall have no financial interests affected by Agrium’s revenues, profits or profit margins, except that the Hold Separate Manager’s compensation for managing the Hold Separate Assets may include economic incentives for him to operate the Hold Separate Assets at no less than current rates of operation, to achieve the objectives of this Agreement and to improve the financial performance of the Hold Separate Assets.

[11] Notwithstanding any other provision of this Agreement, Agrium shall permit the Hold Separate Manager to use the external auditors of Agrium to maintain, in accordance with Canadian generally accepted accounting principles, separate and adequate financial ledger books and records of material financial information with respect to the Hold Separate Assets, provided that such external auditors shall sign a standard confidentiality agreement in a form determined by the Commissioner, and pursuant to which Agrium shall be named as a third party beneficiary.

[12] Agrium shall provide to the Hold Separate Manager such managerial, administrative and operational (including maintenance) resources of Agrium as are reasonably necessary for the following purposes:

(a) human resources and payroll; (b) accounts payable systems; (c) occupational health and safety; (d) environmental permitting and liability issues; (e) insurance, including notification of claims for which coverage is sought; and (f) financial services, including banking, except that, in using such resources, the Hold Separate Manager shall not disclose any Confidential Information, other than as permitted herein.

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PUBLIC VERSION [13] In addition to those Persons employed in connection with the Hold Separate Assets at the expiry of the Initial Sale Period, the Hold Separate Manager may employ such Persons as are reasonably necessary to assist him in managing and operating the Hold Separate Assets, including, without limitation, those providing administrative services, such as finance, information technology, employee relations, regulatory and legal, public relations, and customer relations services; provided that the Hold Separate Manager may not employ additional Persons if such services are reasonably capable of being provided by Persons employed solely in connection with the Hold Separate Assets, and not employed in connection with the operation of other businesses of Agrium following the expiry of the Initial Sale Period, or through the use of the managerial, administrative and operational (including maintenance) resources of Agrium in accordance with paragraph 12 above and the other terms and conditions of this Agreement. All costs associated therewith shall be borne by Agrium.

[14] The Hold Separate Manager shall have the responsibility and be given by Agrium any resources reasonably necessary to continue production levels and output required to satisfy current and future sales of finished product from the Hold Separate Assets and with the approval of the Monitor to implement previously approved goals, capital expenditure budgets and objectives. The Hold Separate Manager may consult with Agrium solely with respect to matters necessary to ensure that the business of Agrium continues to operate in the ordinary course. The Hold Separate Manager shall not, however, have access to any other of Agrium’s confidential marketing materials unrelated to the Hold Separate Assets.

[15] The Hold Separate Manager shall deliver to the Monitor a copy of any communications between the Hold Separate Manager and Agrium.

[16] If the Hold Separate Manager ceases to act or fails to act diligently or otherwise in accordance with this Agreement or any agreement between the Commissioner and the Hold Separate Manager, the Commissioner, or the Monitor with the approval of the Commissioner, shall be permitted to remove the Hold Separate Manager. In the event the Hold Separate Manager ceases to act in his role, the Commissioner shall select a substitute Hold Separate Manager after consultation with Agrium and the Monitor, and transfer to the substitute Hold Separate Manager all rights, powers and authority necessary to permit such substitute Hold Separate Manager to perform the duties and responsibilities of the Hold Separate Manager pursuant to this Agreement.

[17] During the Hold Separate Period, the Hold Separate Manager shall take all necessary steps to preserve the independence and competitive viability of the Hold Separate Assets, including, but not limited to, giving all necessary instructions to cause Persons employed in connection with the Hold Separate Assets to:

(a) operate the Hold Separate Assets independently of Agrium; (b) operate the Hold Separate Assets in compliance with all applicable laws; 11