Document:

Exhibit 4.2
                                                                     -----------

                     POTASH CORPORATION OF SASKATCHEWAN INC.
                         STOCK OPTION PLAN -- DIRECTORS

1.       Purpose of Plan

         Potash Corporation of Saskatchewan Inc. (the "Corporation") by
         resolution of its Board of Directors (the "Board") has established this
         Plan to encourage directors of the Corporation to promote the growth
         and profitability of the Corporation by providing them with the
         opportunity through options to acquire Common Shares of the Corporation
         ("Common Shares").

2.       Administration

         This Plan shall be administered by the Board.

3.       Grant of Options

         From time to time the Board may designate individual directors of the
         Corporation to be granted options to purchase Common Shares and the
         number of Common Shares which each such person will be granted an
         option to purchase; provided that the aggregate number of Common Shares
         subject to such options may not exceed the number provided for in
         paragraph 4 of this Plan.

4.       Shares Subject to Option

         The aggregate number of Common Shares issuable after January 24, 1995
         pursuant to options under this Plan may not exceed 456,000 shares. The
         number of Common Shares issuable pursuant to options under this Plan
         shall be subject to adjustment under paragraphs 8 and 9.

         The aggregate number of Common Shares in respect of which options have
         been granted to any one person and which remain outstanding shall not
         at any time exceed 5% of the number of issued and outstanding Common
         Shares (on a non-diluted basis) at that time.

         If any option granted under this Plan, or any portion thereof, expires
         or terminates for any reason without having been exercised in full, the
         Common Shares with respect to which such option has not been exercised
         shall again be available for further options under this Plan.

5.       Option Price

         The option price under this Plan to any optionee shall be the fair
         market value of the Common Shares at such time which, for optionees
         resident in the United States and any other optionees designated by the
         Board, shall be deemed to be the closing price per share of the Common
         Shares on the New York Stock Exchange on the last trading day
         immediately preceding the day the option is granted and, for all other
         optionees, shall be deemed to be the closing price per share of the
         Common Shares on The Toronto Stock Exchange on the last trading day
         immediately preceding the day the option is granted; provided that, in
         either case, if the Common Shares did not trade on such exchange on
         such day the option price shall be the closing price per share on such
         exchange on the last day on which the Common Shares traded on such
         exchange prior to the day the option is granted.

6.       Terms of Option

         The period during which an option is exercisable may not exceed 10
         years from the date the option is granted. The option agreement may
         contain provisions limiting the number of Common Shares with respect to
         which the option may be exercised in any one year. Each option
         agreement shall contain provisions to the effect that:

         a.       if an optionee ceases to be a director of the Corporation by
                  reason of his or her death or an optionee who is a retiree
                  pursuant to clause b below dies, the legal personal
                  representatives of the optionee will be entitled to exercise
                  any unexercised options, including such options that may vest
                  after the date of death, during the period ending at the end
                  of the twelfth calendar month following the calendar month in
                  which the optionee dies, failing which exercise the options
                  terminate;

         b.       subject to the terms of clause a above, if an optionee ceases
                  to be a director of the Corporation by reason of retirement in
                  accordance with the then prevailing retirement policy of the
                  Corporation, the optionee will be entitled to exercise any
                  unexercised options, including such options as may vest after
                  the date of retirement, until the expiry date of such options
                  or the date on which such options are otherwise terminated in
                  accordance with the provisions of this Plan, failing which
                  exercise the options terminate;

         c.       if an optionee ceases to be a director of the Corporation for
                  any reason other than as provided in the preceding clauses a.
                  or b., the optionee will be entitled to exercise any
                  unexercised options, to the extent exercisable at the date of
                  such event, during the period ending at the end of the
                  calendar month immediately following the calendar month in
                  which the event occurs, failing which exercise the options
                  terminate; and

         d.       each option is personal to the optionee and is not assignable,
                  except (i) as provided in the preceding clause a, and (ii) at
                  the election of the Board, an option may be assignable to the
                  spouse, children and grandchildren of the original optionee
                  and to a trust, partnership or limited liability company, the
                  entire beneficial interest of which is held by one or more of
                  the foregoing.

         Nothing contained in the preceding clauses a, b or c shall extend the
         period during which an option may be exercised beyond its stipulated
         expiry date or the date on which it is otherwise terminated in
         accordance with the provisions of this Plan.

         If an option is assigned pursuant to the preceding subclause (ii) of
         clause d, the references in the preceding clauses a, b and c to ceasing
         to be a director or death of an optionee shall not relate to the
         assignee of an option but shall relate to the original optionee. In the
         event of such assignment, legal personal representatives of the
         original optionee shall not be entitled to exercise the assigned
         option, but the assignee of the option or the legal personal
         representatives of the assignee may exercise the option during the
         applicable specified period.

7.       Exercise of Options

         Subject to the provisions of this Plan, an option may be exercised from
         time to time by delivering to the Corporation at its registered office
         a written notice of exercise specifying the number of shares with
         respect to which the option is being exercised and accompanied by
         payment in cash or certified cheque in full of the purchase price of
         the shares then being purchased.

8.       Adjustments

         Appropriate adjustments to the authorized limits set forth in paragraph
         4, in the number, class and/or type of shares optioned and in the
         option price per share, both as to options granted or to be granted,
         may be made by the Board in its discretion to give effect to
         adjustments in the number of Common Shares which result from
         subdivisions, consolidations or reclassifications of the Common Shares,
         the payment of share dividends by the Corporation, the reconstruction,
         reorganization or recapitalization of the Corporation or other relevant
         changes in the capital of the Corporation. If the Corporation sells all
         or substantially all of its assets as an entirety or substantially as
         an entirety, options under this Plan may be exercised, in whole or in
         part, at any time up to and including (but not after) a date 30 days
         following the date of completion of such sales or prior to the close of
         business on the date the option expires, whichever is earlier.

9.       Mergers

         If the Corporation proposes to amalgamate or merge with another body
         corporate, the Corporation shall give written notice thereof to
         optionees in sufficient time to enable them to exercise outstanding
         options, to the extent they are otherwise exercisable by their terms,
         prior to the effective date of such amalgamation or merger if they so
         elect. The Corporation shall use its best efforts to provide for the
         reservation and issuance by the amalgamated or continuing corporation
         of an appropriate number of shares, with appropriate adjustments, so as
         to give effect to the continuance of the options to the extent
         reasonably practicable. In the event that the Board determines in good
         faith that such continuance is not in the circumstances practicable, it
         may upon 30 days' notice to optionees terminate the options.

10.      Change of Control

         If a "change of control" of the Corporation occurs, each then
         outstanding option granted under this Plan may be exercised, in whole
         or in part, even if such option is not otherwise exercisable by its
         terms. For purposes of this paragraph 10, a change of control of the
         Corporation shall be deemed to have occurred if:

         a.       within any period of two consecutive years, individuals who at
                  the beginning of such period constituted the Board and any new
                  directors whose appointment by the Board or nomination for
                  election by shareholders of the Corporation was approved by a
                  vote of at least a majority of the directors then still in
                  office who either were directors at the beginning of the
                  period or whose appointment or nomination for election was
                  previously so approved, cease for any reason to constitute a
                  majority of the Board;

          b.      there occurs an amalgamation, merger, consolidation,
                  wind-up, reorganization or restructuring of the Corporation
                  with or into any other entity, or a similar event or series
                  of such events, other than any such event or series of
                  events which results in securities of the surviving or
                  consolidated corporation representing 50% or more of the
                  combined voting power of the surviving or consolidated
                  corporation's then outstanding securities entitled to vote
                  in the election of directors of the surviving or
                  consolidated corporation being beneficially owned, directly
                  or indirectly, by the persons who were the holders of the
                  Corporation's outstanding securities entitled to vote in the
                  election of directors of the Corporation prior to such event
                  or series of events in substantially the same proportions as
                  their ownership immediately prior to such event of the
                  Corporation's then outstanding securities entitled to vote
                  in the election of directors of the Corporation;

         c.       50% or more of the fixed assets (based on book value as shown
                  on the most recent available audited annual or unaudited
                  quarterly consolidated financial statements) of the
                  Corporation are sold or otherwise disposed of (by liquidation,
                  dissolution, dividend or otherwise) in one transaction or
                  series of transactions within any twelve month period;

         d.       any party, including persons acting jointly or in concert with
                  that party, becomes (through a take-over bid or otherwise) the
                  beneficial owner, directly or indirectly, of securities of the
                  Corporation representing 20% or more of the combined voting
                  power of the Corporation's then outstanding securities
                  entitled to vote in the election of directors of the
                  Corporation, unless in any particular situation the Board
                  determines in advance of such event that such event shall not
                  constitute a change of control; or

         e.       the Board approves and/or recommends that shareholders accept,
                  approve or adopt any transaction that would constitute a
                  change of control under clause b, c or d above.

11.      Amendment or Discontinuance of this Plan

         The Board may amend or discontinue this Plan at any time but, subject
         to paragraphs 8, 9 and 10, no such amendment may increase the aggregate
         maximum number of shares that may be subject to option under this Plan,
         change the manner of determining the minimum option price, extend the
         option period under any option beyond 10 years or, without the consent
         of the holder of the option, alter or impair any option previously
         granted to an optionee under this Plan. Amendments to the Plan require
         pre-clearance of The Toronto Stock Exchange.

12.      Evidence of Options

         Each option granted under this Plan shall be embodied in a written
         option agreement between the Corporation and the optionee which shall
         give effect to the provisions of this Plan.exv4w14

 

	 	 	 
	CIBC World Markets

	 	CIBC WORLD MARKETS PLC

Cottons Centre

Cottons Lane

London, England SE1 2QL

Tel:   44 (0) 20 7234 4127

Fax:   44 (0) 20 7407 4127

The Directors

Trench Electric Holding B.V.

29th November 2000 

Dear Sirs

FACILITIES AGREEMENT DATED 18 APRIL 2000 AS AMENDED AND RESTATED ON 20 JUNE 2000
AND MADE BETWEEN TRENCH ELECTRIC HOLDING B.B. (AS PARENT) (1), THE COMPANIES
LISTED IN SCHEDULE II THERETO (AS ORIGINAL BORROWERS) (2), THE COMPANIES LISTED
IN SCHEDULE III THERETO (AS GUARANTORS AND CHARGING COMPANIES) (3), CIBC WORLD
MARKETS PLC, BARCLAYS BANK PLC, CREDIT LYONNAIS AND NM ROTHSCHILD & SONS LIMITED
(AS BANKS) (4), CIBC WORLD MARKETS PLC (AS ARRANGER) (5), CIBC WORLD MARKETS
PLC (AS ISSUING BANK) (6) CIBC WORLD MARKETS PLC (AS AGENT) (7), CANADIAN
IMPERIAL BANK OF COMMERCE (AS CANADIAN LENDER) (8) AND CIBC WORLD MARKETS PLC
(AS SECURITY AGENT) (9) (THE “FACILITIES AGREEMENT”)

We refer to the above Facilities Agreement and to the Trench Group Bank
Presentation dated 22 November 2000 (the “Presentation”). Unless a contrary
intention appears, terms and expressions defined in the Facilities Agreement
shall have the same meanings when used in this letter and references to clauses
and schedules of the Facilities Agreement.

We are writing this letter to you in your capacity as Parent (including as
agent for all of the Obligors) in our capacity as Agent.

	1.	 	AMENDMENTS AND WAIVERS

	 	(a)	 	as of the date hereof the Facilities Agreement shall be
amended so that the figure “5” appearing in column 2 of the first
row of schedule VIII (Capital Expenditure Projections) shall be
deleted and replaced with the figure “6.527” provided that, for the
purpose of clause 15.9(a), the increase in permitted capital
expenditure of US$1.527 million may be expended in relation to the
Shanghai Joint Venture and in accordance with the projections
appearing at page 25 of the Presentation and reproduced as Schedule
2 to this letter;
	 
	 	(b)	 	for the purposes of clause 14.1 (q), clause 16.4 and the
definition of “Consolidated EBITDA” contained in clause 17.3, we
hereby waive the requirement that the Accounting Policies reflect US
GAAP to the extent (and only to the extent) necessary to permit the
Group to account for the US$5.29 million representing the cash to be
received of a total US$5.53 million profit due on the sale of
certain technology by Trench Limited and Trench Switzerland AG to
Shanghai Instrument Transfer Works as provided for at page 24 of the
Presentation (and reproduced as Schedule 1 to this letter) over the
twelve month period consisting of the four Quarters commencing with
the Quarter ending 30 September 2000; and

 

 

	 	(c)	 	in the event that the operations of Trench Switzerland AG are
closed down, the costs associated with such closure as provided for
by (but not exceeding) the relevant Swiss currency amounts set out
at pages 43 and 44 of the Presentation (and reproduced as Schedules
3 and 4 of this letter) shall, for the two year period that such
costs will be incurred, from the date such costs are incurred as
illustrated in Schedules 3 and 4 be disregarded (on a profit and
loss or cash basis as appropriate) for the purposes of calculation
of the relevant financial covenants in clause 17. For the purposes
of monitoring compliance with such expenditure limits an additional
schedule in form and substance reasonably acceptable to the Agent
showing the incurrence of such costs measured against Schedule 3
will be added to the monthly management accounts delivered to the
Agent pursuant to clause 16.2(b).

	2.	 	APPROVALS
	 
	 	 	The Majority Banks have indicated to us their positive intention to
address as soon as practicable in terms of satisfactory to them the
following issues:

	 	(a)	 	The amendment of the covenants in the Facilities Agreement to
accommodate the ongoing impact of the Shanghai Joint Venture (being
primarily the capital expenditure limits in Schedule VIII and
carve-out of the single “expansion” capex in 2001 from the cash flow
covenant in clause 17.1 (b)) in accordance with the figures
appearing at page 25 of the Presentation and reproduced as Schedule
2 to this letter; and
	 
	 	(b)	 	The amendment of the financial covenant ratios generally in
clause 17 going forwards to recognise the impact that foreign
exchange movements have had upon the existing financial covenant
ratios.

For the avoidance of doubt no waivers are given under this letter in respect of
any other breach of, or other Event or Default or Potential Event of Default
under, the Facilities Agreement or any other Senior Finance Document which
might result from any other circumstances at any time other than as
specifically set out herein.

The agreement and consents of the Banks contained in this letter shall apply
only to the matters specifically referred to herein and are given in relevance
upon the information (other than any projections) provided to the Agent on
behalf of the Group being true, complete and accurate, and such projections
being prepared in good faith based upon reasonable assumptions. Such agreement
and consents shall be without prejudice to any rights which the Finance Parties
may now or hereafter have in relation to any other circumstances or matters
other than as specifically referred to herein (and whether subsisting on the
date hereof or otherwise) or in relation to any information being other than
true, complete and accurate, which rights shall remain in full force and
effect.

This letter may be executed in any number of counterparts and this has the same
effect as if the signatures on the counterparts were on a single copy of this
letter.

This letter shall be governed by and construed in accordance English Law and
clause 38 (Governing Law and Jurisdiction) of the Facilities Agreement shall
apply mutatis mutandis as if set out in full in this letter.

 

 

Yours faithfully

For and on behalf of CIBC World Markets plc

in its capacity as Agent

for and on behalf of the Banks

	 	 	 
	

	 	/s/ Richard Vaughan
	 
	By:

	 	Richard Vaughan

Director

To CIBC World Markets Plc

We confirm our acceptance of and agreement to your letter dated 29th November 2000.

For and on behalf of

Trench Electric Holding B.V.

(for itself and in its capacity as

Parent and agent for each of the Obligors)

	 	 	 	 	 
	

	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Signed:

	 	/s/ H Poulson

	 
	By (please print):

	 	H Poulson

	 
	Title (please print):

	 	Chief Executive

	 
	Date:
	 	29.11.00

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