10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended June 30, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-10351

POTASH CORPORATION OF SASKATCHEWAN INC.

(Exact name of registrant as specified in its charter)

Canada	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
122 – 1st Avenue South	S7K 7G3
Saskatoon, Saskatchewan, Canada	(Zip Code)
(Address of principal executive offices)

306-933-8500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ     NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o     NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

YES o      NO þ

As at July 31, 2009, Potash Corporation of Saskatchewan Inc. had 295,730,685 Common Shares outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Financial Position
Condensed Consolidated Statements of Operations and Retained Earnings
Condensed Consolidated Statements of Cash Flow
Condensed Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Accumulated Other Comprehensive Income
Notes to the Condensed Consolidated Financial Statements For the Three and Six Months Ended June 30, 2009
14. Seasonality
15. Contingencies
16. Guarantees
17. Related Party Commitment
18. Reconciliation of Canadian and United States Generally Accepted Accounting Principles
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS
SIGNATURES
Exhibit 4(a)
Exhibit 4(b)
Exhibit 4(c)
Exhibit 4(n)
Exhibit 11
Exhibit 31(a)
Exhibit 31(b)
Exhibit 32

PART I.  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

Potash Corporation of Saskatchewan Inc.

Condensed Consolidated Statements of Financial Position
(in millions of US dollars except share amounts)
(unaudited)

	June 30,		December 31,
	2009		2008
Assets
Current assets
Cash and cash equivalents	$	371.3	$	276.8
Accounts receivable		998.9		1,189.9
Inventories (Note 2)		658.4		714.9
Prepaid expenses and other current assets		191.9		79.2
Current portion of derivative instrument assets		0.4		6.4
		2,220.9		2,267.2
Derivative instrument assets		9.9		11.5
Property, plant and equipment		5,492.7		4,812.2
Investments		3,173.1		2,750.7
Other assets		250.4		288.7
Intangible assets		20.5		21.5
Goodwill		97.0		97.0
	$	11,264.5	$	10,248.8
Liabilities
Current liabilities
Short-term debt and current portion of long-term debt (Note 3)	$	735.7	$	1,324.1
Accounts payable and accrued charges		590.7		1,183.6
Current portion of derivative instrument liabilities		84.7		108.1
		1,411.1		2,615.8
Long-term debt (Note 4)		3,082.1		1,739.5
Derivative instrument liabilities		100.3		120.4
Future income tax liability		769.8		794.2
Accrued pension and other post-retirement benefits		266.0		253.4
Accrued environmental costs and asset retirement obligations		133.6		133.4
Other non-current liabilities and deferred credits		2.7		3.2
		5,765.6		5,659.9
Contingencies and Guarantees (Notes 15 and 16, respectively)
Shareholders’ Equity
Share capital		1,415.2		1,402.5
Unlimited authorization of common shares without par value; issued and outstanding 295,552,385 and 295,200,987 at June 30, 2009 and December 31, 2008, respectively Unlimited authorization of first preferred shares; none outstanding
Contributed surplus		145.8		126.2
Accumulated other comprehensive income		1,099.4		657.9
Retained earnings		2,838.5		2,402.3
		5,498.9		4,588.9
	$	11,264.5	$	10,248.8

(See Notes to the Condensed Consolidated Financial Statements)

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Potash Corporation of Saskatchewan Inc.

Condensed Consolidated Statements of Operations and Retained Earnings
(in millions of US dollars except per-share amounts)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2009			2008			2009			2008
Sales (Note 8)	$	856.0		$	2,621.0		$	1,778.5		$	4,511.6
Less: Freight		38.9			103.4			76.5			205.8
Transportation and distribution		37.7			33.3			64.7			65.6
Cost of goods sold		608.8			1,047.0			1,237.1			1,946.9
Gross Margin		170.6			1,437.3			400.2			2,293.3
Selling and administrative		53.4			79.7			96.8			126.9
Provincial mining and other taxes		(18.1	)		163.0			14.9			262.4
Foreign exchange loss (gain)		37.9			1.9			7.7			(25.8	)
Other income (Note 11)		(188.4	)		(103.3	)		(223.4	)		(115.2	)
		(115.2	)		141.3			(104.0	)		248.3
Operating Income		285.8			1,296.0			504.2			2,045.0
Interest Expense (Note 12)		26.5			15.7			49.7			26.9
Income Before Income Taxes		259.3			1,280.3			454.5			2,018.1
Income Taxes (Note 6)		72.2			375.2			(40.9	)		547.0
Net Income	$	187.1		$	905.1			495.4			1,471.1
Retained Earnings, Beginning of Period								2,402.3			2,279.6
Repurchase of Common Shares								-			(1,981.7	)
Dividends								(59.2	)		(62.8	)
Retained Earnings, End of Period							$	2,838.5		$	1,706.2
Net Income Per Share (Note 7)
Basic	$	0.63		$	2.91		$	1.68		$	4.70
Diluted	$	0.62		$	2.82		$	1.63		$	4.54
Dividends Per Share	$	0.10		$	0.10		$	0.20		$	0.20

(See Notes to the Condensed Consolidated Financial Statements)

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Potash Corporation of Saskatchewan Inc.

Condensed Consolidated Statements of Cash Flow
(in millions of US dollars)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2009			2008			2009			2008
Operating Activities
Net income	$	187.1		$	905.1		$	495.4		$	1,471.1
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization		70.1			83.9			144.1			163.8
Stock-based compensation		20.1			25.1			22.6			27.9
Loss (gain) on disposal of property, plant and equipment		0.9			(6.9	)		1.4			(6.8	)
Gain on disposal of auction rate securities		(115.3	)		-			(115.3	)		-
Provision for auction rate securities		-			0.7			-			43.8
Foreign exchange on future income tax		11.7			(4.6	)		(2.1	)		(9.3	)
Provision for (recovery of) of future income tax		41.4			47.4			(75.1	)		26.8
Undistributed earnings of equity investees		69.1			(1.1	)		31.2			(24.5	)
Derivative instruments		3.5			(1.9	)		(41.8	)		(19.0	)
Other long-term liabilities		16.1			7.7			27.2			7.1
Subtotal of adjustments		117.6			150.3			(7.8	)		209.8
Changes in non-cash operating working capital
Accounts receivable		54.5			(283.5	)		191.9			(494.9	)
Inventories		0.5			(106.2	)		61.1			(229.3	)
Prepaid expenses and other current assets		(26.8	)		0.8			(53.6	)		(23.4	)
Accounts payable and accrued charges		(396.6	)		228.1			(652.0	)		403.6
Subtotal of changes in non-cash operating working capital		(368.4	)		(160.8	)		(452.6	)		(344.0	)
Cash (used in) provided by operating activities		(63.7	)		894.6			35.0			1,336.9
Investing Activities
Additions to property, plant and equipment		(399.6	)		(237.9	)		(765.7	)		(434.4	)
Purchase of long-term investments		-			(76.7	)		-			(251.2	)
Proceeds from disposal of property, plant and equipment		15.5			9.3			15.8			9.6
Proceeds from disposal of auction rate securities		132.5			-			132.5			-
Other assets and intangible assets		0.7			(17.4	)		(10.5	)		(21.4	)
Cash used in investing activities		(250.9	)		(322.7	)		(627.9	)		(697.4	)
Cash before financing activities		(314.6	)		571.9			(592.9	)		639.5
Financing Activities
Proceeds from long-term debt obligations		1,795.0			-			2,555.0			-
Repayment of and finance costs on long-term debt obligations		(1,538.8	)		(0.2	)		(2,229.2	)		(0.2	)
Proceeds from short-term debt obligations		196.4			828.9			411.5			842.4
Dividends		(29.0	)		(30.7	)		(58.7	)		(62.5	)
Repurchase of common shares		-			(1,476.6	)		-			(1,897.1	)
Issuance of common shares		7.2			12.0			8.8			28.3
Cash provided by (used in) financing activities		430.8			(666.6	)		687.4			(1,089.1	)
Increase (Decrease) in Cash and Cash Equivalents		116.2			(94.7	)		94.5			(449.6	)
Cash and Cash Equivalents, Beginning of Period		255.1			364.6			276.8			719.5
Cash and Cash Equivalents, End of Period	$	371.3		$	269.9		$	371.3		$	269.9
Cash and cash equivalents comprised of:
Cash	$	56.1		$	42.5		$	56.1		$	42.5
Short-term investments		315.2			227.4			315.2			227.4
	$	371.3		$	269.9		$	371.3		$	269.9
Supplemental cash flow disclosure
Interest paid	$	30.5		$	22.8		$	46.0		$	37.1
Income taxes paid	$	589.0		$	227.1		$	736.2		$	385.6

(See Notes to the Condensed Consolidated Financial Statements)

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Potash Corporation of Saskatchewan Inc.

Condensed Consolidated Statements of Comprehensive Income
(in millions of US dollars)
(unaudited)

	Three Months Ended					Six Months Ended
	June 30					June 30
(Net of related income taxes)	2009		2008			2009			2008
Net income	$	187.1	$	905.1		$	495.4		$	1,471.1
Other comprehensive income
Net increase in unrealized gains on available-for-sale securities(1)		363.9		820.6			437.6			969.6
Net gains (losses) on derivatives designated as cash flow hedges(2)		16.4		154.6			(28.8	)		198.7
Reclassification to income of net losses (gains) on cash flow hedges(3)		16.8		(8.5	)		25.4			(14.2	)
Unrealized foreign exchange gains on translation of self-sustaining foreign operations		7.4		3.3			7.3			4.9
Other comprehensive income		404.5		970.0			441.5			1,159.0
Comprehensive income	$	591.6	$	1,875.1		$	936.9		$	2,630.1

(1)	Available-for-sale securities are comprised of shares in Israel Chemicals Ltd. and Sinofert Holdings Limited and investments in auction rate securities. The amounts are net of income taxes of $(0.3) (2008 — $155.8) for the three months ended June 30, 2009 and $26.5 (2008 — $186.2) for the six months ended June 30, 2009.
(2)	Cash flow hedges are comprised of natural gas derivative instruments, and are net of income taxes of $10.0 (2008 — $62.3) for the three months ended June 30, 2009 and $(17.5) (2008 — $81.2) for the six months ended June 30, 2009.
(3)	Net of income taxes of $10.1 (2008 — $(3.3)) for the three months ended June 30, 2009 and $15.4 (2008 — $(5.8)) for the six months ended June 30, 2009.

Condensed Consolidated Statements of Accumulated Other Comprehensive Income
(in millions of US dollars)
(unaudited)

	June 30,			December 31,
(Net of related income taxes)	2009			2008
Net unrealized gains on available-for-sale securities(1)	$	1,199.4		$	761.8
Net unrealized losses on derivatives designated as cash flow hedges(2)		(104.0	)		(100.6	)
Unrealized foreign exchange gains (losses) on translation of self-sustaining foreign operations		4.0			(3.3	)
Accumulated other comprehensive income		1,099.4			657.9
Retained Earnings		2,838.5			2,402.3
Accumulated Other Comprehensive Income and Retained Earnings	$	3,937.9		$	3,060.2

(1)	$1,349.8 before income taxes (2008 — $885.7)
(2)	$(165.8) before income taxes (2008 — $160.2)

(See Notes to the Condensed Consolidated Financial Statements)

5

Potash Corporation of Saskatchewan Inc.

Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended June 30, 2009
(in millions of US dollars except share, per-share, percentage and ratio amounts)
(unaudited)

1.   Significant Accounting Policies

Basis of Presentation

With its subsidiaries, Potash Corporation of Saskatchewan Inc. (“PCS”) — together known as “PotashCorp” or “the company” except to the extent the context otherwise requires — forms an integrated fertilizer and related industrial and feed products company. The company’s accounting policies are in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”). These policies are consistent with accounting principles generally accepted in the United States (“US GAAP”) in all material respects except as outlined in Note 18. The accounting policies used in preparing these unaudited interim condensed consolidated financial statements are consistent with those used in the preparation of the 2008 annual consolidated financial statements, except as described below.

These unaudited interim condensed consolidated financial statements include the accounts of PCS and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with the 2008 annual consolidated financial statements. In management’s opinion, the unaudited interim condensed consolidated financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year.

Change in Accounting Policy

Goodwill and Intangible Assets

In February 2008, the Canadian Institute of Chartered Accountants (“CICA”) issued amended accounting standards on goodwill and intangible assets, and research and development expenditures. The amended standards provide more specific guidance on the recognition of internally developed intangible assets, and require that research and development expenditures be evaluated against the same criteria as expenditures for intangible assets. The standards substantially harmonize Canadian standards with International Financial Reporting Standards (“IFRSs”) and apply retrospectively to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008.

Also in February 2008, the CICA withdrew and amended certain standards which the CICA concluded permitted deferral of costs that did not meet the definition of an asset. The amendments apply retrospectively to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008.

The implementation of these standards, which the company adopted effective January 1, 2009, did not have a material impact on the company’s consolidated financial statements.

Recent Accounting Pronouncements

IFRSs

In April 2008 and March 2009, the CICA’s Accounting Standards Board (“AcSB”) published exposure drafts on “Adopting IFRSs in Canada”. The exposure drafts propose to incorporate the IFRSs into the CICA Accounting Handbook effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. At this date, publicly accountable enterprises in Canada will be required to prepare financial statements in accordance with IFRSs. The exposure drafts make possible the early adoption of IFRSs by Canadian entities. The company is currently reviewing the standards to determine the potential impact on its consolidated financial statements.

6

Credit Risk and the Fair Value of Financial Assets and Financial Liabilities

In January 2009, the Emerging Issues Committee of the CICA (“EIC”) issued guidance on the implications of credit risk in determining fair value of an entity’s financial assets and financial liabilities. The guidance clarifies that an entity’s own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments, for presentation and disclosure purposes. The conclusions of the EIC were effective from the date of issuance of the abstract and did not have any impact on the company’s consolidated financial statements.

Business Combinations

In January 2009, the AcSB issued revised accounting standards in regards to business combinations with the intent of harmonizing those standards with IFRSs. The revised standards require the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establish the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; and disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. These standards apply prospectively to business combinations for which the acquisition date is after the beginning of the first annual reporting period beginning on or after January 1, 2011. The company is currently reviewing the standards to determine the impact, if any, on its consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements

In January 2009, the AcSB issued accounting standards to require all entities to report noncontrolling (minority) interests as equity in consolidated financial statements. The standards eliminate the disparate treatment that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. These standards apply retrospectively effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The company is currently reviewing the standards to determine the impact, if any, on its consolidated financial statements.

Mining Exploration Costs

In March 2009, the EIC issued guidance to clarify when an enterprise may capitalize mining exploration costs and when and how impairment of exploration costs is determined. The guidance is effective for financial statements issued subsequent to its release. The conclusions of the EIC did not have any impact on the company’s consolidated financial statements.

Financial Instrument Disclosure

In June 2009, the AcSB amended certain requirements related to financial instrument disclosure in response to amendments issued by the International Accounting Standards Board. The AcSB’s amendments are consistent with its strategy to adopt IFRSs and to ensure the existing disclosure requirements for financial instruments are converged to IFRSs to the extent possible. The new disclosure standards require disclosure of fair values based on a fair value hierarchy as well as enhanced discussion and quantitative disclosure related to liquidity risk. The amended disclosure requirements are effective for annual financial statements relating to fiscal years ending after September 30, 2009 and as such the company will include the required disclosure in its annual financial statements for the year ending December 31, 2009.

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2.   Inventories

	June 30,		December 31,
	2009		2008
Finished products	$	336.2	$	421.8
Intermediate products		163.0		117.1
Raw materials		45.7		67.8
Materials and supplies		113.5		108.2
	$	658.4	$	714.9

During the three and six months ended June 30, 2009, inventories of $484.0 (2008 — $1,026.5) and $1,001.8 (2008 — $1,899.2), respectively, were expensed through cost of goods sold. Write-downs of finished products of $27.7 were included in cost of goods sold during the three months ended June 30, 2009 (2008 — $NIL). During the six months ended June 30, 2009, write-downs of finished products of $40.2 were included in cost of goods sold (2008 — $NIL). For the three and six months ended June 30, 2009, the company recorded reversals of previous write-downs of finished products in the amount of $NIL and $5.7, respectively (2008 — $NIL). The carrying amount of inventory recorded at net realizable value was $110.4 at June 30, 2009 and $181.3 at December 31, 2008 with the remaining inventory recorded at cost.

3.   Short-Term Debt and Current Portion of Long-Term Debt

	June 30,		December 31,
	2009		2008
Commercial paper	$	735.4	$	324.8
Credit facility		-		1,000.0
		735.4		1,324.8
Current portion of long-term debt		0.3		0.2
Less net unamortized debt costs		-		(0.9	)
	$	735.7	$	1,324.1

As of December 31, 2008, the company had a $1,000.0 364-day credit facility that was due on May 28, 2009, under which draws of $1,000.0 were classified as short-term debt. Effective January 21, 2009, the facility was amended to increase available borrowings to $1,500.0 and to extend the maturity date to May 28, 2010. The amount available under the credit facility was again increased on March 5, 2009 to $1,850.0. No amounts were outstanding on this credit facility at June 30, 2009.

8

4.   Long-Term Debt

	June 30,			December 31,
	2009			2008
Senior Notes
7.750% notes due May 31, 2011	$	600.0		$	600.0
4.875% notes due March 1, 2013		250.0			250.0
5.250% notes due May 15, 2014		500.0			-
6.500% notes due May 15, 2019		500.0			-
5.875% notes due December 1, 2036		500.0			500.0
Credit facilities		750.0			400.0
Other		8.0			8.2
		3,108.0			1,758.2
Less net unamortized debt costs		(30.3	)		(22.8	)
Add unamortized interest rate swap gains		3.2			3.9
		3,080.9			1,739.3
Less current maturities		(0.3	)		(0.2	)
Add current portion of amortization		1.5			0.4
	$	3,082.1		$	1,739.5

On May 1, 2009, the company closed the issuance of $500.0 of senior notes bearing interest of 5.25 percent due May 15, 2014 and $500.0 of senior notes bearing interest of 6.50 percent due May 15, 2019. The securities were issued under the company’s US shelf registration statement filed on December 12, 2007. The company used the net proceeds to repay outstanding indebtedness under its revolving credit facilities and for general corporate purposes.

During the three months ended June 30, 2009, the company received proceeds from its long-term credit facilities of $795.0, and made repayments of $1,530.0 under these facilities. During the six months ended June 30, 2009, the company received proceeds of $1,555.0 and made repayments of $2,205.0 under these facilities.

The company also has three long-term revolving credit facilities that provide for unsecured advances. The first is a $750.0 facility that provides for unsecured advances through May 31, 2013. As of June 30, 2009, $750.0 (December 31, 2008 — $220.0) of borrowings were outstanding under this facility. The second facility is a $180.0 facility entered into on December 22, 2008, with a maturity date of December 21, 2010. As at June 30, 2009, there were no borrowings outstanding (December 31, 2008 — $180.0) under this facility. The third is the company’s $1,850.0 facility as discussed in Note 3.

5.   Capital Management

The company’s objectives when managing its capital are to maintain financial flexibility while managing its cost of, and optimizing access to, capital. In order to achieve these objectives, the company’s strategy, which was unchanged from 2008, was to maintain its investment grade credit rating.

9

The company includes net debt and adjusted shareholders’ equity as components of its capital structure. The calculation of net debt, adjusted shareholders’ equity and adjusted capital are set out in the following table:

	June 30,		December 31,
	2009		2008
Short-term debt and current portion of long-term debt	$	735.7	$	1,324.1
Long-term debt		3,082.1		1,739.5
Total debt		3,817.8		3,063.6
Less: cash and cash equivalents		371.3		276.8
Net debt		3,446.5		2,786.8
Shareholders’ equity		5,498.9		4,588.9
Less: accumulated other comprehensive income		1,099.4		657.9
Adjusted shareholders’ equity		4,399.5		3,931.0
Adjusted capital(1)	$	7,846.0	$	6,717.8

⁽¹⁾ Adjusted capital = (total debt — cash and cash equivalents) + (shareholders’ equity — accumulated other comprehensive income)

The company monitors capital on the basis of a number of factors, including the ratios of: adjusted earnings before interest expense, income taxes, depreciation and amortization, provision for auction rate securities, gain on disposal of auction rate securities and gain on sale of assets (“adjusted EBITDA”) to adjusted interest expense; net debt to adjusted EBITDA and net debt to adjusted capital. Adjusted EBITDA to adjusted interest expense and net debt to adjusted EBITDA are calculated utilizing twelve-month trailing adjusted EBITDA and adjusted interest expense.

	As At or For the
	12 Months Ended
	June 30,			December 31,
	2009			2008
Components of ratios
Adjusted EBITDA (twelve months ended)	$	3,310.4		$	5,030.0
Net debt	$	3,446.5		$	2,786.8
Adjusted interest expense (twelve months ended)	$	139.6		$	105.7
Adjusted capital	$	7,846.0		$	6,717.8
Ratios
Adjusted EBITDA to adjusted interest expense(1)		23.7			47.6
Net debt to adjusted EBITDA(2)		1.0			0.6
Net debt to adjusted capital(3)		43.9	%		41.5	%

(1)	Adjusted EBITDA to adjusted interest expense = adjusted EBITDA (twelve months ended) / adjusted interest expense (twelve months ended)
(2)	Net debt to adjusted EBITDA = (total debt — cash and cash equivalents) / adjusted EBITDA (twelve months ended)
(3)	Net debt to adjusted capital = (total debt — cash and cash equivalents) / (total debt — cash and cash equivalents + total shareholders’ equity — accumulated other comprehensive income)

The company monitors its capital structure and, based on changes in economic conditions, may adjust the structure through adjustments to the amount of dividends paid to shareholders, repurchase of shares, issuance of new shares or issuance of new debt.

The decrease in adjusted EBITDA to adjusted interest expense is a result of a decrease in adjusted EBITDA and an increase in adjusted interest expense due to increased long-term debt during the twelve months ending June 30, 2009. The net debt to adjusted EBITDA ratio increased as net debt increased due to the issuance of long-term debt and adjusted EBITDA decreased. Net debt to adjusted capital ratio increased due to the company issuing more long-term debt.

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The calculations of the twelve-month trailing net income, adjusted EBITDA, interest expense and adjusted interest expense are set out in the following tables:

	Twelve														Twelve
	Months Ended			Three Months Ended											Months Ended
	June 30,			June 30,			March 31,			December 31,		September 30,			December 31,
	2009			2009			2009			2008		2008			2008
Net income	$	2,519.5		$	187.1		$	308.3		$	788.0	$	1,236.1		$	3,495.2
Income taxes		489.2			72.2			(113.1	)		66.8		463.3			1,077.1
Interest expense		85.6			26.5			23.2			20.6		15.3			62.8
Depreciation and amortization		307.8			70.1			74.0			80.4		83.3			327.5
Provision for auction rate securities		45.0			-			-			17.5		27.5			88.8
Gain on disposal of auction rate securities		(115.3	)		(115.3	)		-			-		-			-
Gain on sale of assets		(21.4	)		-			-			-		(21.4	)		(21.4	)
Adjusted EBITDA	$	3,310.4		$	240.6		$	292.4		$	973.3	$	1,804.1		$	5,030.0

	Twelve										Twelve
	Months Ended		Three Months Ended								Months Ended
	June 30,		June 30,		March 31,		December 31,		September 30,		December 31,
	2009		2009		2009		2008		2008		2008
Interest expense	$	85.6	$	26.5	$	23.2	$	20.6	$	15.3	$	62.8
Interest capitalized to property, plant and equipment		54.0		17.2		12.8		10.8		13.2		42.9
Adjusted interest expense	$	139.6	$	43.7	$	36.0	$	31.4	$	28.5	$	105.7

6.   Income Taxes

The company’s income tax provision was $72.2 for the three months ended June 30, 2009 as compared to $375.2 for the same period last year. For the six months ended June 30, 2009, the company’s income tax provision was a recovery of $40.9 (2008 — an expense of $547.0). The effective tax rate for the three and six months ended June 30, 2009 was 28 percent and negative 9 percent, respectively compared to 29 percent and 27 percent for the three and six months ended June 30, 2008.

The provision for the six months ended June 30, 2009 included:

•  A future income tax recovery of $119.2 for a tax rate reduction resulting from an internal restructuring during the first quarter.

•  A current income tax recovery of $47.6 recorded in the first quarter that related to an increase in permanent deductions in the US from prior years. The recovery will have a positive impact on cash.

•  A future income tax provision of $24.4 related to a second-quarter functional currency election by the parent company for Canadian income tax purposes.

•  The benefit of a lower proportion of consolidated income earned in the higher-tax jurisdictions.

The provision for the six months ended June 30, 2008 included:

•  The benefit of a scheduled one and a half percentage point reduction in the Canadian federal income tax rate applicable to resource companies along with the elimination of the one percent surtax that became effective at the beginning of the year.

•  A future income tax recovery of $42.0 recorded during the first quarter that related to an increase in permanent deductions in the US from prior years.

•  No tax expense on the $25.3 gain recognized in the first quarter that resulted from the change in fair value of the forward purchase contract for shares in Sinofert Holdings Limited (“Sinofert”) as the gain was not taxable.

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7.   Net Income Per Share

Basic net income per share for the quarter is calculated on the weighted average shares issued and outstanding for the three months ended June 30, 2009 of 295,443,000 (2008 — 310,615,000). Basic net income per share for the six months ended June 30, 2009 is calculated based on the weighted average shares issued and outstanding for the period of 295,338,000 (2008 — 313,138,000).

Diluted net income per share is calculated based on the weighted average number of shares issued and outstanding during the period. The denominator is: (1) increased by the total of the additional common shares that would have been issued assuming exercise of all stock options for which performance conditions have been met and with exercise prices at or below the average market price for the period; and (2) decreased by the number of shares that the company could have repurchased if it had used the assumed proceeds from the exercise of stock options to repurchase them on the open market at the average share price for the period. The weighted average number of shares outstanding for the diluted net income per share calculation for the three months ended June 30, 2009 was 304,066,000 (2008 — 321,089,000) and for the six months ended June 30, 2009 was 303,736,000 (2008 — 323,716,000).

8.   Segment Information

The company has three reportable business segments: potash, phosphate and nitrogen. These business segments are differentiated by the chemical nutrient contained in the product that each produces. Inter-segment sales are made under terms that approximate market value. The accounting policies of the segments are the same as those described in Note 1.

	Three Months Ended June 30, 2009
	Potash		Phosphate		Nitrogen		All Others		Consolidated
Sales	$	210.7	$	324.7	$	320.6	$	-	$	856.0
Freight		10.6		15.8		12.5		-		38.9
Transportation and distribution		11.6		12.5		13.6		-		37.7
Net sales — third party		188.5		296.4		294.5		-
Cost of goods sold		82.3		275.9		250.6		-		608.8
Gross margin		106.2		20.5		43.9		-		170.6
Depreciation and amortization		5.9		37.9		23.9		2.4		70.1
Inter-segment sales		-		-		15.0		-		-

	Three Months Ended June 30, 2008
	Potash		Phosphate		Nitrogen		All Others		Consolidated
Sales	$	1,194.5	$	782.0	$	644.5	$	-	$	2,621.0
Freight		60.3		29.8		13.3		-		103.4
Transportation and distribution		13.9		8.4		11.0		-		33.3
Net sales — third party		1,120.3		743.8		620.2		-
Cost of goods sold		233.9		402.9		410.2		-		1,047.0
Gross margin		886.4		340.9		210.0		-		1,437.3
Depreciation and amortization		24.0		35.7		22.3		1.9		83.9
Inter-segment sales		-		10.5		40.6		-		-

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	Six Months Ended June 30, 2009
	Potash		Phosphate		Nitrogen		All Others		Consolidated
Sales	$	479.9	$	654.6	$	644.0	$	-	$	1,778.5
Freight		17.3		34.0		25.2		-		76.5
Transportation and distribution		15.2		20.9		28.6		-		64.7
Net sales — third party		447.4		599.7		590.2		-
Cost of goods sold		174.6		570.4		492.1		-		1,237.1
Gross margin		272.8		29.3		98.1		-		400.2
Depreciation and amortization		13.4		76.9		49.2		4.6		144.1
Inter-segment sales		-		-		20.8		-		-

	Six Months Ended June 30, 2008
	Potash		Phosphate		Nitrogen		All Others		Consolidated
Sales	$	1,990.7	$	1,295.2	$	1,225.7	$	-	$	4,511.6
Freight		115.6		61.9		28.3		-		205.8
Transportation and distribution		25.3		16.4		23.9		-		65.6
Net sales — third party		1,849.8		1,216.9		1,173.5		-
Cost of goods sold		448.8		720.0		778.1		-		1,946.9
Gross margin		1,401.0		496.9		395.4		-		2,293.3
Depreciation and amortization		46.8		68.3		44.9		3.8		163.8
Inter-segment sales		-		14.7		82.6		-		-

Assets

	Potash		Phosphate			Nitrogen			All Others		Consolidated
Assets at June 30, 2009	$	3,912.6	$	2,273.3		$	1,582.8		$	3,495.8	$	11,264.5
Assets at December 31, 2008		3,350.0		2,283.0			1,593.6			3,022.2		10,248.8
Change in assets		562.6		(9.7	)		(10.8	)		473.6		1,015.7
Additions to property, plant and equipment		536.8		173.3			44.5			11.1		765.7

9.   Stock-Based Compensation

On May 7, 2009, the company’s shareholders approved the 2009 Performance Option Plan under which the company may, after February 20, 2009 and before January 1, 2010, issue options to acquire up to 1,000,000 common shares. Under the plan, the exercise price shall not be less than the quoted market closing price of the company’s common shares on the last trading day immediately preceding the date of grant and an option’s maximum term is 10 years. In general, options will vest, if at all, according to a schedule based on the three-year average excess of the company’s consolidated cash flow return on investment over weighted average cost of capital. As of June 30, 2009, options to purchase a total of 641,400 common shares have been granted under the plan. The weighted average fair value of options granted was $42.42 per share, estimated as of the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions:

Expected dividend	$	0.40
Expected volatility		48%
Risk-free interest rate		2.53%
Expected life of options		5.9 years

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10.   Pension and Other Post-Retirement Expenses

Defined Benefit Pension Plans

	Three Months						Six Months
	Ended June 30						Ended June 30
	2009			2008			2009			2008
Service cost	$	4.3		$	3.8		$	8.6		$	7.6
Interest cost		11.1			10.0			22.2			20.0
Expected return on plan assets		(9.6	)		(12.8	)		(19.2	)		(25.8	)
Net amortization and change in valuation allowance		7.3			2.9			14.4			5.0
Net expense	$	13.1		$	3.9		$	26.0		$	6.8

Other Post-Retirement Plans

	Three Months				Six Months
	Ended June 30				Ended June 30
	2009		2008		2009		2008
Service cost	$	1.6	$	1.4	$	3.1	$	2.8
Interest cost		4.2		4.0		8.3		8.0
Net amortization		0.2		0.2		0.3		0.3
Net expense	$	6.0	$	5.6	$	11.7	$	11.1

For the three months ended June 30, 2009, the company contributed $8.5 to its defined benefit pension plans, $3.8 to its defined contribution pension plans and $2.3 to its other post-retirement plans. Contributions for the six months ended June 30, 2009 were $14.2 to its defined benefit pension plans, $12.2 to its defined contribution pension plans and $4.7 to its other post-retirement plans. Total 2009 contributions to these plans are not expected to differ significantly from the amounts previously disclosed in Note 15 to the consolidated financial statements for the year ended December 31, 2008 in the company’s 2008 financial review annual report.

11.   Other Income

	Three Months					Six Months
	Ended June 30					Ended June 30
	2009		2008			2009		2008
Share of earnings of equity investees	$	29.8	$	60.3		$	67.7	$	83.7
Dividend income		40.4		33.7			40.4		33.7
Gain on disposal of auction rate securities		115.3		-			115.3		-
Other		2.9		10.0			-		16.3
Gain on forward purchase contract for shares in Sinofert		-		-			-		25.3
Provision for auction rate securities		-		(0.7	)		-		(43.8	)
	$	188.4	$	103.3		$	223.4	$	115.2

In April 2009, the company recognized a gain on the disposal of auction rate securities of $115.3 due to the settlement of a claim the company filed in an arbitration proceeding against an investment firm that purchased auction rate securities for the company’s account without the company’s authorization. The investment firm paid the company the full par value of $132.5 in exchange for the transfer of the auction rate securities to the investment firm. The company retained all interest paid and accrued on these securities through the date of the transfer of the securities to the investment firm. The company was also reimbursed by the investment firm for $3.0 of the company’s legal costs. Prior to the settlement, the company had recognized in net income a loss of $115.3 related to these unauthorized securities placed in its account.

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12.   Interest Expense

	Three Months						Six Months
	Ended June 30						Ended June 30
	2009			2008			2009			2008
Interest expense on
Short-term debt	$	9.4		$	4.6		$	13.7		$	6.3
Long-term debt		40.1			23.6			73.8			47.3
Interest capitalized to property, plant and equipment		(17.2	)		(10.5	)		(30.0	)		(18.9	)
Interest income		(5.8	)		(2.0	)		(7.8	)		(7.8	)
	$	26.5		$	15.7		$	49.7		$	26.9

13.   Financial Instruments and Related Risk Management

The company is exposed in varying degrees to a variety of financial risks from its use of financial instruments: credit risk, liquidity risk and market risk. The source of risk exposure and how each is managed is described in Note 28 to the consolidated financial statements for the year ended December 31, 2008 in the company’s 2008 financial review annual report.

Credit Risk

The company is exposed to credit risk on its cash and cash equivalents, accounts receivable and derivative instrument assets. The company was also exposed to credit risk on auction rate securities prior to the disposal of such securities in connection with the April 2009 settlement of the company’s arbitration claim. The maximum exposure to credit risk, as represented by the carrying amount of the financial assets, was:

	June 30,		December 31,
	2009		2008
Cash and cash equivalents	$	371.3	$	276.8
Accounts receivable		998.9		1,189.9
Derivative instrument assets		10.3		17.9
Auction rate securities		-		17.2

The aging of trade receivables that were past due but not impaired was as follows:

	June 30,		December 31,
	2009		2008
1 — 30 days	$	11.5	$	33.3
31 — 60 days		0.6		8.7
Greater than 60 days		3.4		1.7
	$	15.5	$	43.7

A reconciliation of the accounts receivable allowance for doubtful accounts is as follows:

	As At and For the		As At and For the
	Six Months Ended		Year Ended
	June 30,		December 31,
	2009		2008
Balance — beginning of period	$	7.7	$	5.9
Provision for receivables impairment		0.7		5.0
Receivables written off during the period as uncollectible (primarily related to offshore receivables)		-		(3.2	)
Balance — end of period	$	8.4	$	7.7

Of total accounts receivable at June 30, 2009, $482.6 related to non-trade accounts, $90.0 related to margin deposits on derivative instruments and $234.6 represented amounts receivable from Canpotex Limited (“Canpotex”). The company sells potash from its Saskatchewan mines for use outside Canada and the US exclusively to Canpotex. Sales to Canpotex are at prevailing market prices and are settled on normal trade terms. There were no

15

amounts past due or impaired relating to the amounts owing to the company from Canpotex or the non-trade accounts receivable. Certain receivables of Canpotex relating to Brazilian customers totaling $40.5 were overdue at June 30, 2009 and payment schedules have been agreed to for payment.

Liquidity Risk

Liquidity risk arises from the company’s general funding needs and in the management of the company’s assets, liabilities and optimal capital structure. The company manages its liquidity risk to maintain sufficient liquid financial resources to fund its operations and meet its commitments and obligations in a cost-effective manner. In managing its liquidity risk, the company has access to a range of funding options. The table below outlines the company’s available debt instruments:

	June 30, 2009
	Total			Amount Outstanding
	Amount			and Committed			Amount Available
Credit facilities	$	2,780.0	(1)	$	1,487.9	(1)	$	1,292.1	(1)
Line of credit		75.0			30.5	(2)		44.5

(1)

The amount available under the $750.0 commercial paper program is limited to the availability of backup funds under the credit facilities. Included in the amount outstanding and committed is $737.9 of commercial paper. Per the terms of the agreements, the commercial paper outstanding and committed, as applicable, is based on the US dollar balance or equivalent thereof in lawful money of other currencies at the time of issue; therefore, subsequent changes in the exchange rate applicable to Canadian dollar denominated commercial paper have no impact on this balance.

(2)

Letters of credit committed.

On December 12, 2007, the company filed a US shelf registration statement under which it may issue and sell up to $1,000.0 of additional debt securities subject to market conditions.

The company has an unsecured line of credit available for short-term financing (net of letters of credit of $30.5 and direct borrowings of NIL) in the amount of $44.5 at June 30, 2009 (December 31, 2008 — $55.0). The line of credit is renewable in June 2010.

As at June 30, 2009, interest rates ranged from 0.24 percent to 1.86 percent on outstanding commercial paper denominated in Canadian dollars and 0.45 percent to 1.63 percent on outstanding commercial paper denominated in US dollars. Interest rates on borrowings under the credit facilities ranged from 0.76 percent to 0.83 percent on LIBOR rate loans with one base rate loan at 3.75 percent.

The table below presents a maturity analysis of the company’s financial liabilities based on the expected cash flows from the date of the balance sheet to the contractual maturity date. The amounts are the contractual undiscounted cash flows.

	Carrying
	Amount of
	Liability at
	June 30,		Contractual			Within							Over
	2009		Cash Flows			1 year			1 to 3 years		3 to 5 years		5 years
Short-term debt obligations(1)	$	735.4	$	739.8		$	739.8		$	-	$	-	$	-
Accounts payable and accrued charges(2)		483.3		483.3			483.3			-		-		-
Long-term debt obligations(1)		3,108.0		4,557.9			157.8			875.1		1,699.5		1,825.5
Derivative financial instrument liabilities
Foreign currency forward contracts		13.7
Outflow				443.5			443.5			-		-		-
Inflow				(429.8	)		(429.8	)		-		-		-
Natural gas hedging derivatives		171.3		179.0			70.6			58.5		16.3		33.6
	$	4,511.7	$	5,973.7		$	1,465.2		$	933.6	$	1,715.8	$	1,859.1

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(1)	Contractual cash flows include contractual interest payments related to debt obligations. Interest rates on variable rate debt are based on prevailing rates at June 30, 2009.
(2)	Excludes taxes, accrued interest, deferred revenues and current portions of accrued environmental costs and asset retirement obligations and accrued pension and other post-retirement benefits. This also excludes derivative financial instrument liabilities which have been presented separately.

Market Risk

Market risk is the risk that financial instrument fair values will fluctuate due to changes in market prices. The significant market risks to which the company is exposed are foreign exchange risk, interest rate risk and price risk (related to commodity and equity securities).

Foreign Exchange Risk

The following table shows the company’s exposure to exchange risk and the pre-tax effects on income and other comprehensive income (“OCI”) of reasonably possible changes in the relevant foreign currency. This analysis assumes all other variables remain constant.

	Carrying Amount			Foreign Exchange Risk
	of Asset (Liability)			5% increase in						5% decrease in
	at June 30,			US$						US$
	2009			Income			OCI			Income			OCI
Cash and cash equivalents denominated in Canadian dollars	$	15.3		$	(0.8	)	$	-		$	0.8		$	-
Accounts receivable denominated in Canadian dollars		9.5			(0.5	)		-			0.5			-
Available-for-sale investments
Israel Chemical Ltd. denominated in New Israeli Shekels		1,426.3			-			(71.3	)		-			71.3
Sinofert denominated in Hong Kong dollars		782.7			-			(39.1	)		-			39.1
Short-term debt denominated in Canadian dollars		(511.4	)		25.6			-			(25.6	)		-
Accounts payable denominated in Canadian dollars		(137.1	)		6.9			-			(6.9	)		-
Derivative instruments
Foreign currency forward contracts		(13.6	)		(21.5	)		-			21.5			-

As at June 30, 2009, the company had entered into foreign currency forward contracts to sell US dollars and receive Canadian dollars in the notional amount of $440.0 (December 31, 2008 — $873.0) at an average exchange rate of 1.1260 (December 31, 2008 — 1.1522) per US dollar. The company had also entered into other small forward contracts. Maturity dates for all forward contracts are within 2009.

Interest Rate Risk

The following table shows the company’s exposure to interest rate risk and the pre-tax effects on net income and other comprehensive income of reasonably possible changes in the relevant interest rates. This analysis assumes all other variables remain constant.

	Carrying Amount			Interest Rate Risk
	of Asset (Liability)			1% decrease in					1% increase in
	at June 30,			interest rates					interest rates
	2009			Income			OCI		Income			OCI
Fixed rate instruments
Long-term debt obligations(1)	$	(2,352.1	)	$	-		$	-	$	-		$	-
Variable rate instruments
Cash and cash equivalents		371.3			(3.7	)		-		3.7			-
Long-term debt obligations		(755.9	)		7.6			-		(7.6	)		-
Short-term debt obligations(2)		(735.4	)		-			-		-			-

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(1)	The company does not measure any fixed rate debt at fair value. Therefore, changes in interest rates will not affect income or OCI as there is no change in the carrying value of fixed-rate debt and interest payments are fixed.
(2)	Commercial paper is excluded from interest rate risk on short-term obligations since interest rates are fixed for their stated period. The company is only exposed to interest rate risk on the issuance of new commercial paper.

Price Risk

The following table shows the company’s exposure to price risk and the pre-tax effects on net income and other comprehensive income of reasonably possible changes in the relevant commodity or securities prices. This analysis assumes all other variables remain constant.

	Carrying Amount			Price Risk
	of Asset (Liability)			10% decrease in					10% increase in
	at June 30,			prices					prices
	2009			Income		OCI			Income		OCI
Derivative instruments
Natural gas hedging derivatives	$	(161.0	)	$	-	$	(79.8	)	$	-	$	80.4
Available-for-sale investments
Intercorporate investments		2,209.0			-		(220.9	)		-		220.9

As at June 30, 2009, the company had derivatives qualifying for hedge accounting in the form of swaps which represented a notional amount of 131.3 million MMBtu with maturities in 2009 through 2019. At December 31, 2008 the notional amount of swaps was 135.4 million MMBtu with maturities in 2009 through 2018.

Fair Value

Fair value represents point-in-time estimates that may change in subsequent reporting periods due to market conditions or other factors.

Presented below is a comparison of the fair value of each financial instrument to its carrying value.

	June 30,						December 31,
	2009						2008
	Carrying						Carrying
	Amount			Fair Value			Amount			Fair Value
	of Asset			of Asset			of Asset			of Asset
	(Liability)			(Liability)			(Liability)			(Liability)
Cash and cash equivalents	$	371.3		$	371.3		$	276.8		$	276.8
Accounts receivable		998.9			998.9			1,189.9			1,189.9
Derivative financial instruments		(174.7	)		(174.7	)		(210.6	)		(210.6	)
Investments		3,173.1			6,674.9			2,750.7			4,615.2
Short-term debt obligations		(735.4	)		(735.4	)		(1,323.9	)		(1,323.9	)
Accounts payable and accrued charges		(483.3	)		(483.3	)		(565.3	)		(565.3	)
Long-term debt		(3,108.0	)		(3,197.7	)		(1,758.2	)		(1,730.3	)

Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, short-term debt, and accounts payable and accrued charges is assumed to approximate carrying value. The effective interest rate on the company’s short-term debt at June 30, 2009 was 1.09 percent and 2.33 percent at December 31, 2008. The fair value of its senior notes at June 30, 2009 reflects the current yield valuation based on observed market prices. The current yield on the notes payable ranges from 2.71 percent to 6.39 percent. At December 31, 2008 the yield ranged from 5.05 percent to 6.73 percent. The fair value of the company’s other long-term debt instruments approximated carrying value.

14.   Seasonality

The company’s sales of fertilizer can be seasonal. Typically, the second quarter of the year is when fertilizer sales will be highest, due to the North American spring planting season. However, planting conditions and the timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another.

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15.   Contingencies

Canpotex

PotashCorp is a shareholder in Canpotex, which markets potash offshore. Should any operating losses or other liabilities be incurred by Canpotex, the shareholders have contractually agreed to reimburse Canpotex for such losses or liabilities in proportion to their productive capacity. There were no such operating losses or other liabilities during the first six months of 2009 or 2008.

Mining Risk

In common with other companies in the industry, the company is unable to acquire insurance for underground assets.

Investment in Arab Potash Company Ltd. (“APC”)

The company is party to a shareholders’ agreement with Jordan Investment Company (“JIC”) with respect to its investment in APC. The terms of the shareholders’ agreement provide that, from October 17, 2006 to October 16, 2009, JIC may seek to exercise a put option (the “Put”) to require the company to purchase JIC’s remaining common shares in APC. If the Put were exercised, the company’s purchase price would be calculated in accordance with a specified formula based, in part, on earnings of APC. The amount, if any, which the company may have to pay for JIC’s remaining common shares if there were to be a valid exercise of the Put would be determinable at the time JIC provides appropriate notice to the company pursuant to the terms of the agreement.

Legal and Other Matters

Significant matters of note include the following:

•  In 1998, the company, along with other parties, was notified by the US Environmental Protection Agency (“USEPA”) of potential liability under the US federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) with respect to certain soil and groundwater conditions at a PCS Joint Venture blending facility in Lakeland, Florida and certain adjoining property. In 1999, PCS Joint Venture signed an Administrative Order and Consent with the USEPA pursuant to which PCS Joint Venture agreed to conduct a Remedial Investigation and Feasibility Study (“RI/FS”) of these conditions. PCS Joint Venture and another party are sharing the costs of the RI/FS, which is now complete. A Record of Decision (“ROD”) based upon the RI/FS was issued on September 27, 2007. The ROD provides for a remedy that requires excavation of impacted soils and interim treatment of groundwater. The total remedy cost is estimated in the ROD to be $8.5. Soil excavation activities are expected to begin in the fourth quarter of 2009. PCS Joint Venture and additional potentially responsible parties have negotiated with the USEPA a Remedial Design/Remedial Action Consent Decree, pursuant to which the parties will perform the ROD remedy. In addition, negotiations are underway regarding the appropriate share of the cost of the remedy that should be borne by each party. Although PCS Joint Venture sold the Lakeland property in July 2006, it has retained the above-described remediation responsibilities and has indemnified the third-party purchaser for the costs of remediation and certain related claims.

•  The USEPA has identified PCS Nitrogen, Inc. (“PCS Nitrogen”) as a potentially responsible party with respect to a former fertilizer blending operation in Charleston, South Carolina, known as the Planters Property or Columbia Nitrogen site, formerly owned by a company from which PCS Nitrogen acquired certain other assets. The USEPA has requested reimbursement of $3.0 of previously incurred response costs and the performance or financing of future site investigation and response activities from PCS Nitrogen and other named potentially responsible parties. In September 2005, Ashley II of Charleston, L.L.C., the current owner of the Planters Property, filed a complaint in the United States District Court for the District of South Carolina (the “Court”) seeking a declaratory judgment that PCS Nitrogen is liable to pay environmental response costs that Ashley II of Charleston, L.L.C. alleges it has incurred and will incur in connection with response activities at the site. The Court entered an order bifurcating the case into two phases. In the third quarter of 2007, the Court issued its decision for the first phase of the case, in which it

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determined that PCS Nitrogen is the successor to a former owner of the site and may be liable to Ashley II of Charleston, L.L.C. for its environmental response costs at the site. PCS Nitrogen has filed and is pursuing third-party complaints against owners and operators that it believes should be responsible parties with respect to the site. In the first quarter of 2009, the judge who had been handling the case disqualified himself and the case was transferred to a new judge. PCS Nitrogen has filed a motion to vacate the orders entered by the previous judge, including the order finding that PCS Nitrogen is a successor to a former owner of the site. The Court entered an order in June 2009 denying PCS Nitrogen’s motion to vacate. PCS Nitrogen denies that it is a potentially responsible party and is vigorously defending its interests in these actions.

•  PCS Phosphate Company, Inc. (“PCS Phosphate”), along with several other entities, has received notice from parties to an Administrative Settlement Agreement (“Settling Parties”) with the USEPA of alleged contribution liability under CERCLA for costs incurred and to be incurred addressing PCB soil contamination at the Ward Superfund Site in Raleigh, North Carolina (“Site”). PCS Phosphate has agreed to participate, on a non-joint and several basis, with the Settling Parties in the performance of the removal action and the payment of certain other costs associated with the Site, including reimbursement of the USEPA’s past costs. The cost of performing the removal action at the Site is estimated at $65.0. The removal activities commenced at the Site in August 2007. In July 2009, the Settling Parties served the company, and more than 100 other entities, with complaints seeking contribution for and recovery of response costs incurred in performing the removal action. The company anticipates recovering some portion of its expenditures for the removal action from other liable parties through settlement or litigation. In addition to the removal action at the Site, investigation of sediments downstream of the Site in what is called “Operable Unit 1” has occurred. In September 2008, the USEPA issued a final remedy, with an estimated cost of $6.1, for Operable Unit 1. In October 2008, the USEPA issued special notice letters to PCS Phosphate and other alleged potentially responsible parties requiring a good-faith offer to perform and/or pay for the clean-up of Operable Unit 1, to perform further investigation at the Site and adjacent properties, and to reimburse USEPA for its past costs. In January 2009, in addition to good-faith offers made by other potentially responsible parties, PCS Phosphate, along with some of the Settling Parties, submitted a good-faith offer to the USEPA. The USEPA is reviewing the good-faith offers. At this time, the company is unable to evaluate the extent of any exposure that it may have for the matters addressed in the special notice letter.

•  The USEPA has an ongoing initiative to evaluate implementation within the phosphate industry of a particular exemption for mineral processing wastes under the hazardous waste program. In connection with this industry-wide initiative, the USEPA conducted hazardous waste compliance evaluation inspections at numerous phosphate operations, including the company’s plants in Aurora, North Carolina; Geismar, Louisiana; and White Springs, Florida. The USEPA has notified the company of various alleged violations of the US Resource Conservation and Recovery Act (“RCRA”) at its Aurora and White Springs plants. The company and other industry members have met with representatives of the US Department of Justice, the USEPA and various state environmental agencies regarding potential resolutions of these matters. During these meetings, the company was informed that the USEPA also believes the Geismar plant is in violation of these requirements. As part of the initiative, the company entered into RCRA 3013 Administrative Orders on Consent to perform certain site assessment activities at its White Springs, Aurora and Geismar plants. The company is uncertain if any resolution will be possible without litigation, or, if litigation occurs, what the outcome would be. At this time, the company is unable to evaluate the extent of any exposure that it may have in these matters.

•  The USEPA also has begun an initiative to evaluate compliance with the Clean Air Act at sulfuric and nitric acid plants. In connection with this industry-wide initiative, the USEPA has sent requests for information to numerous facilities, including the company’s plants in Augusta, Georgia; Aurora, North Carolina; Geismar, Louisiana; Lima, Ohio; and White Springs, Florida. The USEPA has notified the company of various alleged violations of the Clean Air Act at its Geismar and Lima plants. The company has met and will continue to meet with representatives of the USEPA and the US Department of Justice regarding

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potential resolutions of these matters. At this time, the company is unable to evaluate the extent of any exposure that it may have in these matters.

•  Significant portions of the company’s phosphate reserves in Aurora, North Carolina are located in wetlands. Under the Clean Water Act, the company must obtain a permit from the US Army Corps of Engineers (the “Corps”) before disturbing the wetlands. On June 10, 2009, the Corps issued the company a permit to mine reserves in excess of thirty years. On June 17, 2009, USEPA advised the Corps that USEPA would not seek additional review of the permit or invoke its veto authority. In a related approval for mining, on March 12, 2009, four environmental organizations (Pamlico-Tar River Foundation, North Carolina Coastal Federation, Environmental Defense Fund, and Sierra Club) filed a Petition for a Contested Case Hearing before the North Carolina Office of Administrative Hearings challenging the Certification issued to the Company by the North Carolina Department of Environment and Natural Resources Division of Water Quality pursuant to Section 401 of the Clean Water Act, 33 U.S.C. § 1341 and state rules. The company has intervened in this proceeding and, at this time, is unable to evaluate the extent of any exposure that it may have in this matter.

•  Pursuant to the 1996 Corrective Action Consent Order (the “Order”) executed between PCS Nitrogen Fertilizer, L.P., formerly known as Arcadian Fertilizer, L.P. (“PCS Nitrogen Fertilizer”) and Georgia Department of Natural Resources, Environmental Protection Division (“GEPD”) in conjunction with PCS Nitrogen Fertilizer’s purchase of real property located in Augusta, Georgia from the entity from which PCS Nitrogen Fertilizer previously leased such property, PCS Nitrogen Fertilizer agreed to perform certain activities including a facility investigation and, if necessary, a corrective action. In accordance with the Order, PCS Nitrogen Fertilizer has performed an investigation of environmental site conditions, has documented its findings in several successive facility investigation reports submitted to GEPD, and has conducted a pilot study to evaluate the viability of in-situ bioremediation of groundwater at the site. Based on these findings, the requirements of the Order and the pilot study, in May 2009, PCS Nitrogen Fertilizer submitted a Corrective Action Plan (“CAP”) to GEPD proposing to utilize in-situ bioremediation of groundwater at the site. In the event GEPD approves the CAP, a full-scale bioremediation remedy will be implemented.

•  In April 2009, the USEPA proposed rules to require greenhouse gas emission inventory reporting and to find that greenhouse gas emissions from mobile sources endanger public health and welfare. In May 2009, the Canadian government announced that its new industrial greenhouse gas emissions policies will be coordinated with policies that may be implemented in the US. It is anticipated that target numbers for emissions reductions will not be published until December 2009 at the earliest. The company is monitoring these policy changes and any effect they may have on our operations when they become final.

•  At the direction of the USEPA, the Florida Department of Environmental Protection (“FDEP”) has announced a rulemaking to restrict nutrient concentrations in surface waters to levels below those currently permitted at the company’s White Springs, Florida plant. The company is working with FDEP on the rulemaking to pursue an acceptable resolution. The company is uncertain if any resolution will be possible without litigation, or, if litigation occurs, what the outcome would be.

•  The company, having been unable to agree with Mosaic Potash Esterhazy Limited Partnership (“Mosaic”) on the remaining amount of potash that the company is entitled to receive from Mosaic pursuant to the mining and processing agreement in respect of the company’s rights at the Esterhazy mine, issued a statement of claim in the Saskatchewan Court of Queen’s Bench against Mosaic on May 27, 2009. Under the statement of claim the company has asserted that it has the right under the mining and processing agreement to receive potash from Mosaic until at least 2012, and seeks an order from the Court declaring the amount of potash which the company has the right to receive. Mosaic in its statement of defence dated June 16, 2009, asserts that at a delivery rate of 1.24 million tons of product per year, the company’s entitlement to receive potash under the mining and processing agreement will terminate by August 30, 2010. Also, on June 16, 2009 Mosaic commenced a counterclaim against the company asserting that the company has breached the mining and processing agreement due to its refusal to take delivery of potash

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product under the agreement based on an event of force majeure. The company will continue to assert its position in these proceedings vigorously and it denies liability to Mosaic in connection with its counterclaim.

•  Between September 11 and October 2, 2008, the company and PCS Sales (USA), Inc. were named as defendants in eight very similar antitrust complaints filed in federal courts. Other potash producers are also defendants in these cases. Each of the separate complaints alleges conspiracy to fix potash prices, to divide markets, to restrict supply and to fraudulently conceal the conspiracy, all in violation of Section 1 of the Sherman Act. Five of the eight complaints were brought by plaintiffs who claim to have purchased potash directly from at least one of the defendants during the period between July 1, 2003 and the present (collectively, the “Direct Purchaser Plaintiffs”). All five Direct Purchaser Plaintiffs purport to sue on behalf of a class of persons who purchased potash in the United States directly from a defendant. The Direct Purchaser Plaintiffs, who filed a single, consolidated amended complaint on November 13, 2008, seek unspecified treble damages, injunctive relief, attorneys’ fees, costs and pre- and post-judgment interest. The other three complaints were brought by plaintiffs who claim to be indirect purchasers of potash (collectively, the “Indirect Purchaser Plaintiffs”). The Indirect Purchaser Plaintiffs, who purport to sue on behalf of all persons who purchased potash indirectly in the United States, filed a single, consolidated amended complaint on November 13, 2008. In addition to the Sherman Act claim described above, the Indirect Purchaser Plaintiffs also assert claims for violation of various state antitrust laws; violations of various state consumer protection statutes; and for unjust enrichment. The Indirect Purchaser Plaintiffs seek injunctive relief, unspecified damages, treble damages where allowed, costs, fees and pre- and post-judgment interest. All eight lawsuits have been consolidated into a Multidistrict Litigation proceeding, or MDL (No. 1996), for coordinated pretrial proceedings before Judge Ruben Castillo in the United States District Court for the Northern District of Illinois (the “Court”). Two consolidated complaints, one for the Direct Purchaser Plaintiffs and one for the Indirect Purchaser Plaintiffs, have been filed. In June 2009, the company and PCS Sales (USA), Inc., along with the other defendants filed motions to dismiss the amended consolidated complaints filed by the Direct Purchaser Plaintiffs and the Indirect Purchaser Plaintiffs. The Court has stayed all discovery pending a resolution of the defendants’ motions to dismiss. The company and PCS Sales (USA), Inc. believe each of these eight private antitrust law lawsuits is without merit and intend to defend them vigorously.

The company is also engaged in ongoing site assessment and/or remediation activities at a number of other facilities and sites. Based on current information, it does not believe that its future obligations with respect to these facilities and sites are reasonably likely to have a material adverse effect on its consolidated financial position or results of operations.

In addition, various other claims and lawsuits are pending against the company in the ordinary course of business. While it is not possible to determine the ultimate outcome of such actions at this time, and there exist inherent uncertainties in predicting such outcomes, it is the company’s belief that the ultimate resolution of such actions is not reasonably likely to have a material adverse effect on its consolidated financial position or results of operations.

The breadth of the company’s operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating the taxes it will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, provincial, state and local tax audits. The resolution of these uncertainties and the associated final taxes may result in adjustments to the company’s tax assets and tax liabilities.

The company owns facilities which have been either permanently or indefinitely shut down. It expects to incur nominal annual expenditures for site security and other maintenance costs at certain of these facilities. Should the facilities be dismantled, certain other shutdown-related costs may be incurred. Such costs would not be expected to have a material adverse effect on the company’s consolidated financial position or results of operations and would be recognized and recorded in the period in which they were incurred.

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16.   Guarantees

In the normal course of operations, the company provides indemnifications, that are often standard contractual terms, to counterparties in transactions such as purchase and sale contracts, service agreements, director/officer contracts and leasing transactions. These indemnification agreements may require the company to compensate the counterparties for costs incurred as a result of various events, including environmental liabilities and changes in (or in the interpretation of) laws and regulations, or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The terms of these indemnification agreements will vary based upon the contract, the nature of which prevents the company from making a reasonable estimate of the maximum potential amount that it could be required to pay to counterparties. Historically, the company has not made any significant payments under such indemnifications and no amounts have been accrued in the accompanying unaudited interim condensed consolidated financial statements with respect to these indemnification guarantees (apart from any appropriate accruals relating to the underlying potential liabilities).

The company enters into agreements in the normal course of business that may contain features that meet the definition of a guarantee. Various debt obligations (such as overdrafts, lines of credit with counterparties for derivatives and back-to-back loan arrangements) and other commitments (such as railcar leases) related to certain subsidiaries and investees have been directly guaranteed by the company under such agreements with third parties. The company would be required to perform on these guarantees in the event of default by the guaranteed parties. No material loss is anticipated by reason of such agreements and guarantees. At June 30, 2009, the maximum potential amount of future (undiscounted) payments under significant guarantees provided to third parties approximated $582.2. It is unlikely that these guarantees will be drawn upon and the maximum potential amount of future payments does not consider the possibility of recovery under recourse or collateral provisions. Accordingly, this amount is not indicative of future cash requirements or the company’s expected losses from these arrangements. At June 30, 2009, no subsidiary balances subject to guarantees were outstanding in connection with the company’s cash management facilities, and it had no liabilities recorded for other obligations other than subsidiary bank borrowings of approximately $5.9, which are reflected in other long-term debt.

The company has guaranteed the gypsum stack capping, closure and post-closure obligations of White Springs and PCS Nitrogen in Florida and Louisiana, respectively, pursuant to the financial assurance regulatory requirements in those states. The USEPA has announced that it plans to adopt rules requiring financial assurance from a variety of mining operations, including phosphate rock mining. It is too early in the rulemaking process to determine what the impact, if any, on our facilities will be when these rules are issued.

The environmental regulations of the Province of Saskatchewan require each potash mine to have decommissioning and reclamation plans. Financial assurances for these plans must be established within one year following their approval by the responsible provincial minister. The Minister of the Environment for Saskatchewan (“MOE”) provisionally approved the plans in July 2000. In July 2001, a CDN $2.0 irrevocable Letter of Credit was posted. The company submitted a revised plan when it was due in 2006. In early 2009, the MOE advised that the 2006 decommissioning and reclamation plans were approved and advised of its preferred position regarding the financial assurances to be provided by the company. The company anticipates that all matters regarding these financial assurances will be finalized in the third quarter of 2009. Under the regulations, the decommissioning and reclamation plans and financial assurances are to be reviewed at least once every five years, or sooner as required by the MOE. The next scheduled review for the decommissioning and reclamation plans and financial assurances is in 2011. Based on current information, the company does not believe that its financial assurance requirements or future obligations with respect to this matter are reasonably likely to have a material impact on its consolidated financial position or results of operations.

The company has met its financial assurance responsibilities as of June 30, 2009. Costs associated with the retirement of long-lived tangible assets have been accrued in the accompanying unaudited interim condensed consolidated financial statements to the extent that a legal liability to retire such assets exists.

During the period, the company entered into various other commercial letters of credit in the normal course of operations. As at June 30, 2009, $30.5 of letters of credit were outstanding.

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The company expects that it will be able to satisfy all applicable credit support requirements without disrupting normal business operations.

17.   Related Party Commitment

In June 2009, the company committed to purchase minimum amounts of potash from Sociedad Quimica y Minera de Chile S.A., a significantly influenced equity investee. Future commitments, based on market rates for such potash as at August 6, 2009 are $70.0 within one year and $110.0 between one and three years.

18.   Reconciliation of Canadian and United States Generally Accepted Accounting Principles

Canadian GAAP varies in certain significant respects from US GAAP. As required by the US Securities and Exchange Commission (“SEC”), the effect of these principal differences on the company’s unaudited interim condensed consolidated financial statements is described and quantified below. For a complete discussion of US and Canadian GAAP differences, see Note 33 to the consolidated financial statements for the year ended December 31, 2008 in the company’s 2008 financial review annual report.

(a) Inventory valuation: Under Canadian GAAP, when the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed. The reversal is limited to the amount of the original write-down. Under US GAAP, the reversal of a write-down is not permitted unless the reversal relates to a write-down recorded in a prior interim period during the same fiscal year.

(b) Long-term investments: Certain of the company’s investments in international entities are accounted for under the equity method. Accounting principles generally accepted in those foreign jurisdictions may vary in certain important respects from Canadian GAAP and in certain other respects from US GAAP. The company’s share of earnings and other comprehensive income of these equity investees under Canadian GAAP have been adjusted for the significant effects of conforming to US GAAP.

In addition, the company’s interest in a foreign joint venture is accounted for using proportionate consolidation under Canadian GAAP. US GAAP requires joint ventures to be accounted for using the equity accounting method. As a result, an adjustment is recorded to reflect the company’s interest in the joint venture under the equity method of accounting.

(c) Property, plant and equipment and goodwill: The net book value of property, plant and equipment and goodwill under Canadian GAAP is higher than under US GAAP, as past provisions for asset impairment under Canadian GAAP were measured based on the undiscounted cash flow from use together with the residual value of the assets. Under US GAAP, they were measured based on fair value, which was lower than the undiscounted cash flow from use together with the residual value of the assets. Fair value for this purpose was determined based on discounted expected future net cash flows.

(d) Depreciation and amortization: Depreciation and amortization under Canadian GAAP is higher than under US GAAP, as a result of differences in the carrying amounts of property, plant and equipment under Canadian and US GAAP.

(e) Exploration costs: Under Canadian GAAP, capitalized exploration costs are classified under property, plant and equipment. For US GAAP, these costs are generally expensed until such time as a final feasibility study has confirmed the existence of a commercially mineable deposit.

(f) Pension and other post-retirement benefits: Under Canadian GAAP, when a defined benefit plan gives rise to an accrued benefit asset, a company must recognize a valuation allowance for the excess of the adjusted benefit asset over the expected future benefit to be realized from the plan asset. Changes in the pension valuation allowance are recognized in income. US GAAP does not specifically address pension valuation allowances, and the US regulators have interpreted this to be a difference between Canadian and US GAAP. In light of this, a difference between Canadian and US GAAP has been recorded for the effects of recognizing a pension valuation allowance and the changes therein under Canadian GAAP.

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In addition, under US GAAP the company is required to recognize the difference between the benefit obligation and the fair value of plan assets in the Consolidated Statements of Financial Position with the offset to OCI. No similar requirement currently exists under Canadian GAAP.

(g) Foreign currency translation adjustment: The company adopted the US dollar as its functional and reporting currency on January 1, 1995. At that time, the consolidated financial statements were translated into US dollars at the December 31, 1994 year-end exchange rate using the translation of convenience method under Canadian GAAP. This translation method was not permitted under US GAAP. US GAAP required the comparative Consolidated Statements of Operations and Consolidated Statements of Cash Flow to be translated at applicable weighted-average exchange rates; whereas, the Consolidated Statements of Financial Position were permitted to be translated at the December 31, 1994 year-end exchange rate. The use of disparate exchange rates under US GAAP gave rise to a foreign currency translation adjustment. Under US GAAP, this adjustment is reported as a component of accumulated OCI.

(h) Offsetting of certain amounts: US GAAP requires an entity to adopt a policy of either offsetting or not offsetting fair value amounts recognized for derivative instruments and for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. The company adopted a policy to offset such amounts. Under Canadian GAAP offsetting of the margin deposits is not permitted.

(i) Stock-based compensation: Under Canadian GAAP, the company’s stock-based compensation plan awards classified as liabilities are measured at intrinsic value at each reporting period. US GAAP requires that these liability awards be measured at fair value at each reporting period. The company uses a Monte Carlo simulation model to estimate the fair value of its performance unit incentive plan liability for US GAAP purposes.

Under Canadian GAAP, stock options are recognized over the service period, which for PotashCorp is established by the option performance period. Effective January 1, 2006, under US GAAP, stock options are recognized over the requisite service period which does not commence until the option plan is approved by the company’s shareholders and options are granted thereunder. For options granted under the PotashCorp 2007 Performance Option Plan, the service period commenced January 1, 2007 under Canadian GAAP and May 3, 2007 under US GAAP. For options granted under the PotashCorp 2008 Performance Option Plan, the service period commenced January 1, 2008 under Canadian GAAP and May 8, 2008 under US GAAP. For options granted under the PotashCorp 2009 Performance Option Plan, the service period commenced January 1, 2009 under Canadian GAAP and May 7, 2009 under US GAAP. This difference impacts the stock-based compensation cost recorded and may impact diluted earnings per share.

(j) Stripping costs: Under Canadian GAAP, the company capitalizes and amortizes costs associated with the activity of removing overburden and other mine waste minerals in the production phase. US GAAP requires such stripping costs to be attributed to ore produced in that period as a component of inventory and recognized in cost of sales in the same period as related revenue.

(k) Income taxes related to the above adjustments: The income tax adjustment reflects the impact on income taxes of the US GAAP adjustments described above. Accounting for income taxes under Canadian and US GAAP is similar, except that income tax rates of enacted or substantively enacted tax law must be used to calculate future income tax assets and liabilities under Canadian GAAP, whereas only income tax rates of enacted tax law can be used under US GAAP.

(l) Income tax consequences of stock-based employee compensation: Under Canadian GAAP, the income tax benefit attributable to stock-based compensation that is deductible in computing taxable income but is not recorded in the consolidated financial statements as an expense of any period (the “excess benefit”) is considered to be a permanent difference. Accordingly, such amount is treated as an item that reconciles the statutory income tax rate to the company’s effective tax rate. Under US GAAP, the excess benefit is recognized as additional paid-in capital.

(m) Income taxes related to uncertain income tax positions: US GAAP prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its consolidated financial statements uncertain income tax positions that it has taken or expects to take on a tax return (including a decision whether to file

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or not to file a return in a particular jurisdiction). Canadian GAAP has no similar requirements related to uncertain income tax positions.

(n) Cash flow statements: US GAAP requires the disclosure of income taxes paid. Canadian GAAP requires the disclosure of income tax cash flows, which would include any income taxes recovered during the year. For the three months ended June 30, 2009, income taxes paid under US GAAP were $588.7 (2008 — $227.6) and for the six months ended June 30, 2009, income taxes paid under US GAAP were $736.8 (2008 — $386.9).

The application of US GAAP, as described above, would have had the following effects on net income, net income per share, total assets and shareholders’ equity.

	Three Months						Six Months
	Ended June 30						Ended June 30
	2009			2008			2009			2008
Net income as reported — Canadian GAAP	$	187.1		$	905.1		$	495.4		$	1,471.1
Items increasing (decreasing) reported net income
Inventory valuation (a)		5.4			-			(0.3	)		-
Depreciation and amortization (d)		2.1			2.1			4.2			4.2
Exploration costs (e)		-			-			-			(5.9	)
Stock-based compensation (i)		4.5			1.5			4.1			3.5
Stripping costs (j)		(2.5	)		(2.8	)		(2.8	)		(3.5	)
Share of earnings of equity investees (b)		0.6			0.8			-			0.2
Pension and other post-retirement benefits (f)		0.3			0.1			0.6			0.2
Deferred income taxes relating to the above adjustments (k)		(2.5	)		-			1.4			0.1
Income taxes related to US GAAP effective tax rate (k)		(0.6	)		-			-			(3.2	)
Income taxes related to stock-based compensation (l)		(3.8	)		(11.8	)		(4.4	)		(29.1	)
Income taxes related to uncertain income tax positions (m)		4.2			2.4			(3.9	)		6.1
Net income — US GAAP	$	194.8		$	897.4		$	494.3		$	1,443.7
Basic weighted average shares outstanding — US GAAP		295,443,000			310,615,000			295,338,000			313,138,000
Diluted weighted average shares outstanding — US GAAP		304,066,000			321,082,000			303,736,000			323,710,000
Basic net income per share — US GAAP	$	0.66		$	2.89		$	1.67		$	4.61
Diluted net income per share — US GAAP	$	0.64		$	2.79		$	1.63		$	4.46

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	June 30,			December 31,
	2009			2008
Total assets as reported — Canadian GAAP	$	11,264.5		$	10,248.8
Items increasing (decreasing) reported total assets
Inventory (a)		(0.3	)		-
Property, plant and equipment (c)		(88.6	)		(92.8	)
Exploration costs (e)		(13.0	)		(13.0	)
Stripping costs (j)		(39.5	)		(36.7	)
Pension and other post-retirement benefits (f)		(90.2	)		(105.2	)
Margin deposits associated with derivative instruments (h)		(90.0	)		(91.1	)
Investment in equity investees (b)		(1.0	)		1.3
Income tax asset related to uncertain income tax positions (m)		29.6			24.8
Goodwill (c)		(46.7	)		(46.7	)
Total assets — US GAAP	$	10,924.8		$	9,889.4

	June 30,			December 31,
	2009			2008
Total shareholders’ equity as reported — Canadian GAAP	$	5,498.9		$	4,588.9
Items increasing (decreasing) reported shareholders’ equity
Accumulated other comprehensive income, net of related income taxes, consisting of:
Income taxes related to uncertain income tax positions (m)		(1.2	)		(1.2	)
Pension and other post-retirement benefits (f)		(238.2	)		(246.6	)
Share of accumulated other comprehensive income of equity investees (b)		(1.2	)		-
Foreign currency translation adjustment (g)		(20.9	)		(20.9	)
Foreign currency translation adjustment (g)		20.9			20.9
Provision for asset impairment (c)		(218.0	)		(218.0	)
Inventory valuation (a)		(0.3	)		-
Depreciation and amortization (d)		82.7			78.5
Exploration costs (e)		(13.0	)		(13.0	)
Stripping costs (j)		(39.5	)		(36.7	)
Pension and other post-retirement benefits (f)		16.4			15.8
Stock-based compensation (i)		3.5			-
Share of earnings of equity investees (b)		1.3			1.3
Deferred income taxes relating to the above adjustments (k)		31.5			30.1
Income taxes related to US GAAP effective tax rate (k, l)		(82.3	)		(82.3	)
Income taxes related to uncertain income tax positions(m)		82.6			86.5
Shareholders’ equity — US GAAP	$	5,123.2		$	4,203.3

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Supplemental US GAAP Disclosures

Fair Value Measurement

The following table presents the company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2009.

							Fair Value Measurements Using:
	Carrying						Quoted Prices in
	Amount of						Active Markets for		Significant Other			Significant
	Asset (Liability)						Identical Assets or		Observable			Unobservable
	at June 30,			Cash Collateral			Liabilities		Inputs			Inputs
Description	2009			Netting			(Level 1)		(Level 2)			(Level 3)
Derivative instrument assets	$	10.3		$	-		$	-	$	0.4		$	9.9
Derivative instrument liabilities		(95.0	)		90.0	(1)		-		(58.4	)		(126.6	)
Available-for-sale securities		2,209.0			-			2,209.0		-			-

⁽¹⁾ Amount represents the effect of legally enforceable master netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

	Three Months						Six Months
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Ended June 30						Ended June 30
For Derivative Instruments	2009			2008			2009			2008
Beginning balance	$	(159.4	)	$	180.5		$	(110.8	)	$	127.7
Total gains (losses) (realized and unrealized) before income taxes
Included in earnings		(14.8	)		11.9			(23.2	)		17.9
Included in other comprehensive income		38.9			205.1			(13.3	)		261.9
Purchases, sales, issuances and settlements		18.6			(15.6	)		30.6			(25.6	)
Ending balance, June 30	$	(116.7	)	$	381.9		$	(116.7	)	$	381.9
Amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to instruments still held at the reporting date	$	-		$	(3.1	)	$	(0.4	)	$	(3.4	)
Gains (losses) (realized and unrealized) included in earnings for the period reported in Cost of goods sold	$	(14.8	)	$	11.9		$	(23.2	)	$	17.9

	Three Months						Six Months
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Ended June 30						Ended June 30
For Available-For-Sale Securities	2009			2008			2009			2008
Beginning balance	$	18.1		$	43.1		$	17.2		$	56.0
Total gains (losses) (realized and unrealized) before income taxes
Included in earnings		115.3			(0.7	)		115.3			(43.8	)
Included in other comprehensive income		(0.9	)		4.5			-			34.7
Purchases, sales, issuances and settlements		(132.5	)		-			(132.5	)		-
Ending balance, June 30	$	-		$	46.9		$	-		$	46.9
Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized losses relating to instruments still held at the reporting date	$	-		$	(0.7	)	$	-		$	(43.8	)
Gains (losses) (realized and unrealized) included in earnings for the period reported in Other income	$	115.3		$	(0.7	)	$	115.3		$	(43.8	)

Recent Accounting Pronouncements

Derivative Instruments and Hedging Activities

In March 2008, the Financial Accounting Standards Board (“FASB”) issued accounting standards that require enhanced disclosures about an entity’s derivative and hedging activities. Entities are required to provide disclosures

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about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The standards increase convergence with IFRSs, as it relates to disclosures of derivative instruments. The applicable disclosures under these standards, which the company adopted effective January 1, 2009, are included below.

Accounting for Derivative Instruments

Derivative financial instruments are used by the company to manage its exposure to exchange rate, interest rate and commodity price fluctuations. The company recognizes its derivative instruments at fair value on the Consolidated Statements of Financial Position where appropriate. Contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments (except contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with expected purchase, sale or usage requirements), are accounted for as derivative financial instruments.

The accounting for changes in the fair value (i.e. gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship. For strategies designated as fair value hedges, the effective portion of the change in the fair value of the derivative is offset in income against the change in fair value, attributed to the risk being hedged, of the underlying hedged asset, liability or firm commitment. For cash flow hedges, the effective portion of the change in the fair value of the derivative is accumulated in OCI until the variability in cash flows being hedged is recognized in earnings in future accounting periods. Ineffective portions of hedges are recorded in earnings in the current period. The change in fair value of derivative instruments not designated as hedges is recorded in income in the current period.

The company’s policy is not to use derivative financial instruments for trading or speculative purposes, although it may choose not to designate a relationship as an accounting hedge. The company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking derivatives to specific assets and liabilities or to specific firm commitments or forecast transactions. The company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in fair values of hedged items. Hedge effectiveness related to the company’s natural gas hedges is assessed on a prospective and retrospective basis using regression analyses. A hedging relationship may be terminated because the hedge ceases to be effective; the underlying asset or liability being hedged is derecognized; or the derivative instrument is no longer designated as a hedging instrument. In such instances, the difference between the fair value and the accrued value of the hedging derivatives upon termination is deferred and recognized into earnings on the same basis that gains, losses, revenue and expenses of the previously hedged item are recognized. If a hedging relationship is terminated because it is no longer probable that the anticipated transaction will occur, then the net gain or loss accumulated in OCI is recognized into earnings in the current period.

Cash Flow Hedges

The company is exposed to commodity price risk resulting from its natural gas requirements. Its natural gas strategy is based on diversification for its total gas requirements (which represent the forecast consumption of natural gas volumes by its manufacturing and mining facilities). Its objective is to acquire a reliable supply of natural gas feedstock and fuel on a location-adjusted, cost-competitive basis in a manner that minimizes volatility without undue risk. The company employs derivative commodity instruments related to a portion of its natural gas requirements (primarily futures, swaps and options) for the purpose of managing its exposure to commodity price risk in the purchase of natural gas, not for speculative or trading purposes. The company has an Advisory Committee, comprised of members from senior management, responsible for developing policies and establishing procedural requirements relating to its natural gas activities. Such policies include the establishment of limits for the portion of its natural gas requirements that will be hedged as well as the types of instruments that may be utilized for such hedging activities. Natural gas futures and swap agreements, used to manage the cost of natural gas, are generally designated as cash flow hedges of anticipated transactions.

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The portion of gain or loss on derivative instruments designated as cash flow hedges that are deferred in accumulated OCI is reclassified into cost of goods sold when the product containing the hedged item impacts earnings. Any hedge ineffectiveness is recorded in cost of goods sold in the current period. Of the gains and losses at June 30, 2009, approximately $70.7 of losses will be reclassified to cost of goods sold within the next 12 months.

Derivative Instruments Not Designated as Hedging Instruments

The company uses foreign currency forward contracts for the primary purpose of limiting exposure to exchange rate fluctuations relating to expenditures denominated in currencies other than the US dollar. These contracts are not designated as hedging instruments for accounting purposes. Accordingly, they are marked-to-market with changes in fair value recognized through foreign exchange gain or loss in earnings.

Fair Values of Derivative Instruments in the Consolidated Statements of Financial Position

		June 30,		December 31,
Fair value of derivative instrument assets:(1)                          Balance Sheet Location		2009		2008
Derivatives designated as hedging instruments
Natural gas contracts	Current portion of derivative instrument assets	$	0.3	$	0.1
Natural gas contracts	Derivative instrument assets		9.9		11.5
Total derivatives designated as hedging instruments			10.2		11.6
Derivatives not designated as hedging instruments
Foreign currency forward contracts	Current portion of derivative instrument assets		0.1		6.3
Total derivative instrument assets		$	10.3	$	17.9

		June 30,		December 31,
Fair value of derivative instrument liabilities:(1)                  Balance Sheet Location		2009		2008
Derivatives designated as hedging instruments
Natural gas contracts	Current portion of derivative instrument liabilities	$	71.0	$	50.2
Natural gas contracts	Derivative instrument liabilities		100.3		120.4
Total derivatives designated as hedging instruments			171.3		170.6
Derivatives not designated as hedging instruments
Foreign currency forward contracts	Current portion of derivative instrument liabilities		13.7		57.9
Total derivative instrument liabilities		$	185.0	$	228.5

⁽¹⁾ All fair value amounts are gross and exclude netted cash collateral balances.

The Effect of Derivative Instruments on the Consolidated Statements of Operations for the Three Months Ended June 30

Amount of

Location of (Loss)

(Loss) Gain

Amount of (Loss) Gain

Gain Recognized in

Recognized in

Amount of

Location of (Loss)

Reclassified from

Income (Ineffective

Income (Ineffective

(Loss) Gain

Gain Reclassified

Accumulated OCI into

Portion and Amount

Portion and Amount

Recognized in OCI

from Accumulated

Income (Effective

Excluded from

Excluded from

Derivatives in Cash Flow

(Effective Portion)

OCI into Income

Portion)

Effectiveness

Effectiveness Testing)

Hedging Relationships

2009

2008

(Effective Portion)

2009

2008

Testing)

2009

2008

Natural gas contracts

$

26.4

$

220.1

Cost of goods sold

$

(26.9

)

$

15.0

Cost of goods sold

$

-

$

(3.2

)

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		Amount of (Loss) Gain
Derivatives Not Designated		Recognized in Income
as Hedging Instruments	Location of (Loss) Gain Recognized in Income	2009			2008
Foreign currency forward contracts	Foreign exchange (loss) gain	$	(18.9	)	$	7.8

The Effect of Derivative Instruments on the Consolidated Statements of Operations for the Six Months Ended June 30

													Amount of
												Location of (Loss)	(Loss) Gain
							Amount of (Loss) Gain					Gain Recognized in	Recognized in
	Amount of					Location of (Loss)	Reclassified from					Income (Ineffective	Income (Ineffective
	(Loss) Gain					Gain Reclassified	Accumulated OCI into					Portion and Amount	Portion and Amount
	Recognized in OCI					from Accumulated	Income (Effective					Excluded from	Excluded from
Derivatives in Cash Flow	(Effective Portion)					OCI into Income	Portion)					Effectiveness	Effectiveness Testing)
Hedging Relationships	2009			2008		(Effective Portion)	2009			2008		Testing)	2009			2008
Natural gas contracts	$	(46.1	)	$	283.5	Cost of goods sold	$	(40.6	)	$	23.6	Cost of goods sold	$	(0.2	)	$	(3.6	)

		Amount of (Loss) Gain
Derivatives Not Designated		Recognized in Income
as Hedging Instruments	Location of (Loss) Gain Recognized in Income	2009			2008
Foreign currency forward contracts	Foreign exchange (loss) gain	$	(22.5	)	$	2.5

Methods and Assumptions

Estimated fair values for financial instruments are designed to approximate amounts at which the instruments could be exchanged in a current transaction between willing parties. The fair value of derivative instruments traded in active markets (such as natural gas futures and exchange-traded options) is based on quoted market prices at the date of the statement of financial position.

The fair value of derivative instruments that are not traded in an active market (such as natural gas swaps, over-the-counter option contracts and foreign currency forward contracts) is determined by using valuation techniques. The company uses a variety of methods and makes assumptions that are based on market conditions existing at the date of the statement of financial position. Natural gas swap valuations are based on a discounted cash flows model. The inputs used in the model include contractual cash flows based on prices for natural gas futures contracts, fixed prices and notional volumes specified by the swap contracts, the time value of money, liquidity and credit risk. Certain of the futures contract prices are supported by prices quoted in an active market and others are not based on observable market data. The fair value of swap contracts is especially sensitive to changes in futures contract prices. The interest rates used to discount estimated cash flows were between 0.31 percent and 4.82 percent (2008 — between 0.44 and 4.45) depending on the settlement date. Over-the-counter option contracts are valued based on quoted market prices for similar instruments where available or an option valuation model. The fair value of foreign currency forward contracts is determined using quoted forward exchange rates at the balance sheet date.

Contingent Features

Certain of the company’s derivative instruments contain provisions that require the company’s debt to maintain specified credit ratings from two of the major credit rating agencies. If the company’s debt were to fall below the specified ratings, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position on June 30, 2009, is $168.3 for which the company has posted collateral of $90.0 in the normal course of business. If the credit-risk-related contingent features underlying these

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agreements were triggered on June 30, 2009, the company would have been required to post an additional $76.0 of collateral to its counterparties.

Business Combinations

In December 2007, the FASB issued accounting standards which require the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establish the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; and disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. In April 2009, the FASB issued guidance to address application issues raised by preparers, auditors and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. These standards applied prospectively. The implementation of these standards, effective January 1, 2009, did not have a material impact on the company’s consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued accounting standards to require all entities to report noncontrolling (minority) interests as equity in consolidated financial statements. The standards eliminate the disparate treatment that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. These standards were applied prospectively. The implementation of these standards, effective January 1, 2009, did not have a material impact on the company’s consolidated financial statements.

Framework for Fair Value Measurement

In February 2008, the FASB issued guidance related to the application of the framework for fair value measurement to non-financial assets and non-financial liabilities. The FASB decided to delay the effective date of applying the framework for fair value measurement to non-financial assets and non-financial liabilities until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The implementation of this guidance, effective January 1, 2009, did not have a material impact on the company’s consolidated financial statements.

FASB Accounting Standards Codification

On July 1, 2009, the FASB issued the FASB Accounting Standards Codification^tm (the “Codification”) as the single source of authoritative US GAAP (other than guidance issued by the US Securities and Exchange Commission), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and related literature. The Codification is effective for interim and annual periods ending after September 15, 2009. At this time, only one level of authoritative US GAAP will exist. All other literature will be considered non-authoritative. The Codification does not change US GAAP; instead, it introduces a new structure that is organized in an easily accessible, user-friendly online research system. The Codification did not have an impact on the company’s consolidated financial statements.

Fair Value Measurement in Inactive Markets and Distressed Transactions

In April 2009, the FASB issued guidance for estimating fair value in accordance with the framework for fair value measurement, when the volume and level of activity for the asset or liability have significantly decreased. At the same time the FASB issued guidance on identifying circumstances that indicate a transaction is not orderly. The guidance, which was applied prospectively, was effective for interim and annual periods ending after June 15, 2009 and did not have a material impact on the company’s consolidated financial statements.

Other Than Temporary Impairment on Debt Securities

In April 2009, the FASB issued guidance to change the recognition threshold of an other than temporary impairment for debt securities. When an entity does not intend to sell the debt security and it is more likely than not that the entity will not have to sell the debt security before recovery of its cost basis, it will recognize only the credit loss component of an other than temporary impairment of a debt security in earnings and the remaining portion in

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other comprehensive income. The guidance was effective for interim and fiscal periods ending after June 15, 2009 and did not have a material impact on the company’s consolidated financial statements.

Fair Value Disclosure

In April 2009, the FASB issued guidance to require disclosure of fair value information of financial instruments at each interim reporting period. The disclosures shall include the relevant carrying value as well as the methods and significant assumptions used to estimate the fair value. The guidance is effective for interim and annual periods beginning after June 15, 2009. The company has included the relevant disclosures in the above disclosures related to financial instruments.

Subsequent Events

In May 2009, the FASB issued standards addressing subsequent events. The standards address the recognition and disclosure of events that occur after the balance sheet date but before the issuance of the financial statements. The FASB issued the standards in order to incorporate, within the accounting standards, principles that had originated in auditing standards. The standards also require an entity to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. The standards do not differ significantly from previously applied standards on disclosure of subsequent events. The company adopted these standards prospectively, effective for reporting periods ending after June 15, 2009. The standards did not have a material impact on the company’s consolidated financial statements. The company has evaluated subsequent events through August 6, 2009, the date the financial statements were issued, and noted no subsequent events that required disclosure.

Variable Interest Entities

In June 2009, the FASB issued revised accounting standards to improve financial reporting by enterprises involved with variable interest entities. The standards replace the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and: (1) the obligation to absorb losses of the entity; or, (2) the right to receive benefits from the entity. The standards are effective as of the beginning of the first annual reporting period that begins after November 15, 2009 and shall be applied prospectively. The company is currently reviewing the impact, if any, on the company’s consolidated financial statements.

19.   Comparative Figures

Certain of the prior periods’ figures have been reclassified to conform with the current period’s presentation.

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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is the responsibility of management and is as of August 6, 2009. The Board of Directors carries out its responsibility for review of this disclosure principally through its audit committee, comprised exclusively of independent directors. The audit committee reviews, and prior to its publication, approves, pursuant to the authority delegated to it by the Board of Directors, this disclosure. The term “PCS” refers to Potash Corporation of Saskatchewan Inc. and the terms “we”, “us”, “our”, “PotashCorp” and the “company” refer to PCS and, as applicable, PCS and its direct and indirect subsidiaries as a group. Additional information relating to the company, including our Annual Report on Form 10-K, can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

POTASHCORP AND OUR BUSINESS ENVIRONMENT

PotashCorp is an integrated producer of fertilizer, industrial and animal feed products. We are the world’s largest fertilizer enterprise by capacity, producing the three primary plant nutrients: potash, phosphate and nitrogen. We sell fertilizer to North American retailers, cooperatives and distributors that provide storage and application services to farmers, the end users. Our offshore customers are government agencies and private importers who buy under contract and on the spot market; spot sales are more prevalent in North America. Fertilizers are sold primarily for spring and fall application in both Northern and Southern Hemispheres.

Transportation is an important part of the final purchase price for fertilizer so producers usually sell to the closest customers. In North America, we sell mainly on a delivered basis via rail, barge, truck and pipeline. Offshore customers purchase product either at the port where it is loaded or delivered with freight included.

Potash, phosphate and nitrogen are also used as inputs for the production of animal feed and industrial products. Most feed and industrial sales are by contract and are more evenly distributed throughout the year than fertilizer sales.

POTASHCORP VISION

Our vision is to play a key role in the global food solution while building long-term value for all our stakeholders. We strive to be the highest quality low-cost producer and sustainable gross margin leader in the products we sell and the markets we serve. Through our strategy, we attempt to minimize the natural volatility of our business. We strive for increased earnings and to outperform our sector and companies on the DAXglobal Agribusiness Index in total shareholder return.

We link our financial performance with areas of extended responsibility that include safety, the environment and all those who have a social or economic interest in our business. We focus on increased transparency to improve our relationships with all our stakeholders, believing this gives us a competitive advantage.

POTASHCORP STRATEGY

To provide our stakeholders with long-term value, our strategy focuses on generating growth while striving to minimize fluctuations in our upward-trending earnings line. This value proposition has given our stakeholders superior value for many years. We apply this strategy by concentrating on our highest margin products. Such analysis dictates our Potash First strategy, focusing our capital — internally and through investments — to build on our world-class potash assets and meet the rising global demand for this vital nutrient. By investing in potash capacity while producing to meet market demand, we create the opportunity for significant growth while limiting downside risk. We complement our potash operations with focused phosphate and nitrogen businesses that emphasize the production of high-margin products with stable and sustainable earnings potential.

We strive to grow PotashCorp by enhancing our position as supplier of choice to our customers, delivering the highest quality products at market prices when they are needed. We seek to be the preferred supplier to high-volume, high-margin customers with the lowest credit risk. It is critical that our customers recognize our ability to create value for them based on the price they pay for our products.

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As we plan our future, we carefully weigh our choices for our cash flow. We base all investment decisions on cash flow return materially exceeding cost of capital, evaluating the best return on any investment that matches our Potash First strategy. Most of our recent capital expenditures have gone to investments in our own potash capacity, and we look to increase our existing offshore potash investments and seek other merger and acquisition opportunities in this nutrient. We also consider share repurchase and increased dividends as ways to maximize shareholder value over the long term.

KEY PERFORMANCE DRIVERS — PERFORMANCE COMPARED TO GOALS

Each year we set targets to advance our long-term goals and drive results. We have developed key performance indicators to monitor our progress and measure success. As we drill down into the organization with these metrics, we believe:

•  management will focus on the most important things, which will be reinforced by having the measurable, relevant results readily accessible;

•  employees will understand and be able to effectively monitor their contribution to the achievement of corporate goals; and

•  we will be even more effective in meeting our targets.

Our long-term goals and 2009 targets are set out on pages 35 to 37 of our 2008 financial review annual report. A summary of our progress against selected goals and representative annual targets is set out below.

	Representative	Performance
Goal	2009 Annual Target	to June 30, 2009
Achieve no harm to people.	Reduce total site severity injury rate by 25 percent by the end of 2011 from 2008 levels.	Total site severity injury rate was 0.88 for the first six months of 2009, representing a reduction of 10 percent compared to the 2008 annual level. The total site severity injury rate was not tracked in the first half of 2008.
Achieve no damage to the environment.	Reduce total reportable releases, permit excursions and spills by 15 percent from 2008 levels.	Reportable release rate on an annualized basis declined 71 percent, annualized permit excursions were down 50 percent and annualized spills were down 25 percent during the first six months of 2009 compared to 2008 annual levels. Compared to the first six months of 2008, reportable releases were down 50 percent, permit excursions were down 50 percent and spills were down 40 percent.
Maximize long-term shareholder value.	Exceed total shareholder return for our sector and companies on the DAXglobal Agribusiness Index for 2009.	PotashCorp’s total shareholder return was 27 percent in the first six months of 2009 compared to the DAXglobal Agribusiness Index weighted average return of 25 percent and our sector weighted average return of 34 percent.

FINANCIAL OVERVIEW

This discussion and analysis is based on the company’s unaudited interim condensed consolidated financial statements reported under generally accepted accounting principles in Canada (“Canadian GAAP”). These principles differ in certain significant respects from accounting principles generally accepted in the United States. These differences are described and quantified in Note 18 to the unaudited interim condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. All references to per-share amounts pertain to diluted net income per share.

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For an understanding of trends, events, uncertainties and the effect of critical accounting estimates on our results and financial condition, the entire document should be read carefully together with our 2008 financial review annual report.

Earnings Guidance

The company’s initial guidance for the second quarter of 2009 was earnings per share in the range of $1.10 to $1.50 per share, assuming a period end exchange rate of 1.18 Canadian dollars per US dollar and an effective tax rate of 26-28 percent. The final result was net income of $187.1 million, or $0.62 per share, with a period-end exchange rate of 1.1625 Canadian dollars per US dollar and an effective tax rate of 28 percent for the quarter.

Overview of Actual Results

Operations

	Three Months Ended June 30										Six Months Ended June 30
Dollars (millions) — except					Dollar			%							Dollar			%
per-share amounts	2009		2008		Change			Change			2009		2008		Change			Change
Sales	$	856.0	$	2,621.0	$	(1,765.0	)		(67	)	$	1,778.5	$	4,511.6	$	(2,733.1	)		(61	)
Freight		38.9		103.4		(64.5	)		(62	)		76.5		205.8		(129.3	)		(63	)
Transportation and distribution		37.7		33.3		4.4			13			64.7		65.6		(0.9	)		(1	)
Cost of goods sold		608.8		1,047.0		(438.2	)		(42	)		1,237.1		1,946.9		(709.8	)		(36	)
Gross margin	$	170.6	$	1,437.3	$	(1,266.7	)		(88	)	$	400.2	$	2,293.3	$	(1,893.1	)		(83	)
Operating income	$	285.8	$	1,296.0	$	(1,010.2	)		(78	)	$	504.2	$	2,045.0	$	(1,540.8	)		(75	)
Net income	$	187.1	$	905.1	$	(718.0	)		(79	)	$	495.4	$	1,471.1	$	(975.7	)		(66	)
Net income per share — basic	$	0.63	$	2.91	$	(2.28	)		(78	)	$	1.68	$	4.70	$	(3.02	)		(64	)
Net income per share — diluted	$	0.62	$	2.82	$	(2.20	)		(78	)	$	1.63	$	4.54	$	(2.91	)		(64	)

Second-quarter earnings of $187.1 million were 79 percent lower than the same quarter in 2008 as fertilizer and industrial demand for potash and phosphate products were weak and pricing for phosphate and nitrogen products were significantly lower. Earnings per share of $0.62 in the second quarter reflected strong potash pricing and a gain on disposal of auction rate securities. Earnings for the first six months of 2009 were $495.4 million ($1.63 per share), 66 percent lower than the record $1,471.1 million ($4.54 per share) earned in the first half of last year. Second-quarter gross margin was $170.6 million compared to $1,437.3 million in the same period last year, with 62 percent of the current total generated by potash. For the six months ended June 30, 2009, gross margin of $400.2 million fell 83 percent compared to $2,293.3 million in the first six months of 2008, with potash comprising 68 percent of the current total.

Fertilizer buyers continued to be extremely cautious in the wake of the global economic downturn, creating an unprecedented decline in potash and phosphate sales volumes and phosphate and nitrogen prices. Potash buyers continued to operate conservatively during the second quarter, carefully managing cash in a tough economy and waiting for price definition. With dealers and farmers globally continuing to work through inventories and reducing applications during the quarter, potash prices moved lower but avoided the significant declines seen in phosphate and nitrogen. While contract negotiations were not settled with India and China by June 30, 2009, customers in Brazil began purchasing towards the end of the quarter to replenish largely depleted inventories in advance of their key planting season. In North America, estimated potash applications for the fertilizer year (July 2008 to June 2009) declined by the largest amount on record, down approximately 40 percent on a year-over-year basis. Shipments from North American producers fell 73 percent compared to the same quarter last year and 53 percent for the fertilizer year, leaving US dealer inventories at very low levels heading into the fall application season. In phosphate, US producer solid fertilizer sales to US customers declined 27 percent compared to the second quarter of 2008. For the fertilizer year, sales declined 38 percent and application rates were down approximately 30 percent. With strong demand from India and renewed interest in Brazil near the end of the quarter, offshore sales from US producers rose 30 percent compared to the same quarter last year. In nitrogen, US sales volume and prices declined as a result of weak industrial demand and liquidation of inventories by customers.

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Selling and administrative expenses were $26.3 million lower than in the same quarter last year and $30.1 million lower than the first half of 2008 due to: (1) lower accruals for our short-term incentive plan, as a result of our financial performance being below budget; (2) lower stock option expense; and (3) the price of our common shares not increasing as much during the second quarter and first half of 2009 compared to 2008, causing the expense associated with our deferred share units to decrease. Provincial mining and other taxes declined $181.1 million quarter over quarter and $247.5 million year over year as a result of anticipated lower potash margins and decreased sales tonnes compared to the same period last year. Foreign exchange losses increased quarter over quarter from $1.9 million to $37.9 million and changed from a gain of $25.8 million in the six months ended June 30, 2008 to a loss of $7.7 million in the same period for 2009 due to treasury losses and a stronger Canadian dollar, both of which were slightly offset by a recovery in foreign exchange related to a functional currency tax election during the second quarter of 2009. Interest expense of $26.5 million in the second quarter and $49.7 million for the first half of 2009 was almost two times higher than the same periods in 2008 due to higher debt levels. Other income increased $85.1 million quarter over quarter and $108.2 million year over year due to a $115.3 million gain on disposal of previously written down auction rate securities. This increase was partially offset by a decrease in equity earnings from investments in Arab Potash Company Ltd. (“APC”) and Sociedad Quimica y Minera de Chile (“SQM”) of $30.5 million for the quarter and $16.0 million for the first half, respectively, compared to 2008. Dividends from Sinofert Holdings Limited (“Sinofert”) and Israel Chemicals Limited (“ICL”) contributed $40.4 million, in total, to other income for the three and six months ended June 30, 2009 compared to $33.7 million for the same periods in 2008. Other income for the first half of 2008 included a $43.8 million provision for other-than-temporary impairment of auction rate securities, which was partially offset by a $25.3 million gain on the Sinofert forward share purchase contract.

Our effective tax rate for the three months and six months ended June 30, 2009 was 28 percent (2008 — 29 percent) and negative 9 percent (2008 — 27 percent), respectively. Compared to the same periods in 2008, the income tax provision for the second quarter was down $303.0 million and $587.9 million for the first six months as a result of significantly lower earnings compared to record earnings in 2008, a reduction in our effective tax rate applicable to ordinary earnings due to a lower proportion of earnings from the higher-tax jurisdictions and discrete items recognized. In 2009, a future income tax recovery of $119.2 million resulted from an internal restructuring in the first quarter while a functional currency election made during the second quarter increased the future income tax provision by $24.4 million. In 2008, an income tax recovery of $42.0 million, related to an increase in permanent deductions in the US, and a non-taxable $25.3 million gain on the fair value of the forward purchase contract for shares in Sinofert both occurred in the first quarter.

Other comprehensive income of $404.5 million for the second quarter of 2009 fell $565.5 million from the same period last year due to our combined investments in ICL and Sinofert contributing $456.7 million less than last year and $138.2 million lower natural gas hedging gains as a result of declining natural gas prices. Other comprehensive income fell $717.5 million year over year due to ICL and Sinofert contributing $532.0 million less and a $227.5 million negative change in the value of our natural gas derivatives.

Balance Sheet

Total assets were $11,264.5 million at June 30, 2009, an increase of $1,015.7 million or 10 percent over December 31, 2008. Total liabilities increased $105.7 million from December 31, 2008 to $5,765.6 million at June 30, 2009, and total shareholders’ equity increased by $910.0 million during the same period to $5,498.9 million.

Property, plant and equipment and investments were the largest contributors to the increase in assets during the first six months of 2009. Additions to property, plant and equipment were $765.7 million ($536.8 million, or 70 percent, related to the potash segment). Investments increased $422.4 million mainly due to the fair value of our investments in ICL and Sinofert increasing $428.2 million and $35.9 million, respectively, while our investments in SQM and APC declined $24.4 million as dividends received exceeded our share of earnings during the first six months of 2009. Investments in auction rate securities declined $17.2 million as the company settled an arbitration proceeding instituted against an investment firm that purchased the auction rate securities without our approval. In exchange for transferring the securities to the investment firm, we received $132.5 million in cash plus $3.0 million

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to cover legal costs. We also retained all interest paid and accrued on those securities through the date of the transfer of the securities to the investment firm.

Accounts receivable decreased $191.0 million or 16 percent compared to December 31, 2008, largely as a result of sales declining 47 percent in the month of June 2009 compared to December 2008. Our collection effectiveness index (the industry measure for assessing collection effectiveness) ranged between 90 percent and 99 percent per month in the first half of 2009. The reduction in trade accounts receivable was partially offset by income taxes receivable which resulted from an over-instalment position due to our downward revised expectations for annual earnings. During the first six months of 2009 potash inventories increased $94.1 million while phosphate inventories decreased $111.5 million and nitrogen inventories decreased $39.1 million, resulting in a $658.4 million inventory balance at June 30, 2009 as compared to $714.9 million at December 31, 2008. Inventory quantities for potash increased due to production outpacing demand, while phosphate and nitrogen inventory quantities decreased due to demand for product outpacing reduced operating rates. Inventory values also declined due to lower input costs.

Liabilities increased as a result of the settlement of the issuance of $1,000.0 million in new senior notes in May, offset by a net reduction in outstanding commercial paper and credit facilities borrowings of $245.8 million as proceeds from the senior notes issuance were used to repay these borrowings and for general corporate purposes, and a $592.9 million decrease in accounts payable and accrued charges. The primary reasons accounts payable and accrued charges declined were: (1) income taxes payable decreased $468.7 million as a result of payments made during the first six months of 2009 and significantly lower earnings compared to 2008; (2) $77.4 million lower accrued payroll due to lower incentives and stock-based compensation accruals; and (3) accrued provincial mining taxes declined $43.5 million due to significantly reduced demand and forecasted lower potash margins. Liabilities were further reduced by a $24.4 million reduction in the future income tax liability compared to December 31, 2008, which was primarily due to a restructuring of one of our investment holdings during the first quarter of 2009 offset, in part, by a functional currency tax election made during the second quarter of 2009 and future taxes applicable to earnings in the current year.

Share capital, contributed surplus, accumulated other comprehensive income (“AOCI”) and retained earnings all increased at June 30, 2009 compared to December 31, 2008. AOCI increased $441.5 million as a result of a $437.6 million increase in unrealized gains on available-for-sale securities (primarily the company’s investment in ICL which increased $428.2 million and Sinofert which increased $35.9 million, offset in part by a future income tax liability increase of $26.5 million). Net income of $495.4 million for the first six months of 2009 increased retained earnings while dividends declared of $59.2 million reduced the balance, for a net increase in retained earnings of $436.2 million at June 30, 2009 compared to December 31, 2008.

Business Segment Review

Note 8 to the unaudited interim condensed consolidated financial statements provides information pertaining to our business segments. Management includes net sales in segment disclosures in the consolidated financial statements pursuant to Canadian GAAP, which requires segmentation based upon our internal organization and reporting of revenue and profit measures derived from internal accounting methods. Net sales (and the related per-tonne amounts) are the primary revenue measures we use and review in making decisions about operating matters on a business segment basis. These decisions include assessments about potash, phosphate and nitrogen performance and the resources to be allocated to these segments. We also use net sales (and the related per-tonne amounts) for business planning and monthly forecasting. Net sales are calculated as sales revenues less freight, transportation and distribution expenses.

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Our discussion of segment operating performance is set out below and includes nutrient product and/or market performance results where applicable to give further insight into these results.

Potash

	Three Months Ended June 30
	Dollars (millions)								Tonnes (thousands)							Average Price per Tonne(1)
	2009			2008		% Change			2009		2008		% Change			2009		2008		% Change
Sales	$	210.7		$	1,194.5		(82	)
Freight		10.6			60.3		(82	)
Transportation and distribution		11.6			13.9		(17	)
Net sales	$	188.5		$	1,120.3		(83	)
Manufactured product
Net sales
North American	$	115.1		$	437.5		(74	)		200		1,086		(82	)	$	576.29	$	403.03		43
Offshore		71.2			680.8		(90	)		194		1,633		(88	)	$	366.70	$	416.93		(12	)
		186.3			1,118.3		(83	)		394		2,719		(86	)	$	473.05	$	411.38		15
Cost of goods sold		78.7			232.4		(66	)								$	199.95	$	85.56		134
Gross margin		107.6			885.9		(88	)								$	273.10	$	325.82		(16	)
Other miscellaneous and purchased product
Net sales		2.2			2.0		10
Cost of goods sold		3.6			1.5		140
Gross margin		(1.4	)		0.5		n/m
Gross Margin	$	106.2		$	886.4		(88	)								$	269.54	$	326.00		(17	)

	Six Months Ended June 30
	Dollars (millions)							Tonnes (thousands)							Average Price per Tonne(1)
	2009		2008		% Change			2009		2008		% Change			2009		2008		% Change
Sales	$	479.9	$	1,990.7		(76	)
Freight		17.3		115.6		(85	)
Transportation and distribution		15.2		25.3		(40	)
Net sales	$	447.4	$	1,849.8		(76	)
Manufactured product
Net sales
North American	$	200.5	$	729.1		(73	)		333		2,053		(84	)	$	601.75	$	355.12		69
Offshore		239.2		1,112.8		(79	)		535		3,202		(83	)	$	447.19	$	347.56		29
		439.7		1,841.9		(76	)		868		5,255		(83	)	$	506.54	$	350.51		45
Cost of goods sold		167.2		444.1		(62	)								$	192.60	$	84.52		128
Gross margin		272.5		1,397.8		(81	)								$	313.94	$	265.99		18
Other miscellaneous and purchased product
Net sales		7.7		7.9		(3	)
Cost of goods sold		7.4		4.7		57
Gross margin		0.3		3.2		(91	)
Gross Margin	$	272.8	$	1,401.0		(81	)								$	314.29	$	266.60		18

⁽¹⁾ Rounding differences may occur due to the use of whole dollars in per-tonne calculations.

n/m = not meaningful

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Highlights

•  Gross margin down $780.2 million for the quarter and $1,128.2 million for the first half of 2009 compared to same periods in 2008.

•  Increased North American realized sales prices year over year reflect price increases introduced in 2008. Lower realized offshore prices quarter over quarter were indicative of levels recently established in the export market.

•  Net sales down $931.8 million for the quarter, $1,402.4 million for the first half of 2009, compared to same periods in 2008, due to reduced sales volumes. Sales volumes down 86 percent for the quarter, 83 percent for the first half, due to major markets destocking inventories.

•  Inventories up 1,375,000 tonnes from second-quarter 2008, 281,000 tonnes from March 31, 2009, due to lower demand (partially offset by production curtailments).

•  Cost of goods sold per-tonne increased $114 per tonne quarter over quarter, $108 per tonne year over year, due to production shutdown costs and brine inflow costs being allocated over fewer tonnes and higher royalties as a result of a higher potash sales price. The impact of a weaker Canadian dollar relative to the US dollar positively impacted cost of goods sold for both the second quarter and first half of 2009 compared to the same periods in 2008.

Manufactured potash gross margin variance attributable to:

	Three Months Ended June 30												Six Months Ended June 30
Dollars (millions)	2009 vs. 2008												2009 vs. 2008
				Change in												Change in
				Prices/Costs												Prices/Costs
	Change in						Cost of Goods						Change in					Cost of Goods
	Sales Volumes			Net Sales			Sold			Total			Sales Volumes			Net Sales		Sold		Total
Manufactured product
North American	$	(313.5	)	$	37.0		$	(2.3	)	$	(278.8	)	$	(521.4	)	$	82.2	$	3.6	$	(435.6	)
Offshore		(505.7	)		(20.9	)		27.2			(499.4	)		(779.0	)		53.3		36.1		(689.6	)
Change in market mix		(1.4	)		1.3			-			(0.1	)		(0.1	)		-		-		(0.1	)
Total manufactured product	$	(820.6	)	$	17.4		$	24.9		$	(778.3	)	$	(1,300.5	)	$	135.5	$	39.7	$	(1,125.3	)
Other miscellaneous and purchased product											(1.9	)									(2.9	)
Total										$	(780.2	)								$	(1,128.2	)

Sales and Cost of Goods Sold

The most significant contributors to the $780.2 million decrease in total gross margin quarter over quarter were as follows:

•  Despite limited product movement, our average realized potash price was 15 percent higher than second-quarter 2008 levels; however, such prices dropped 11 percent from the previous quarter principally due to activity in the export markets. Offshore realized prices were below those of the trailing quarter as market pricing recalibrated to lower levels. Prices for most product shipped by PotashCorp to Canpotex Limited (“Canpotex”, the offshore marketing company for Saskatchewan potash producers) in the latter half of the quarter were adjusted to levels commensurate with those recently established in the offshore market. Offshore realized prices for the quarter were also affected by the allocation of transportation and distribution fixed costs over fewer sales tonnes. North American realized prices increased $173 per tonne due to price increases introduced in the second and third quarters of 2008. Realized North American prices declined $64 per tonne from the trailing quarter due to weaker demand.

•  Sales volumes were down 86 percent as buyers continued to operate with caution, carefully managing cash in a difficult economy and waiting to regain confidence in pricing levels. Offshore sales volumes fell

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88 percent as customers worldwide destocked inventories. Canpotex did not settle its annual price contracts with China and India by the end of the second quarter, whereas last year both contracts were settled by the second quarter. Canpotex only shipped 21,000 tonnes to China during the second quarter of 2009, down 86 percent from the same period last year. India received 20,000 tonnes from Canpotex in the quarter, a decrease of 94 percent. Canpotex shipments to Brazil were 86,000 tonnes, down 87 percent as that country cautiously began purchasing to replenish largely depleted inventories in advance of their key planting season. The 223,000 tonnes sent to Indonesia, Malaysia, Taiwan and Thailand in 2009 was 73 percent below last year, as customers there worked through inventories. In North America, sales to our customers declined 82 percent as the decision by a large proportion of farmers to defer application resulted in an approximately 40 percent reduction in potash applications for the current crop year. Volumes were further impacted by uncertainty about planting decisions and weather delays. As a result, dealers continued to manage purchases carefully, buying only as much as needed so they could end the spring season with limited inventories.

•  As a result of our long-held strategy of matching production with market demand, production levels were down 74 percent as shutdown weeks increased from 2 in 2008 to 50 weeks in 2009. Cost of goods sold per tonne increased $114 per tonne as fixed costs were allocated over fewer tonnes sold. The impact of higher potash royalty rates ($8 per tonne) as a result of higher potash prices negatively impacted the price variance in cost of goods sold by $3.1 million. The weaker Canadian dollar relative to the US dollar positively impacted cost of goods sold by $13.1 million. The price variance in offshore cost of goods sold was more favorable than North America due to brine inflow management costs at New Brunswick decreasing $15.6 million as surface drilling equipment was temporarily idled since further grouting from surface is not considered necessary, in the near term, to control the water inflow rate. The price variance for North America cost of goods sold was negative due to industrial products, which cost more to produce, comprising a larger proportion of sales.

Quarterly potash gross margin for the first half of 2009 and 2008 was as follows:

The most significant contributors to the $1,128.2 million decrease in total gross margin year over year were as follows:

•  Offshore prices rose 29 percent due to announced price increases in Brazil, India, China and Southeast Asia in 2008 being realized for a portion of 2009. With dealers and farmers globally continuing to work through inventories or reduce applications, potash prices moved lower during the second quarter of 2009, but avoided the significant decline seen in phosphate and nitrogen. In North America, realized prices climbed $247 per tonne as price increases implemented in 2008 largely carried over to 2009. Prices in the North American market were affected by the higher than historic, and higher than offshore, proportion of industrial volumes relative to fertilizer.

•  Sales were limited in the first half of 2009 as agreements for 2009 shipments to India and China were not reached by June 30, 2009. Sales volumes in both North American and offshore markets remained weak due to market uncertainty over potash pricing. India, Canpotex’s largest customer to date, took 263,000 tonnes in 2009 compared to nearly 700,000 tonnes in the first six months of 2008. Canpotex’s shipments to China were 169,000 tonnes in 2009 compared to 324,000 tonnes in the first six months of 2008. Brazil took 86,000

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tonnes compared to 1,284,000 tonnes in the first six months of 2008 when that country was Canpotex’s largest customer.

•  Production levels were down 66 percent as a result of 89 shutdown weeks compared to 2 shutdown weeks last year. All per tonne costs were amplified by the fact that there were fewer production tonnes over which to allocate the costs. The impact of a weaker Canadian dollar relative to the US dollar positively impacted cost of goods sold by $29.2 million. Potash royalties increased cost of goods sold by $7.0 million as potash prices increased. Brine inflow management costs at New Brunswick decreased $23.3 million as a result of stable brine inflow rates. Since the costs of brine inflow were attributed to production of potash that was mainly sold in the offshore market, the positive price component of the cost of goods sold variance was higher for the offshore market than for North America.

Phosphate

	Three Months Ended June 30
	Dollars (millions)							Tonnes (thousands)							Average Price per Tonne(1)
	2009		2008		% Change			2009		2008		% Change			2009		2008		% Change
Sales	$	324.7	$	782.0		(58	)
Freight		15.8		29.8		(47	)
Transportation and distribution		12.5		8.4		49
Net sales	$	296.4	$	743.8		(60	)
Manufactured product
Net sales
Fertilizer — liquids	$	43.6	$	128.8		(66	)		177		190		(7	)	$	246.54	$	679.76		(64	)
Fertilizer — solids		80.3		355.0		(77	)		273		370		(26	)	$	294.11	$	960.63		(69	)
Feed		72.2		139.9		(48	)		139		183		(24	)	$	517.47	$	762.31		(32	)
Industrial		96.2		105.2		(9	)		134		166		(19	)	$	717.46	$	633.50		13
		292.3		728.9		(60	)		723		909		(20	)	$	403.96	$	802.20		(50	)
Cost of goods sold		274.7		391.8		(30	)								$	379.62	$	431.35		(12	)
Gross margin		17.6		337.1		(95	)								$	24.34	$	370.85		(93	)
Other miscellaneous and purchased product
Net sales		4.1		14.9		(72	)
Cost of goods sold		1.2		11.1		(89	)
Gross margin		2.9		3.8		(24	)
Gross Margin	$	20.5	$	340.9		(94	)								$	28.35	$	375.03		(92	)

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	Six Months Ended June 30
	Dollars (millions)							Tonnes (thousands)							Average Price per Tonne(1)
	2009		2008		% Change			2009		2008		% Change			2009		2008		% Change
Sales	$	654.6	$	1,295.2		(49	)
Freight		34.0		61.9		(45	)
Transportation and distribution		20.9		16.4		27
Net sales	$	599.7	$	1,216.9		(51	)
Manufactured product
Net sales
Fertilizer — liquids	$	87.7	$	223.7		(61	)		273		449		(39	)	$	320.94	$	498.44		(36	)
Fertilizer — solids		172.9		531.3		(67	)		543		637		(15	)	$	318.29	$	834.31		(62	)
Feed		140.7		235.4		(40	)		253		397		(36	)	$	556.03	$	592.62		(6	)
Industrial		190.8		196.4		(3	)		250		358		(30	)	$	763.81	$	548.48		39
		592.1		1,186.8		(50	)		1,319		1,841		(28	)	$	448.79	$	644.67		(30	)
Cost of goods sold		567.2		696.4		(19	)								$	429.91	$	378.29		14
Gross margin		24.9		490.4		(95	)								$	18.88	$	266.38		(93	)
Other miscellaneous and purchased product
Net sales		7.6		30.1		(75	)
Cost of goods sold		3.2		23.6		(86	)
Gross margin		4.4		6.5		(32	)
Gross Margin	$	29.3	$	496.9		(94	)								$	22.21	$	269.91		(92	)

⁽¹⁾ Rounding differences may occur due to the use of whole dollars in per-tonne calculations.

Highlights

•  Gross margin down $320.4 million quarter over quarter, $467.6 million year over year. Manufactured gross margin for second-quarter 2009 comprised of: industrial $40.9 million, liquid fertilizer $2.5 million, feed $(0.6) million and solid fertilizer $(25.2) million. Manufactured gross margin for first six months of 2009 comprised of: industrial $76.1 million, liquid fertilizer $5.5 million, feed $(1.0) million and solid fertilizer $(55.7) million.

•  Average realized sales price fell 50 percent quarter over quarter, 30 percent year over year, as a result of price weakness in all product usages except industrial.

•  Volumes for all manufactured products declined, as customers exercised caution in the midst of economic uncertainty and drew down their own inventories while seeking market stability.

•  Manufactured cost of goods sold declined $117.1 million from last year’s second quarter, $129.2 million from first half of 2008, as a result of curtailed production and lower sulfur costs. Manufactured cost of goods sold per tonne decreased quarter over quarter as a result of lower sulfur and ammonia input costs and increased year over year due to fixed costs being allocated over fewer tonnes.

•  Curtailed production offset a decline in sales volumes and resulted in finished product inventories increasing slightly from 204,000 tonnes at June 30, 2008 to 206,000 tonnes at June 30, 2009. Inventories at the end of the second quarter increased from 186,000 tonnes at March 31, 2009 due to sales volumes falling further than second quarter production curtailments.

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Manufactured phosphate gross margin variance attributable to:

	Three Months Ended June 30												Six Months Ended June 30
Dollars (millions)	2009 vs. 2008												2009 vs. 2008
				Change in												Change in
				Prices/Costs												Prices/Costs
	Change in						Cost of Goods						Change in						Cost of Goods
	Sales Volumes			Net Sales			Sold			Total			Sales Volumes			Net Sales			Sold			Total
Manufactured product
Fertilizer — liquids	$	(22.2	)	$	(57.3	)	$	27.0		$	(52.5	)	$	(47.2	)	$	(48.5	)	$	26.3		$	(69.4	)
Fertilizer — solids		(57.3	)		(194.7	)		36.9			(215.1	)		(56.6	)		(280.3	)		6.0			(330.9	)
Feed		(19.8	)		(27.1	)		(23.5	)		(70.4	)		(42.5	)		(9.3	)		(51.0	)		(102.8	)
Industrial		(12.6	)		14.2			19.9			21.5			(32.0	)		53.8			19.4			41.2
Change in product mix		0.9			(0.7	)		(3.2	)		(3.0	)		(25.8	)		25.9			(3.7	)		(3.6	)
Total manufactured product	$	(111.0	)	$	(265.6	)	$	57.1		$	(319.5	)	$	(204.1	)	$	(258.4	)	$	(3.0	)	$	(465.5	)
Other miscellaneous and purchased product											(0.9	)											(2.1	)
Total										$	(320.4	)										$	(467.6	)

Sales and Cost of Goods Sold

Quarter over quarter total gross margin declined $320.4 million, largely as a result of the following:

•  Realized prices for solid fertilizer, liquid fertilizer and feed products decreased, reflecting weaker market conditions and markedly lower prices for raw material inputs. Industrial prices rose 13 percent as some of these products are sold to customers pursuant to contracts that contain cost-plus or market index provisions that lag current market conditions.

•  Fertilizer sales volumes fell due to customer uncertainty about planting decisions, weather delays, lack of pricing direction and the economy. North American solid and liquid fertilizer dealers carefully managed purchases, buying only as much as needed so they could end the spring season with low stocks. Total feed sales volumes declined 24 percent caused by weakening economics for beef, pork and poultry producers in the US, lower offshore demand and the use of cheaper feed phosphate sources as a substitute. Industrial sales volumes were down 19 percent due to reduced demand in the US associated with the poor economic conditions.

•  Manufactured cost of goods sold per-tonne decreased 12 percent mainly due to lower costs of sulfur and ammonia. Sulfur costs were down 55 percent and positively impacted the change in gross margin by $71.2 million while ammonia prices that were down 18 percent positively impacted the gross margin change (particularly, solid fertilizers) by $6.3 million. All product lines benefited from lower sulfur costs but feed had a negative price variance due to the absorption of a higher portion of fixed costs at our facility in White Springs, Florida and write-downs of finished product due to cost exceeding net realizable value.

Quarterly phosphate gross margin for the first half of 2009 and 2008 was as follows:

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The most significant contributors to the $467.6 million decrease in total gross margin year over year were as follows:

•  All major phosphate product prices, except industrial, decreased due to lower demand and input costs throughout 2009. Industrial prices increased as a result of certain contracts based on prior year input costs which were significantly higher in 2008.

•  Solid fertilizer sales volumes fell 15 percent due to demand deferral caused by pricing uncertainty and the decision by customers to work through existing inventory levels. Liquid fertilizer sales volumes decreased 39 percent due to decreased demand in the US. Demand for feed product declined 36 percent due to weak economics for beef, pork and poultry and increased use of substitutes. Industrial sales volume fell 30 percent due to a slow down in demand for purified phosphoric acid used for food (e.g., soft drinks, vegetable oils, salad dressings, etc.) and other commercial purposes (e.g., fire retardants, metal finishing, aluminum brightening, etc.).

•  The increase in cost of goods sold per tonne was the result of fixed costs being allocated over fewer tonnes due to reduced operating rates at both our White Springs, Florida and Aurora, North Carolina operations. The price variance in cost of goods sold was flat despite lower sulfur costs ($37.0 million) and lower ammonia costs ($2.2 million), due to write-downs of finished product to net realizable value. All product lines benefited from lower sulfur costs but feed had a negative price variance due to a higher allocation of fixed costs (as a result of liquid fertilizer production volumes falling significantly and feed being the highest volume product at our White Springs, Florida plant which was shuttered for a significant portion of 2009 through June 30, 2009) and write-downs of finished product to net realizable value.

•  Significant sales volume declines in industrial and feed (for which prices are higher than fertilizers) coupled with significant price increases in industrial and only slightly lower feed prices, caused the change in market mix to produce an unfavorable variance of $25.8 million related to sales volumes and a favorable variance of $25.9 million in sales price.

Nitrogen

	Three Months Ended June 30
	Dollars (millions)								Tonnes (thousands)							Average Price per Tonne(1)
	2009			2008		% Change			2009		2008		% Change			2009		2008		% Change
Sales	$	320.6		$	644.5		(50	)
Freight		12.5			13.3		(6	)
Transportation and distribution		13.6			11.0		24
Net sales	$	294.5		$	620.2		(53	)
Manufactured product
Net sales
Ammonia	$	123.9		$	238.0		(48	)		450		432		4		$	275.07	$	551.09		(50	)
Urea		92.9			177.0		(48	)		330		330		-		$	281.30	$	536.09		(48	)
Nitrogen solutions/Nitric acid/Ammonium nitrate		69.2			145.6		(52	)		418		512		(18	)	$	165.64	$	284.38		(42	)
		286.0			560.6		(49	)		1,198		1,274		(6	)	$	238.67	$	440.04		(46	)
Cost of goods sold		242.0			355.4		(32	)								$	201.94	$	278.97		(28	)
Gross margin		44.0			205.2		(79	)								$	36.73	$	161.07		(77	)
Other miscellaneous and purchased product
Net sales		8.5			59.6		(86	)
Cost of goods sold		8.6			54.8		(84	)
Gross margin		(0.1	)		4.8		n/m
Gross Margin	$	43.9		$	210.0		(79	)								$	36.64	$	164.84		(78	)

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	Six Months Ended June 30
	Dollars (millions)							Tonnes (thousands)							Average Price per Tonne(1)
	2009		2008		% Change			2009		2008		% Change			2009		2008		% Change
Sales	$	644.0	$	1,225.7		(47	)
Freight		25.2		28.3		(11	)
Transportation and distribution		28.6		23.9		20
Net sales	$	590.2	$	1,173.5		(50	)
Manufactured product
Net sales
Ammonia	$	214.8	$	478.6		(55	)		929		906		3		$	231.10	$	528.24		(56	)
Urea		214.5		308.9		(31	)		725		627		16		$	295.89	$	492.88		(40	)
Nitrogen solutions/Nitric acid/Ammonium nitrate		142.2		276.3		(49	)		804		1,067		(25	)	$	177.01	$	258.87		(32	)
		571.5		1,063.8		(46	)		2,458		2,600		(5	)	$	232.53	$	409.15		(43	)
Cost of goods sold		478.6		682.0		(30	)								$	194.74	$	262.30		(26	)
Gross margin		92.9		381.8		(76	)								$	37.79	$	146.85		(74	)
Other miscellaneous and purchased product
Net sales		18.7		109.7		(83	)
Cost of goods sold		13.5		96.1		(86	)
Gross margin		5.2		13.6		(62	)
Gross Margin	$	98.1	$	395.4		(75	)								$	39.91	$	152.08		(74	)

⁽¹⁾ Rounding differences may occur due to the use of whole dollars in per-tonne calculations.

n/m = not meaningful

Highlights

•  Gross margin down $166.1 million quarter over quarter, $297.3 million year over year.

•  Realized sales prices fell dramatically due to declining raw material input costs and weak demand from both the fertilizer and non-fertilizer sectors.

•  Average natural gas costs in production, including hedging losses, decreased to $3.77 per MMBtu compared to $7.74 per MMBtu for second-quarter in 2008 due to lower US natural gas prices and Tampa ammonia prices to which our Trinidad natural gas is primarily indexed. Average natural gas costs in production, including hedging losses, decreased to $3.70 per MMBtu for the first six months of 2009 from $7.23 per MMBtu in the first six months of 2008.

•  Our Trinidad operation, which benefits from long-term, lower-cost natural gas contracts, generated $22.9 million in second-quarter gross margin, $45.0 million in the first half of 2009. Our US operations which profited from lower spot gas costs in the second quarter, contributed $46.9 million in second-quarter 2009 gross margin, $92.5 million in first half of 2009. Our US operations experienced natural gas hedging losses of $25.9 million for the quarter and $39.4 million for the first six months of 2009.

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Manufactured nitrogen gross margin variance attributable to:

	Three Months Ended June 30												Six Months Ended June 30
Dollars (millions)	2009 vs. 2008												2009 vs. 2008
				Change in												Change in
				Prices/Costs												Prices/Costs
	Change in						Cost of Goods						Change in						Cost of Goods
	Sales Volumes			Net Sales			Sold			Total			Sales Volumes			Net Sales			Sold			Total
Manufactured product
Ammonia	$	5.8		$	(124.0	)	$	75.0		$	(43.2	)	$	7.9		$	(276.1	)	$	148.9		$	(119.3	)
Urea		1.1			(88.9	)		45.7			(42.1	)		24.8			(142.8	)		62.2			(55.8	)
Solutions, NA, AN		(13.1	)		(48.0	)		24.2			(36.9	)		(31.0	)		(65.8	)		43.8			(53.0	)
Hedge		-			-			(37.8	)		(37.8	)		-			-			(59.2	)		(59.2	)
Change in product mix		(18.9	)		19.2			(1.5	)		(1.2	)		(50.5	)		50.5			(1.6	)		(1.6	)
Total manufactured product	$	(25.1	)	$	(241.7	)	$	105.6		$	(161.2	)	$	(48.8	)	$	(434.2	)	$	194.1		$	(288.9	)
Other miscellaneous and purchased product											(4.9	)											(8.4	)
Total										$	(166.1	)										$	(297.3	)

Sales and Cost of Goods Sold

The total gross margin decrease of $166.1 million quarter over quarter was primarily attributable to the following changes:

•  Realized sales prices for nitrogen products dropped sharply against a backdrop of declining natural gas prices, weak downstream industrial demand for resins, nylons, plastics and rubber, and soft ammonia demand for solid phosphate fertilizers.

•  Fertilizer sales volumes decreased 5 percent due, in part, to delayed spring plantings in North America due to suboptimal weather conditions, and light demand for nitrogen solutions due to high system-wide inventories. Non-fertilizer sales volumes were down 7 percent, largely as a result of demand contraction for customers associated with downstream housing, automotive, coal and metal mining markets, which have weakened considerably with the economic downturn. Ammonia sales were slightly higher as Trinidad production displaced sales of purchased product due to tempered industrial demand. Urea sales were flat, as a marked drop in industrial shipments was offset by an increase in offshore business.

•  Manufactured cost of goods sold decreased 32 percent due to lower volumes and lower cost natural gas. The price variance in cost of goods sold was favorable $105.6 million. Total average natural gas cost in production, including hedge, was 51 percent lower than second-quarter 2008. Trinidad natural gas cost is primarily indexed to Tampa ammonia prices and was 60 percent lower in second-quarter 2009 compared to second-quarter 2008. US spot natural gas costs fell 67 percent, though the impact on cost of goods sold was partially offset by losses from US natural gas hedging activities of $25.9 million this year, compared to gains of $11.9 million in 2008. The cost of goods sold price variance was more favorable in ammonia than in other products as natural gas is a larger component of ammonia than downstream products.

•  The change in market mix caused an unfavorable variance of $18.9 million in sale volumes and a favorable variance of $19.2 million in sales price, due to a reduction in sales volumes for lower-priced nitrogen solutions, nitric acid and ammonium nitrate being more than offset by flat and slightly higher sales volumes for higher-priced urea and ammonia, respectively.

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Quarterly nitrogen gross margin for the first half of 2009 and 2008 was as follows:

The total gross margin decrease of $297.3 million year over year was primarily attributable to the following changes:

•  Realized sales prices fell as a result of lower natural gas prices and weak industrial demand associated with the economic downturn.

•  Sales volumes for urea were up 16 percent due to higher shipments to offshore markets. Ammonia sales volumes were up three percent, with soft North American demand for direct application of solid phosphate fertilizers offset by export opportunities to high gas cost regions that had curtailed production. Nitrogen solutions sales volumes were down 23 percent as customers worked through high inventories during cool, wet spring weather conditions. Nitric acid and ammonium nitrate sales volumes decreased 26 percent due to reduced industrial demand in the US as certain of our customers’ facilities operated at substantially lower rates due to the effects of the weak economy on consumer goods and durables and commercial explosives businesses.

•  Cost of goods sold decreased 30 percent mainly due to the 49 percent decrease in average natural gas costs included in production. Our natural gas costs in Trinidad production decreased 64 percent while our US natural gas spot costs in production decreased 56 percent. Losses from our US natural gas hedging activities were $39.4 million compared to gains of $19.8 million in 2008. Lower natural gas costs were offset somewhat by higher turnaround costs recognized in 2009 that were not incurred in 2008 and additional costs associated with a fire at one of our plants at Trinidad in March. Ammonia had a greater effect on the decrease in cost of goods sold than urea and other nitrogen products as a higher proportion of natural gas is used.

•  Market mix caused a variance of $50.5 million in both sales price (favorable) and sales volumes (unfavorable), due to lower sales volumes in lower-priced nitrogen solutions, nitric acid and ammonium nitrate being offset by increased sales volumes for higher-price ammonia and urea.

Expenses and Other Income

	Three Months Ended June 30											Six Months Ended June 30
Dollars (millions)	2009			2008		Dollar Change			% Change			2009			2008			Dollar Change			% Change
Selling and administrative	$	53.4		$	79.7	$	(26.3	)		(33	)	$	96.8		$	126.9		$	(30.1	)		(24	)
Provincial mining and other taxes		(18.1	)		163.0		(181.1	)		n/m			14.9			262.4			(247.5	)		(94	)
Foreign exchange loss (gain)		37.9			1.9		36.0			n/m			7.7			(25.8	)		33.5			n/m
Other income		188.4			103.3		85.1			82			223.4			115.2			108.2			94
Interest expense		26.5			15.7		10.8			69			49.7			26.9			22.8			85
Income taxes		72.2			375.2		(303.0	)		(81	)		(40.9	)		547.0			(587.9	)		n/m

n/m = not meaningful

Selling and administrative expenses decreased quarter over quarter and year over year due to lower costs for our short-term incentive plan (as a result of our financial performance being below budget), stock option plan (due to a change in the compensation formula used in determining the number of options to grant causing the number of

48

options to be reduced compared to what would have resulted from the previous formula) and deferred share units (the price of our common shares did not increase as much during the second quarter and first half of 2009 compared to the same periods in 2008).

Provincial mining and other taxes were negative during the second quarter as a result of annual estimates made in the first quarter of 2009 which were revised lower during the second quarter to reflect weaker than anticipated demand for potash. Provincial mining and other taxes decreased in both the first and second quarter of 2009 principally due to lower potash revenue and gross margin impacting our Saskatchewan Potash Production Tax and resource surcharge. Saskatchewan’s Potash Production Tax is comprised of a base tax per tonne of product sold and an additional tax based on mine profits. The profit tax component was down $147.9 million in the second quarter and down $192.0 million in the first half of 2009 over the same period in 2008, largely because Saskatchewan-produced potash gross margin decreased 86 percent quarter over quarter and decreased 83 percent year over year. The resource surcharge decreased $33.2 million quarter over quarter and $55.5 million year over year as a result of lower potash sales revenues.

Losses on treasury activity and the period-end translation of Canadian dollar denominated monetary items on the Condensed Consolidated Statement of Financial Position, as a result of a strengthening Canadian dollar, contributed to second quarter foreign exchange losses of $37.9 million, which, combined with first quarter gains, resulted in a $7.7 million foreign exchange loss for the first six months of 2009. Included in the currency translation during the second quarter was a gain resulting from the reversal of foreign exchange losses recognized on income taxes payable and future income tax balances in the first quarter, related to a functional currency election made for Canadian income tax purposes during the second quarter of 2009. The Canadian dollar strengthened relative to the US dollar in the second quarter of 2008, and treasury activity produced small losses. In the first half of 2008, the Canadian dollar weakened resulting in a gain of $25.8 million.

Other income increased $85.1 million quarter over quarter and $108.2 million year over year. A $115.3 million gain on disposal of auction rate securities was recognized during the quarter when we received $132.5 million and $3.0 million to cover legal costs, from an investment firm that purchased the securities without our approval. Our share of earnings from equity investments in APC and SQM decreased $30.5 million in the second quarter of 2009 and $16.0 million in the first half compared to the same periods in 2008 as a result of decreased earnings caused by lower potash sales. Other income in the first half of 2008 included a $25.3 million gain from the change in fair value of the company’s forward purchase contract to acquire additional shares of Sinofert, more than offset by a $43.8 million provision for other-than-temporary impairment of auction rate securities.

The interest expense category increased $10.8 million compared to the second quarter of 2008 and $22.8 million compared to the first half. Weighted average balances of debt obligations outstanding and the associated interest rates were as follows:

	Three Months Ended June 30								Six Months Ended June 30
							%								%
Dollars (millions) — except percentage amounts	2009		2008		Change		Change		2009		2008		Change		Change
Long-term debt obligations, including current portion
Weighted average outstanding	$	3,032.3	$	1,358.4	$	1,673.9		123	$	2,694.5	$	1,358.5	$	1,336.0		98
Weighted average interest rate		4.8%		6.5%		(1.7)%		(26)		4.6%		6.5%		(1.9)%		(29)
Short-term debt obligations
Weighted average outstanding	$	638.6	$	399.2	$	239.4		60	$	583.0	$	246.0	$	337.0		137
Weighted average interest rate		1.5%		2.8%		(1.3)%		(46)		1.7%		3.1%		(1.4)%		(45)

The higher average balance of long-term debt obligations outstanding in the second quarter and first half of 2009 compared to the same periods in 2008 caused interest expense on long-term debt to increase $16.5 million and $26.5 million, respectively. Average interest rates on long-term debt were reduced 1.7 percentage points quarter over quarter and 1.9 percentage points year over year due to lower rates on draws under our credit facilities classified as long-term during 2009 that did not exist in the first half of 2008. Capitalized interest reduced interest expense by $17.2 million in the second quarter and $30.0 million in the first six months of 2009 while in 2008 it was reduced by $10.5 million in the quarter and $18.9 million in the first half of the year. Interest expense on short-term

49

debt increased $4.8 million quarter over quarter and $7.4 million year over year due to higher average balances outstanding, despite lower applicable rates.

The company’s income tax provision was $72.2 million for the second quarter of 2009 compared to $375.2 million in 2008. The company recorded a recovery of $40.9 million during the six months ended June 30, 2009 as compared to an expense of $547.0 million last year. The effective tax rate decreased to 28 percent from 29 percent, quarter over quarter, and decreased to negative 9 percent from 27 percent, year over year. The effective rate decreased due to lower forecast earnings and less income expected to be earned in higher-tax jurisdictions. The second-quarter 2009 provision included a discrete tax adjustment resulting in a future tax expense of $24.4 million related to a functional currency tax election of the parent company for Canadian income tax purposes. The benefit of a lower percentage of consolidated income earned in higher-tax jurisdictions positively impacted the second-quarter income tax provision. In the first quarter of 2009 a tax rate reduction resulting from an internal restructuring provided a non-cash future income tax recovery of $119.2 million. An increase in permanent deductions in the US from prior years was also recorded in the first quarter of 2009 and resulted in a current income tax recovery of $47.6 million, which will have a positive impact on cash. In the first quarter of 2008, the income tax provision was affected by the benefit of scheduled reductions in the Canadian federal income tax rate applicable to resource companies along with the elimination of a surtax. In addition, a future income tax recovery of $42.0 million was recorded in the first quarter of 2008 that related to an increase in permanent deductions in the US from prior years. Finally, the $25.3 million gain recognized as a result of the change in fair value of the forward purchase contract for shares in Sinofert was not taxable in the first quarter of 2008.

Excluding discrete items, for the first half of 2009, 75 percent of the effective tax rate pertained to current income taxes and 25 percent related to future income taxes. The decrease in the current income tax provision from 90 percent in the same period last year was largely due to the shifting of income between our various tax jurisdictions.

Current Market Conditions

Demand for our products, especially potash and phosphate, was significantly limited during the first half of the year. In addition, prices for phosphate and nitrogen products were substantially lower than 2008 levels. Subsequent to June 30, 2009, Canpotex settled potash contracts with selected customers in India for a delivered price of $460 per tonne. This price is significantly lower than last year’s contract settlements; however, depending on freight rates, we expect the new contract to result in realized prices nearly triple those of three years ago. Also subsequent to June 30, 2009, we reduced our US published list prices by approximately 35 percent (as compared to our preceeding price list published in third-quarter 2008) to reflect current market conditions. The following section analyzes selected aspects of our business that are or could be affected.

Cash flow from operating activities was positive in the first half of 2009 and we expect it to remain positive in the second half of the current year, although continued demand weakness may necessitate the incurrence of additional debt. We currently finance short-term liquidity needs through commercial paper borrowings and availability under our short-term line of credit and long-term revolving credit facilities. In May, the company settled the issuance of $1,000.0 million aggregate principal amount of senior notes. The current ratings on the company’s long-term debt are Baa1 with a stable outlook from Moody’s and A- with a stable outlook from Standard & Poor’s. Both ratings were confirmed in connection with our senior notes offering in the second quarter of 2009.

During the first six months of 2009, average realized potash prices remained above 2008 levels while demand was significantly lower. Phosphate prices and volumes were down significantly while in nitrogen, prices were lower and demand declined slightly. These factors caused a decline in net sales and caused cash flow provided by operations to be $35.0 million for the first six months of 2009 compared to $1,336.9 million in the same period a year ago. To match production to market demand, we reduced potash production by 3.2 million tonnes or 66 percent and phosphoric acid production by 424,000 tonnes or 41 percent year over year. Cash flows from operating and financing activities were used to fund capital expenditures, including our continuing potash mine expansion projects. Certain costs are incurred in Canadian dollars and we will continue to use foreign exchange derivative products to manage the impact of foreign exchange rates on our cash flows. As a result of our functional currency election for Canadian income tax purposes, our foreign exchange monetary exposure is significantly reduced.

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Our capital expansion plans currently remain unchanged and will be funded with cash flows from operations and proceeds from borrowings, as necessary. We believe we have adequate access to capital. At June 30, 2009, we had working capital of $809.8 million and available borrowings under various debt facilities of $1,336.6 million, which we expect will be sufficient to cover our expected investments of $1,120.0 million in property, plant and equipment (inclusive of capitalized interest) and operating requirements for the remainder of 2009.

While market values of our investments in other publicly traded companies have decreased from previous highs reached during 2008, the market values continue to exceed cost. Investments also continue to generate earnings and/or dividends for the company.

The decline in plan asset valuations in the company’s defined benefit pension plans as of December 31, 2008 will require additional future increases in contributions from the company. We estimate $105.8 million will be paid to the defined benefit pension plans throughout 2009 with the majority of contributions to be made in the third quarter. Recommended contributions for 2009 as determined by actuarial valuation calculations at December 31, 2008 increased from those recommended for 2008, but are expected to be funded through operations and other available sources, if necessary.

The company evaluates the creditworthiness of its major customers on an ongoing basis and there were no significant changes to such customers’ ability to pay for product orders during the second quarter. For the first six months of 2009, $0.7 million of provision for doubtful accounts was recorded while receivables written off were $NIL. Given the slowdown in demand for all three nutrients we produce, we will continue to carefully manage our credit risk relating to trade receivables through our credit management program, and customers that fail to meet specified benchmark credit standards may be required to transact with us on a prepayment basis or some other form of credit support.

The carrying values of our inventories were considered in the context of our accounting policy to record inventories at the lower of average cost and net realizable value.

Natural gas prices, which are a significant input cost in the production of nitrogen, decreased in the first quarter of 2009 and increased during the second quarter of 2009. We enter into derivative contracts to manage the cost of natural gas and as a result of natural gas price increases from recent lows, our cash deposits to counterparties as required under these agreements fell by $1.1 million compared to December 31, 2008. In the event natural gas prices fall, we will be required to increase cash deposits to counterparties as required under our agreements. We continue to consider the impact by which our cash flow may be affected by changes in natural gas prices or our credit rating, and believe that cash flows from operations and financing sources are sufficient to meet potential obligations.

LIQUIDITY AND CAPITAL RESOURCES

Cash Requirements

Demand is typically higher during the second quarter but was lower than recent years as a result of uncertainty caused by the global economic downturn. Despite significant declines in sales volumes, potash net sales exceeded fixed cost of sales and period costs by $129.8 million for the quarter and $329.7 million for the first six months of the year. Phosphate and nitrogen net sales exceeded fixed cost of sales and period costs by $157.1 million and $199.6 million, respectively, for the quarter and by $337.4 million and $400.6 million, respectively, for the first six months of the year. As we expect demand to pick up in the second half of 2009, we do not anticipate cash flow constraints related to production.

The following aggregated information about our contractual obligations and other commitments aims to provide insight into our short- and long-term liquidity and capital resource requirements. The information presented

51

in the table below does not include obligations that have original maturities of less than one year or planned capital expenditures.

Contractual Obligations and Other Commitments

	June 30, 2009
Dollars (millions)	Payments Due By Period
	Total		Within 1 year		1 to 3 years		3 to 5 years		Over 5 years
Long-term debt obligations	$	3,108.0	$	0.3	$	606.9	$	1,500.8	$	1,000.0
Estimated interest payments on long-term debt obligations		1,449.9		157.5		268.2		198.7		825.5
Operating leases		660.2		100.2		167.8		142.8		249.4
Purchase obligations(1)		909.9		223.3		345.6		124.7		216.3
Other commitments		73.8		30.5		19.9		10.6		12.8
Other long-term liabilities		1,192.1		139.3		121.3		79.5		852.0
Total	$	7,393.9	$	651.1	$	1,529.7	$	2,057.1	$	3,156.0

⁽¹⁾ Potash purchase obligations have been priced using expected prices as at August 6, 2009

Long-Term Debt

Long-term debt consists of $2,350.0 million of senior notes issued under US shelf registration statements, $750.0 million of long-term debt outstanding under credit facilities, a net of $5.9 million under back-to-back loan arrangements (described in Note 13 to the consolidated financial statements in our 2008 financial review annual report) and other commitments of $2.1 million payable over the next 3 years.

The senior notes represent 76 percent of our total long-term debt obligations portfolio and are unsecured. Of the senior notes outstanding, $600.0 million bear interest at 7.750 percent and mature in 2011, $250.0 million bear interest at 4.875 percent and mature in 2013 and $500.0 million bear interest at 5.875 percent and mature in 2036. In addition, on May 1, 2009, we closed the issuance of $1,000.0 million aggregate principal amount of senior notes, $500.0 million of which bear interest at 5.250 percent and mature in 2014 and $500.0 million of which bear interest at 6.500 percent and mature in 2019.

One long-term revolving credit facility represents 24 percent of our total long-term debt obligations and provides for unsecured advances of $750.0 million (available until May 31, 2013) and was fully drawn at June 30, 2009. The company also has available two other long-term revolving credit facilities. One facility of $180.0 million is available until December 21, 2010, and the other facility of $1,850.0 is available until May 28, 2010. No borrowings were outstanding at June 30, 2009 under these two facilities.

There are no sinking fund requirements related to any of our long-term debt obligations. The senior notes are not subject to any financial test covenants but are subject to certain customary covenants (including limitations on liens and sale and leaseback transactions) and events of default, including an event of default for acceleration of certain other debt in excess of $50.0 million. The back-to-back loan arrangements are not subject to any financial test covenants but are subject to certain customary covenants and events of default, including, an event of default for non-payment of certain other debt in excess of $25.0 million. Non-compliance with such covenants could result in accelerated payment of the related debt. The company was in compliance with all covenants as at June 30, 2009. Under certain conditions related to a change in control, the company is required to make an offer to purchase all, or any part, of the senior notes due 2014, the senior notes due 2019 and the senior notes due 2036 at 101 percent of the principal amount of the senior notes repurchased, plus accrued interest. Principal covenants and events of default under the credit facilities are described under “Liquidity and Capital Resources — Principal Debt Instruments”.

The estimated interest payments on long-term debt obligations in the table above include our cumulative scheduled interest payments on fixed and variable rate long-term debt. Interest on variable rate debt is based on interest rates prevailing at June 30, 2009.

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Operating Leases

We have long-term operating lease agreements for land, buildings, port facilities, equipment, ocean-going transportation vessels and railcars, the latest of which expires in 2038. The most significant operating leases consist of two items. The first is our lease of railcars, which extends to approximately 2025. The second is our lease of four vessels for transporting ammonia from Trinidad. One vessel agreement runs through 2018; the others terminate in 2016.

Purchase Obligations

We have long-term agreements for the purchase of sulfur for use in the production of phosphoric acid, which provide for minimum purchase quantities and, in most cases, prices that are based on market rates at the time of delivery. The purchase obligations and other commitments included in the table above are based on current contract prices.

We have entered into long-term natural gas contracts with the National Gas Company of Trinidad and Tobago Limited, the latest of which expires in 2018. The contracts provide for prices that vary primarily with ammonia market prices, escalating floor prices and minimum purchase quantities. The commitments included in the table above are based on the floor prices and minimum purchase quantities.

We also have a long-term agreement for the purchase of phosphate rock used at our Geismar facility. The commitments included in the table above are based on the expected purchase quantity and current net base prices.

In June 2009, the company committed to purchase minimum amounts of potash from SQM for resale to specific countries based on market prices in effect at the time of those sales, plus a nominal per-tonne fee. The commitments included in the table above are based on committed volumes at June 30, 2009 and expected prices as of August 6, 2009.

Other Commitments

Other operating commitments consist principally of a port facility throughput contract, which expires in 2018, various rail and vessel freight contracts, the latest of which expires in 2012, and mineral lease commitments, the latest of which expires in 2029.

Other Long-Term Liabilities

Other long-term liabilities consist primarily of accrued pension and other post-retirement benefits, future income taxes, environmental costs and asset retirement obligations.

Future income tax liabilities may vary according to changes in tax laws, tax rates and the operating results of the company. Since it is generally impractical to determine whether there will be a cash impact in any particular year, all long-term future income tax liabilities have been reflected in the “over 5 years” category in the table above.

Capital Expenditures

During 2009, we expect to incur capital expenditures, including capitalized interest, of approximately $1,465 million for opportunity capital, approximately $300 million to sustain operations at existing levels and approximately $120 million for site improvements.

The most significant project on which funds will be spent in 2009 relates to a major debottlenecking and expansion project that is expected to increase annual capacity at our Cory, Saskatchewan operation to 3.0 million tonnes, including 750,000 tonnes of new compaction capacity. The project is comprised of an initial project on which work began in May 2007, plus an increase in scope announced in July 2008. The initial project, which is a new red potash product mill, is scheduled for completion by September 2010 and is expected to increase its annual capacity to 2.0 million tonnes. The additional project announced in July 2008 is expected to add an additional 1.0 million tonnes of the same red potash product capacity with construction and ramp-up of the project to be completed by the end of 2012. The initial project is expected to cost approximately CDN $892 million, plus capitalized interest, and the additional project has an estimated cost of CDN $220 million bringing the total Cory expansion costs to CDN $1.1 billion. We currently expect to spend CDN $490 million, plus capitalized interest, on the Cory expansion projects in 2009.

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We expect to spend CDN $423 million, plus capitalized interest, in 2009 on our new 2-million-tonne-per-year potash mine and expanded milling operations in New Brunswick (a net increase of 1.2 million tonnes per year). The four-year construction project has an estimated cost of CDN $1.6 billion, plus capitalized interest, which includes CDN $100 million for additional upgraded granular production capability. Construction of the mill expansion is expected to be complete at the end of the fourth quarter of 2011 with the new Picadilly mine development expected to be complete by the end of 2012 and ramp-up of the project expected to be completed by the end of 2014.

At our Rocanville, Saskatchewan plant, we announced a project in 2007 that is expected to bring over 2.0 million tonnes of additional capacity to the plant. The project requires a new mine shaft, extensive expansion to the existing mill site and expansion of the leased mining areas and will take five years to complete. In July 2008, we announced an increase in scope of this project such that an additional 700,000 tonnes of capacity expansion will be incorporated into the 2.0 million-tonne mine and mill project. With an additional investment of CDN $1.0 billion, the project now is expected to add a total of 2.7 million tonnes at a cost of CDN $2.8 billion and raise the facility’s annual capacity to 5.7 million tonnes. Construction of the mill is scheduled for completion at the end of 2012 with ramp-up over the following two years. Expected expenditures in 2009 are CDN $331 million, plus capitalized interest.

In July 2008, we announced a debottlenecking project at our Allan, Saskatchewan operation which is expected to add 1.0 million tonnes of annual production capability. This project, together with the 400,000 tonne expansion/debottlenecking project completed in 2007 is expected to raise its annual capacity to 3.0 million tonnes per year. Construction and ramp-up are scheduled for completion by the end of 2012. This project has an estimated cost of CDN $550 million, plus capitalized interest, of which CDN $76 million is expected to be spent in 2009.

In the phosphate division, we began construction of a new sulfuric acid plant at our Aurora, North Carolina facility in 2007. The total cost of this project is approximately $260 million, plus capitalized interest, with $131 million projected to be spent in 2009. The project is scheduled to be completed in the fourth quarter of 2009.

We anticipate that all capital spending will be financed by internally generated cash flows supplemented, if and as necessary, by borrowing from existing financing sources.

Sources and Uses of Cash

The company’s cash flows from operating, investing and financing activities, as reflected in the unaudited interim Condensed Consolidated Statements of Cash Flow, are summarized in the following table:

	Three Months Ended June 30												Six Months Ended June 30
							$			%									$			%
Dollars (millions)	2009			2008			Change			Change			2009			2008			Change			Change
Cash (used in) provided by operating activities	$	(63.7	)	$	894.6		$	(958.3	)		n/m		$	35.0		$	1,336.9		$	(1,301.9	)		(97	)
Cash (used in) investing activities		(250.9	)		(322.7	)		71.8			(22	)		(627.9	)		(697.4	)		69.5			(10	)
Cash provided by (used in) financing activities		430.8			(666.6	)		1,097.4			n/m			687.4			(1,089.1	)		1,776.5			n/m

n/m = not meaningful

The following table presents summarized working capital information as at June 30, 2009 compared to December 31, 2008:

	June 30,			December 31,						%
Dollars (millions) — except ratio amounts	2009			2008			Change			Change
Current assets	$	2,220.9		$	2,267.2		$	(46.3	)		(2	)
Current liabilities	$	(1,411.1	)	$	(2,615.8	)	$	1,204.7			(46	)
Working capital	$	809.8		$	(348.6	)	$	1,158.4			n/m
Current ratio		1.57			0.87			0.70			80

n/m = not meaningful

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Liquidity needs can be met through a variety of sources, including: cash generated from operations, short-term borrowings under our line of credit, commercial paper borrowings, draw-downs under our long-term revolving credit facilities and long-term debt issued under US shelf registration statements. Our primary uses of funds are operational expenses, sustaining and opportunity capital spending, intercorporate investments, dividends, interest and principal payments on our debt securities.

Cash provided by operating activities declined $958.3 million quarter over quarter, largely attributable to the $718.0 million decrease in net income and $207.6 million decrease from non-cash operating working capital changes. During the second quarter, cash inflows from accounts receivable increased $338.0 million (due to declining receivables in 2009 resulting from reduced sales, particularly as compared to record sales in 2008 and offset by increases in income and provincial mining taxes receivable) and inventories increased $106.7 million (due to production curtailments and lower input costs in 2009 compared to maximum production and higher inputs in 2008). Cash flows on accounts payable and accrued charges increased $624.7 million compared to second-quarter 2008 as: (1) income and provincial mining taxes payable fell during the quarter (in some cases to receivable positions) due to lower sales; (2) trade payables declined in the second quarter of 2009 as purchasing activity declined in conjunction with decreased sales activity; (3) stock-based compensation accruals declined year over year as a result of a significant decrease in our share price; and (4) natural gas and sulfur accruals were lower in 2009 as input costs declined. Year over year, cash provided by operating activities was down $1,301.9 million due to the $975.7 million decrease in net income (the $115.3 million gain on disposal of auction rate securities further negatively impacts operating cash flows), a 2008 provision for future income taxes of $26.8 million as compared to a 2009 recovery of $75.1 million, and a $108.6 million reduction in cash flow from non-cash operating working capital changes. Repayments of accounts payable and accrued charges resulted in a $1,055.6 million decline in non-cash operating working capital changes as expenditures were down significantly as a result of slower demand, taxes were recoverable in 2009 compared to payable in 2008 and payments were made to settle awards under our 2006-2008 medium-term incentive plan. Accounts receivable and inventories contributed $686.8 million and $290.4 million, respectively, to changes in non-cash operating working capital as a result of declining receivables due to fewer sales (partially offset by increased taxes receivable) and declining phosphate and nitrogen inventory volumes and costs in 2009 compared to 2008 whereas the value of sales and inventories were much higher in 2008 than in 2007.

Cash used in investing activities decreased $71.8 million quarter over quarter and $69.5 million year over year. The most significant items impacting cash during the first six months of 2009 and 2008 included:

•  Our spending on property, plant and equipment was $399.6 million in the second quarter of 2009 and $765.7 million for the first half of the year, an increase of $161.7 million and $331.3 million, respectively, compared to the same periods in 2008. Approximately 71 percent (2008 — 76 percent) of our consolidated capital expenditures for the second quarter related to the potash segment and 70 percent (2008 — 69 percent) related to the potash segment in the first six months of 2009.

•  During the second quarter of 2009, $132.5 million was received from the disposal of the auction rate securities.

•  During the first three months of 2008, $173.7 million was paid to settle the company’s forward purchase contract for shares of Sinofert. During the second quarter of 2008, the company purchased additional shares in Sinofert for a total cost of $76.4 million. No such transactions took place during 2009.

Cash provided by financing activities was $430.8 million during the second quarter of 2009 ($687.4 million during the first half of the year) as a result of the issuance of $1,000.0 million aggregate principal amount of senior notes during the second quarter. Proceeds from long-term credit facilities for the second quarter of 2009 were $795.0 million ($1,555.0 million during the first half of the year), proceeds from short-term credit facilities and commercial paper were $196.4 million ($411.5 million in the first half of the year) and repayment of and finance costs on long-term debt obligations were $1,538.8 million ($2,229.2 million during the first half of the year). In the second quarter and first half of 2008, $1,476.6 million and $1,897.1 million, respectively, was paid to repurchase our common shares. Also in 2008, proceeds from short-term debt obligations were $828.9 million in the second quarter and $842.4 million in the first half.

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We believe that internally generated cash flow, supplemented by borrowing from existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures and other cash requirements in 2009, exclusive of any possible acquisitions, as was the case in 2008. At this time, we do not reasonably expect any presently known trend or uncertainty to affect our ability to access our historical sources of cash.

Principal Debt Instruments

	June 30, 2009
	Total			Amount Outstanding			Amount
Dollars (millions)	Amount			and Committed			Available
Credit facilities	$	2,780.0	(1)	$	1,487.9	(1)	$	1,292.1	(1)
Line of credit		75.0			30.5	(2)		44.5

(1)

The amount available under the $750.0 million commercial paper program is limited to the availability of backup funds under the credit facilities. Included in the amount outstanding and committed is $737.9 million of commercial paper. Per the terms of the agreements, the commercial paper outstanding and committed, as applicable, is based on the US dollar balance or equivalent thereof in lawful money of other currencies at the time of issue; therefore, subsequent changes in the exchange rate applicable to Canadian dollar denominated commercial paper have no impact on this balance.

(2)

Letters of credit committed.

We use a combination of short-term and long-term debt to finance our operations. We typically pay floating rates of interest on our short-term debt and credit facilities and fixed rates on our senior notes. As of June 30, 2009, interest rates ranged from 0.24 percent to 1.86 percent on outstanding commercial paper denominated in Canadian dollars and 0.45 percent to 1.63 percent on outstanding commercial paper denominated in US dollars. Interest rates on borrowings under the credit facilities ranged from 0.76 percent to 0.83 percent on LIBOR rate loans with one base rate loan at 3.75 percent.

Our three long-term revolving credit facilities provide for unsecured advances up to the total facilities amount less direct borrowings and amounts committed in respect of commercial paper outstanding. We also have a $75.0 million short-term line of credit that is available through June 2010. Outstanding letters of credit and direct borrowings reduce the amount available. The line of credit and credit facilities have financial tests and other covenants with which we must comply at each quarter-end. Principal covenants under the credit facilities and line of credit require a debt-to-capital ratio of less than or equal to 0.60:1, a long-term debt-to-EBITDA (defined in the respective agreements as earnings before interest, income taxes, provincial mining and other taxes, depreciation, amortization and other non-cash expenses, and unrealized gains and losses in respect of hedging instruments) ratio of less than or equal to 3.5:1, tangible net worth greater than or equal to $1,250.0 million and debt of subsidiaries not to exceed $650.0 million. The credit facilities and line of credit are also subject to other customary covenants and events of default, including an event of default for non-payment of other debt in excess of CDN $40.0 million. Non-compliance with any of the above covenants could result in accelerated payment of the debt owing under the credit facilities and line of credit, and termination of lenders’ further funding obligations under the credit facilities and line of credit. We were in compliance with all covenants as at June 30, 2009.

Commercial paper is normally a source of same day cash for the company. Access to this source of short-term financing depends primarily on maintaining our R1 low credit rating by DBRS and conditions in the money markets. The interest rates at which we issue long-term debt are partly based on the quality of our credit ratings, which are all investment grade. The company’s investment grade rating as measured by Moody’s senior debt ratings remained unchanged from December 31, 2008 at Baa1 with a stable outlook. Our investment grade rating as measured by Standard & Poor’s senior debt ratings remained unchanged from December 31, 2008 at A- with a stable outlook.

Our $2,350.0 million of senior notes were issued under US shelf registration statements. Under our currently effective US shelf registration statement, we can issue and sell additional debt securities, subject to market conditions.

For the first six months of 2009, our weighted average cost of capital was 9.91 percent (2008 — 12.57 percent), of which 89 percent represented equity (2008 — 98 percent).

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Outstanding Share Data

The company had 295,552,385 common shares issued and outstanding at June 30, 2009 compared to 295,200,987 common shares issued and outstanding at December 31, 2008. During the second quarter of 2009, the company issued 259,988 common shares (351,398 common shares during the first six months of 2009) pursuant to the exercise of stock options and our dividend reinvestment plan. At June 30, 2009, there were 13,169,564 options to purchase common shares outstanding under the company’s seven stock option plans, as compared to 12,849,356 at December 31, 2008 under six stock option plans.

Off-Balance Sheet Arrangements

In the normal course of operations, PotashCorp engages in a variety of transactions that, under Canadian GAAP, are either not recorded on our Consolidated Statements of Financial Position or are recorded on our Consolidated Statements of Financial Position in amounts that differ from the full contract amounts. Principal off-balance sheet activities we undertake include issuance of guarantee contracts, certain derivative instruments and long-term fixed price contracts. We do not reasonably expect any presently known trend or uncertainty to affect our ability to continue using these arrangements. These types of arrangements are discussed below.

Guarantee Contracts

Refer to Note 16 to the unaudited interim condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for information pertaining to our guarantees.

Derivative Instruments

We use derivative financial instruments to manage exposure to commodity price, interest rate and foreign exchange rate fluctuations. Regardless of whether the derivatives are designated as hedges for Canadian GAAP purposes, they are recorded on the Consolidated Statements of Financial Position at fair value and marked-to-market each reporting period, except for certain non-financial derivatives that have qualified for and for which we have documented a normal purchase or normal sale exception in accordance with the accounting standards.

Long-Term Fixed Price Contracts

Certain of our long-term raw materials agreements contain fixed price components. Our significant agreements, and the related obligations under such agreements, are discussed in “Cash Requirements”.

QUARTERLY FINANCIAL HIGHLIGHTS

Dollars (millions) — except	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,		December 31,		September 30,
per-share amounts	2009		2009		2008		2008		2008		2008		2007		2007
Sales	$	856.0	$	922.5	$	1,870.6	$	3,064.3	$	2,621.0	$	1,890.6	$	1,431.4	$	1,295.0
Gross margin		170.6		229.6		873.1		1,741.0		1,437.3		856.0		535.0		475.1
Net income		187.1		308.3		788.0		1,236.1		905.1		566.0		376.8		243.1
Net income per share — basic		0.63		1.04		2.63		4.07		2.91		1.79		1.19		0.77
Net income per share — diluted		0.62		1.02		2.56		3.93		2.82		1.74		1.16		0.75

Net income per share for each quarter has been computed based on the weighted average number of shares issued and outstanding during the respective quarter; therefore, quarterly amounts may not add to the annual total.

Certain aspects of our business can be impacted by seasonal factors. Fertilizers are sold primarily for spring and fall application in both Northern and Southern Hemispheres. However, planting conditions and the timing of customer purchases will vary each year and fertilizer sales can be expected to shift from one quarter to another. Most feed and industrial sales are by contract and are more evenly distributed throughout the year.

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RELATED PARTY TRANSACTIONS

The company sells potash from its Saskatchewan mines for use outside of North America exclusively to Canpotex, a potash export, sales and marketing company owned in equal shares by the three potash producers in the Province of Saskatchewan. Sales to Canpotex for the quarter ended June 30, 2009 were $58.2 million (2008 — $604.6 million). For the first six months of 2009, these sales were $217.5 million (2008 — $976.3 million). Sales to Canpotex are at prevailing market prices and are settled on normal trade terms.

In June 2009 the company purchased $26.9 million of potash from SQM, a significantly influenced equity investee. The transaction has been measured based on the exchange amount at the date of the transaction. As required by the supply agreement, subsequent adjustments may be made to the exchange amount based on future changes in market prices up to the point the company sells the potash to a third party. At June 30, 2009 the company had $32.0 million (including $5.1 million Value Added Tax) outstanding in amounts payable to the related party as a result of this transaction. The company has guaranteed the amounts outstanding and all amounts are due October 30, 2009.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited interim condensed consolidated financial statements, which have been prepared in accordance with Canadian GAAP. These principles differ in certain significant respects from accounting principles generally accepted in the United States. These differences are described and quantified in Note 18 to the unaudited interim condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

The accounting policies used in preparing the unaudited interim condensed consolidated financial statements are consistent with those used in the preparation of the 2008 annual consolidated financial statements, except as disclosed in Note 1 to the unaudited interim condensed consolidated financial statements. Certain of these policies involve critical accounting estimates because they require us to make particularly subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts could be reported under different conditions or using different assumptions. There have been no material changes to our critical accounting estimate policies in the first six months of 2009.

We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the audit committee of the Board of Directors, and our audit committee has reviewed the disclosures described in this section.

RECENT ACCOUNTING CHANGES

Refer to Note 1 to the unaudited interim condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for information pertaining to accounting changes effective in 2009, and Notes 1 and 18 to the unaudited interim condensed consolidated financial statements for information on issued accounting pronouncements that will be effective in future periods.

International Financial Reporting Standards

Of particular note is the area of International Financial Reporting Standards (“IFRSs”). In April 2008 and March 2009, the Accounting Standards Board (“AcSB”) published exposure drafts on “Adopting IFRSs in Canada”. The exposure drafts propose to incorporate the IFRSs into the CICA Accounting Handbook effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. At this date, publicly accountable enterprises in Canada will be required to prepare financial statements in accordance with IFRSs. The exposure drafts make possible the early adoption of IFRSs by Canadian entities.

In June 2008, the Canadian Securities Administrators (“CSA”) published a staff notice which stated that it is prepared to recommend exemptive relief on a case-by-case basis to permit a domestic Canadian issuer to prepare its financial statements in accordance with IFRSs for a financial period beginning before January 1, 2011. The US Securities and Exchange Commission (“SEC”) issued a final rule in January 2008 that would allow some foreign private issuers to use IFRSs, without reconciliation to US GAAP, effective for certain 2007 financial statements. In

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November 2008, the SEC issued a proposed roadmap for the potential mandatory adoption of IFRSs by issuers in the US and a proposed rule that would allow the optional use of IFRSs by certain qualifying domestic issuers. Provided it is appropriate to do so, we may adopt IFRSs earlier than the AcSB’s mandatory adoption deadline of January 1, 2011.

The company has established a project team that is led by finance management, and includes representatives from various areas of the organization to plan for and achieve a smooth transition to IFRSs. The audit committee of the Board of Directors regularly receives progress reporting on the status of the IFRSs implementation project.

The implementation project consists of three primary phases, which are sometimes occurring concurrently, as analysis in certain areas is further advanced than in other areas:

•  Scoping and diagnostic phase — This phase involves performing a high-level impact assessment to identify key areas that may be impacted by the transition to IFRSs. Potentially affected areas are ranked as high, medium or low priority.

•  Impact analysis, evaluation and design phase — In this phase, each area identified from the scoping and diagnostic phase is addressed in order of descending priority, with project teams established as deemed necessary. This phase involves specifying changes required to existing accounting policies, information systems and business processes, analyzing policy alternatives allowed under IFRSs and developing draft IFRSs financial statement content. Broader implications on our business activities are being assessed particularly in relation to our debt covenants, compensation arrangements, hedging activities, budgeting and management reporting. Also in this phase, internal controls over financial reporting and disclosure controls and procedures are evaluated to ensure that they remain effective both during and after the transition to IFRSs.

•  Implementation and review phase — This phase includes executing changes to information systems, business processes and internal controls, completing formal authorization processes to approve recommended accounting policy changes and conducting training programs across the company’s finance and other staff, as necessary. This stage culminates in collecting financial information necessary to compile IFRSs-compliant financial statements, embedding IFRSs in business processes, eliminating any unnecessary data collection processes and audit committee approval of IFRSs financial statements. Implementation also involves delivering further training to staff as revised systems begin to take effect.

The company completed the scoping and diagnostic phase in June 2008, and is now in the impact analysis, evaluation and design phase. Many of the differences identified between IFRSs and Canadian GAAP are not expected to have a material impact on our reported results and financial position. However, there may be significant changes as a result of IFRSs’ accounting principles and provisions for first time adoption. The company has not yet determined the full accounting effects of adopting IFRSs. However, we do not expect the adoption of IFRSs to materially impact the underlying cash flows, profitability trends of our operating performance, debt covenants or compensation arrangements.

Most adjustments required on transition to IFRSs will be made, retrospectively, against opening retained earnings as of the date of the first comparative balance sheet presented based on standards applicable at that time. Transitional adjustments relating to those standards where comparative figures are not required to be restated will only be made as of the first day of the year of adoption.

First-Time Adoption of IFRSs

IFRS 1, “First-Time Adoption of International Financial Reporting Standards” (“IFRS 1”), provides entities adopting IFRSs for the first time with a number of optional exemptions and mandatory exceptions, in certain areas, to the general requirement for full retrospective application of IFRSs. The company is analyzing the various accounting policy choices available and will implement those determined to be most appropriate in our

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circumstances. We expect to finalize our choice of certain IFRS 1 optional exemptions during the third quarter of 2009, the most significant of which are summarized below:

Business Combinations

An exemption is available which allows the company, on transition to IFRSs, to either restate all past business combinations or to apply a more limited restatement approach. If the limited restatement approach is chosen, specific requirements must be met, such as: maintaining the classification of the acquirer and the acquiree, recognizing or derecognizing certain acquired assets or liabilities as required under IFRSs and remeasuring certain assets and liabilities at fair value.

Property, Plant and Equipment

An exemption is available which would allow the company to report items of property, plant and equipment, in its opening balance sheet on the transition date, at a deemed cost instead of the actual cost that would be determined under IFRSs. The deemed cost of an item may be either its fair value at the date of transition to IFRSs or an amount determined by a previous revaluation under Canadian GAAP (as long as that amount was close to either its fair value, cost or adjusted cost). The exemption can be applied on an asset-by-asset basis.

Share-Based Payments

An exemption is available which would allow the company to elect not to apply IFRS 2, “Share-Based Payments” to equity instruments granted on or before November 7, 2002 or which vested before the company’s date of transition to IFRSs.

Employee Benefits

An exemption exists for the company to recognize all cumulative actuarial gains and losses at the date of transition to IFRSs. Actuarial gains and losses would have to be recalculated under IFRSs from the inception of each of our defined benefit plans if the exemption is not taken. The company’s choice must be applied to all defined benefit plans consistently.

Cumulative Translation Differences

On transition, cumulative translation gains or losses in accumulated other comprehensive income can be reclassified to retained earnings at the company’s election. If not elected, all cumulative translation differences must be recalculated under IFRSs from inception.

Decommissioning Liabilities

In accounting for changes in obligations to dismantle, remove and restore items of property, plant and equipment, the guidance in IFRSs requires changes in such obligations to be added to or deducted from the cost of the asset to which it relates. The adjusted depreciable amount of the asset is then depreciated prospectively over its remaining useful life. Rather than recalculating the effect of all such changes throughout the life of the obligation, an exemption is available which would allow the company to measure the liability and the related depreciation effects at the date of transition to IFRSs.

Expected Areas of Significance

Set out below are the key areas where changes in accounting policies are expected that may impact the company’s consolidated financial statements. The list and comments below should not be regarded as a complete list of changes that will result from transition to IFRSs. It is intended to highlight those areas we believe to be most significant; however, analysis of changes is still in process and not all decisions have been made where choices of accounting policies are available. We note that the standard-setting bodies that promulgate Canadian GAAP and IFRSs have significant ongoing projects that could affect the ultimate differences between Canadian GAAP and IFRSs and their impact on the company’s consolidated financial statements in future years. In particular, we expect that there may be additional new or revised IFRSs issued in relation to consolidation, income taxes, liabilities, discontinued operations, related party disclosures and joint ventures. We have processes in place to ensure that such potential changes are

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closely monitored and evaluated. The future impacts of IFRSs will also depend on the particular circumstances prevailing in those years. The differences described below are those existing based on Canadian GAAP and IFRSs today. Until our adoption date is finalized, the company is not able to reliably quantify the impacts expected on our consolidated financial statements for these differences. If we decide to early adopt IFRSs, significant accounting policy choices will be finalized in our 2009 third quarter. If IFRSs are adopted on January 1, 2011, we expect to disclose our significant accounting policy choices in our 2009 annual report.

Asset Impairment

Canadian GAAP generally uses a two-step approach to impairment testing: first comparing asset carrying values with undiscounted future cash flows to determine whether impairment exists; and then measuring any impairment by comparing asset carrying values with fair values. International Accounting Standard (“IAS”) 36, “Impairment of Assets”, uses a one-step approach for both testing for and measuring impairment, with asset carrying values compared directly with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows). This may potentially result in more writedowns where carrying values of assets were previously supported under Canadian GAAP on an undiscounted cash flow basis, but could not be supported on a discounted cash flow basis. However, the extent of any new writedowns may be partially offset by the requirement under IAS 36 to reverse any previous impairment losses where circumstances have changed such that the impairments have been reduced. Canadian GAAP prohibits reversal of impairment losses.

Employee Benefits

IAS 19, “Employee Benefits”, requires the past service cost element of defined benefit plans to be expensed on an accelerated basis, with vested past service costs expensed immediately and unvested past service costs recognized on a straight-line basis until the benefits become vested. Under Canadian GAAP, past service costs are generally amortized on a straight-line basis over the average remaining service period of active employees expected under the plan. In addition, actuarial gains and losses are permitted under IAS 19 to be recognized in other comprehensive income rather than through profit or loss.

Share-Based Payments

IFRS 2, “Share-Based Payments”, requires that cash-settled share-based payments to employees be measured (both initially and at each reporting date) based on fair values of the awards. Canadian GAAP on the other hand requires that such payments be measured based on intrinsic values of the awards. This difference is expected to impact the accounting measurement of some of the company’s cash-settled employee incentive plans such as our medium term incentive plan.

Provisions (Including Asset Retirement Obligations)

Under IAS 37, “Provisions, Contingent Liabilities and Contingent Assets”, a provision may arise from both legal and constructive obligations. Under Canadian GAAP, asset retirement obligations are only recognized where they arise from a legal obligation. Therefore, it is possible that there may be some provisions which would meet the recognition criteria under IFRSs that were not recognized under Canadian GAAP.

Other differences between IFRSs and Canadian GAAP exist in relation to the measurement of provisions, such as the methodology for determining the best estimate where there is a range of equally possible outcomes (IFRSs uses the mid-point of the range, whereas Canadian GAAP uses the low-end of the range), and the requirement under IFRSs for provisions to be discounted where material.

Income Taxes

IAS 12, “Income Taxes”, currently requires income tax to be charged (or credited) directly to equity (OCI) if the tax relates to items that are credited (or charged), in the same or a different period, directly to equity. Under Canadian GAAP, only the income tax relating to items credited (or charged) directly to equity in the same period is charged (or credited) directly to equity. This change may result in some income tax effects being recognized directly in equity rather than through net income or loss. This GAAP difference is currently being addressed as part of the International Accounting Standards Board’s project on Income Tax.

61

RISK MANAGEMENT

Execution of our corporate strategy requires an effective program to manage the associated risks. We have adopted the PotashCorp Risk Management Framework (“the Framework”) to identify and manage such risks. The Framework consists of a comprehensive risk universe, with six corporate risk categories, and corresponding identification of risk events. The major corporate categories of risks are: markets/business, distribution, operational, financial/information technology, regulatory and integrity/empowerment. Together and separately, these potentially threaten our strategies and could affect our ability to deliver long-term shareholder value.

The Framework establishes an entity-wide risk ranking methodology. Risk events are evaluated against the criteria of likelihood or frequency of occurrence and the consequential magnitude or severity of the event. Mitigation activities are identified that will reduce the likelihood and/or severity of the occurrence of a risk event. The residual risk that results from identified mitigation activities is also evaluated using the same criteria. Management identifies the most significant risks to our strategy and reports to the Board on the mitigation plans.

The company’s Risk Management Process of identification, management, and reporting of risk is continuous and dynamic. Changes to corporate risk that result from changing internal and external factors are evaluated on a quarterly basis and significant changes in risks and corresponding mitigation activities are reported quarterly to the audit committee. Detailed discussion of the PotashCorp Risk Management Process can be found on pages 39 and 40 of our 2008 financial review annual report as well as in our 2008 Annual Report on Form 10-K. Risk management discussions specific to potash, phosphate and nitrogen operations can be found on pages 18, 24 and 30, respectively, of the 2008 financial review annual report.

The company recognizes damage to reputation as its most severe risk consequence, which is mitigated by ongoing and transparent communication with stakeholders, commitment to sustainability, and best practices in corporate governance. Moreover, significant investments and operations in a number of countries subject the company to business risks which could be exaggerated by differences in domestic culture, political and economic conditions, policies, laws and regulations. The company may also be adversely affected by changing anti-trust laws in operating jurisdictions worldwide.

The risks of greatest potential impact to potash reported in the 2008 financial review annual report include market supply imbalances which may result from fluctuations in global demand for product or from new competitor supply in the form of greenfield mines, inadequacy of the transportation and distribution infrastructure to timely accommodate the volume delivery demands, and physical risks particular to underground mines (such as unexpected underground rock falls and water inflow from underground water-bearing strata). We mitigate the market imbalance risks by managing production to meet market demand. The company mitigates transportation and distribution risks both directly and through Canpotex by working with rail carriers and undertaking sufficient capital investment in transportation infrastructure and railcars. Underground mine risk mitigation activities include advanced geoseismic monitoring. At Lanigan, Saskatchewan, mitigation includes ground penetrating radar development and the installation of protective canopies on mining machines.

Similar risks of cyclicality and market imbalance exist in phosphate and nitrogen, largely due to competitive costs, availability of supply and government involvement. The company mitigates these risks by focusing on less cyclical markets, and employing natural gas price risk hedging strategies where appropriate.

OUTLOOK

Given the essential role fertilizer plays in food production, demand for fertilizer cannot be deferred indefinitely, as removing essential crop nutrients from the soil today means more must be applied tomorrow. With rising populations, fundamental shifts in dietary practices to more meat protein and fruits and vegetables, along with increasingly limited land and water availability, we anticipate long-term pressure on the global food system. We believe that economic uncertainty has resulted in inadequate nutrient replacement to soils in all major agricultural regions, creating a void that must be filled. In some regions, nutrients resident in the soil and exceptional growing conditions can temporarily distract attention from this underlying issue, but unsustainable fertilizer practices cannot continue if the world’s need for food is to be met.

62

The imminent need for improved soil fertility around the world is beginning to bring much-needed clarity to nutrient markets. Recently announced contracts between major potash suppliers and India’s fertilizer buyers demonstrate customer understanding of the premium value and very different long-term supply/demand fundamentals for potash. In contrast to phosphate and nitrogen realized prices, which have reverted to near 2006 levels, India’s recent potash settlements equate to a level nearly triple our realized offshore prices of three years ago. While these prices are 26 percent below the record contract prices of last year, historical and relative context is important: this is one of the worst economic downturns we have ever seen, and we have just exited a fertilizer year in which global potash shipments were more than 30 percent lower than the previous year.

We believe a return to normal potash demand — and demand growth — will be driven not only by the need to replenish soil nutrients but also by renewed customer confidence in pricing. Fertilizer dealers make money by buying when they believe they can capture a positive margin, and many were shaken by the economic downturn and the rapid decline in phosphate and nitrogen pricing. We have seen India resume potash purchasing, which we expect will be followed by significant interest from the large Brazilian market, and we anticipate that customers worldwide will commit with confidence to new orders and initiate the lengthy process of refilling the potash pipeline.

We believe this situation could be similar to 2006, when extended contract negotiations pushed significant potash sales back to the latter half of the year and, more importantly, were the precursor to the strong demand rebound in 2007 and 2008. The current circumstances are even more dramatic because of the extent and duration of destocking that has occurred. With more than 14 million tonnes of global potash production curtailed so far this year, we expect a strong rebound in 2010 potash sales volumes to tighten supply/demand fundamentals.

We anticipate global potash demand in 2010 to be in the range of 55-60 million tonnes, depending on the pace of improvement in the world economy and related crop commodity prices. If economic recovery lags and consumers, including those buying grain and oilseeds, remain cautious, the need to replenish soil fertility could drive a rebound to the lower end of the range. If customer confidence and normal buying patterns return, grain markets could reflect both rising demand and global production shortfalls due to poor fertility practices during this recession. Higher crop prices could once again motivate farmers to maximize production and could drive potash sales volumes to the high end of that range next year. At this level we believe global producers would be near operational capacity.

We expect that the potash inventories built by producers during the downturn will supply immediate needs, but with low inventories in the broader supply chain, warehouses are expected to empty quickly as demand returns. We believe meeting longer-term demand growth will present a greater challenge. Building potash capacity requires considerable cost and a long time to execute, so sufficiently high potash margins are necessary to justify the investment. In our view, margins have not reached a level that justifies the cost of a greenfield mine. Recently settled contract prices have made this investment even more challenging.

We believe these issues further enhance the window of opportunity for our expansion projects in Saskatchewan and New Brunswick, which will be completed in a shorter time frame and at a significant discount to the estimated cost of a greenfield mine. These projects are expected to be completed on schedule, increasing our constructed capacity¹ to 18 million tonnes by the end of 2012 with a steady ramp-up between now and the end of 2014.

We now expect 2009 potash sales volumes to be in the range of 4.5-5.0 million tonnes. As we have for the past two decades, we will match our production to demand as it returns market-by-market through the second half of the year. With our current operational capacity of approximately 11.5 million tonnes, further production curtailments above the 4.7 million tonnes already announced this year will be required. We now anticipate potash gross margin for 2009 to be in the range of $1.2-$1.5 billion.

With lower forecast potash volumes, we now anticipate our 2009 annual effective tax rate will be in the range of 14-16 percent, with the remaining quarters at approximately 23-25 percent. Provincial mining and other taxes are now forecast within a range of 4-5 percent of total potash gross margin as a result of lower volumes increasing the impact that our deductible potash capital expenditures are expected to have on the profit tax component of these taxes. We now anticipate other income to be slightly above 2008 levels.

¹ Constructed capacity: Equipment in a state of readiness to produce. While constructed capacity is increased at mechanical completion of a project, a period of ramp-up may be required to achieve full operating levels.

63

PotashCorp is expecting third-quarter net income per share to be in the range of $0.80-1.20. For the full year, we anticipate earnings to be in the range of $4.00-5.00 per share.

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q, including those in the “Outlook” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations relating to the period after June 30, 2009, are forward-looking statements. These statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical fact. These statements are based on certain factors and assumptions as set forth in this Form 10-Q, including foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective tax rates. While the company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Several factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to: fluctuations in supply and demand in fertilizer, sulfur, transportation and petrochemical markets; changes in competitive pressures, including pricing pressures; the current global financial crisis and conditions and changes in credit markets; the results of negotiations with major markets; timing and amount of capital expenditures; risks associated with natural gas and other hedging activities; changes in capital markets and corresponding effects on the company’s investments; changes in currency and exchange rates; unexpected geological or environmental conditions, including water inflow; strikes or other forms of work stoppage or slowdowns; changes in, and the effects of, government policy and regulations; and earnings, exchange rates and the decisions of taxing authorities, all of which could affect our effective tax rates. Additional risks and uncertainties can be found in our Form 10-K for the fiscal year ended December 31, 2008 under the captions “Forward-Looking Statements” and “Item 1A — Risk Factors” and in our other filings with the US Securities and Exchange Commission and Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this report and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential for loss from adverse changes in the market value of financial instruments. The level of market risk to which we are exposed varies depending on the composition of our derivative instrument portfolio, as well as current and expected market conditions. A discussion of enterprise-wide risk management can be found in our 2008 financial review annual report, pages 39 to 40, and risk management discussion specific to potash, phosphate and nitrogen operations can be found on pages 18, 24, and 30, respectively, of such report. A discussion of commodity risk, interest rate risk, foreign exchange risk, credit risk and liquidity risk, including risk sensitivities, can be found in Note 13 to the unaudited interim condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

ITEM 4.   CONTROLS AND PROCEDURES

As of June 30, 2009, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon that evaluation and as of June 30, 2009, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports the company files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and when required and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

64

PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

For a description of certain legal and environmental proceedings, see Note 15 to the unaudited interim condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) On May 7, 2009, the Company held an annual and special meeting (the “Meeting”) of its shareholders.

(b) At the Meeting, the Company’s shareholders voted upon each of the following proposed director nominees with the results of the voting set forth opposite the name of each such nominee.

	FOR		AGAINST		WITHHELD*
Christopher M. Burley		224,562,550		1030		893,953
William J. Doyle		224,658,162		6630		797,781
John W. Estey		216,399,288		1030		9,057,215
C. Steven. Hoffman		224,649,728		1030		806,775
Dallas J. Howe		224,567,968		4930		888,145
Alice D. Laberge		224,585,833		1030		870,670
Keith G. Martell		216,391,587		1030		9,064,916
Jeffrey J. McCaig		216,264,540		1030		9,191,963
Mary Mogford		224,639,332		1030		817,171
Paul J. Schoenhals		216,431,467		6630		9,024,476
E. Robert Stromberg, Q.C.		214,187,279		6630		11,268,664
Elena Viyella de Paliza		214,306,269		6630		11,149,674

(c) The Company’s shareholders also voted upon the appointment of the firm of Deloitte & Touche, LLP, the present auditors, as the Company’s auditors, to hold office until the next annual meeting of the Company’s shareholders. The results of the vote were: 224,412,660 shares for, 112 shares against and 1,040,771 shares withheld*.

(d) The Company’s shareholders also voted on an ordinary resolution (attached as Appendix B to the Company’s Management Proxy Circular dated February 20, 2009) approving the adoption of a new stock option plan. The results of the vote were: 187,936,123 shares for and 15,650,214 shares against.

^(*) Number of withheld votes is based upon proxies received prior to the Meeting.

65

ITEM 6.   EXHIBITS

(a) EXHIBITS

		Incorporated By
		Reference
Exhibit			Filing Date/	Exhibit Number
Number	Description of Document	Form	Period End Date	(if different)
3(a)	Articles of Continuance of the registrant dated May 15, 2002.	10-Q	6/30/2002
3(b)	Bylaws of the registrant effective May 15, 2002.	10-Q	6/30/2002
4(a)	Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated September 25, 2001.
4(b)	Syndicated Term Credit Facility Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 23, 2003.
4(c)	Syndicated Term Credit Facility Second Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 21, 2004.
4(d)	Syndicated Term Credit Facility Third Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 20, 2005.	8-K	9/22/2005	4(a)
4(e)	Syndicated Term Credit Facility Fourth Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 27, 2006.	10-Q	9/30/2006
4(f)	Syndicated Term Credit Facility, Fifth Amending Agreement between the Bank of Nova Scotia and other financial institutions and the registrant dated as of October 19, 2007.	8-K	10/22/2007	4(a)
4(g)	Indenture dated as of June 16, 1997, between the registrant and The Bank of Nova Scotia Trust Company of New York.	8-K	6/18/1997	4(a)
4(h)	Indenture dated as of February 27, 2003, between the registrant and The Bank of Nova Scotia Trust Company of New York.	10-K	12/31/2002	4(c)
4(i)	Form of Note relating to the registrant’s offering of $600,000,000 principal amount of 7.75% Notes due May 31, 2011.	8-K	5/17/2001	4
4(j)	Form of Note relating to the registrant’s offering of $250,000,000 principal amount of 4.875% Notes due March 1, 2013.	8-K	2/28/2003	4
4(k)	Form of Note relating to the registrant’s offering of $500,000,000 principal amount of 5.875% Notes due December 1, 2036.	8-K	11/30/2006	4(a)
4(l)	Form of Note relating to the registrant’s offering of $500,000,000 principal amount of 5.25% Notes due May 15, 2014.	8-K	5/1/2009	4(a)

66

		Incorporated By
		Reference
Exhibit			Filing Date/	Exhibit Number
Number	Description of Document	Form	Period End Date	(if different)
4(m)	Form of Note relating to the registrant’s offering of $500,000,000 principal amount of 6.50% Notes due May 15, 2019.	8-K	5/1/2009	4(b)
4(n)	Amended and Restated Revolving Term Credit Facility Agreement between the Bank of Nova Scotia and other financial institutions and the registrant dated as of January 21, 2009.
4(o)	First Amending Agreement to the Amended and Restated Term Credit Facility Agreement between the Bank of Nova Scotia and other financial institutions and the registrant dated March 5, 2009.	8-K	3/6/2009	4(a)

The registrant hereby undertakes to file with the Securities and Exchange Commission, upon request, copies of any constituent instruments defining the rights of holders of long-term debt of the registrant or its subsidiaries that have not been filed herewith because the amounts represented thereby are less than 10% of the total assets of the registrant and its subsidiaries on a consolidated basis.

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(a)	Sixth Voting Agreement dated April 22, 1978, between Central Canada Potash, Division of Noranda, Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales and Texasgulf Inc.	F-1 (File No. 33-31303)	9/28/1989	10(f)
	10	(b)	Canpotex Limited Shareholders Seventh Memorandum of Agreement effective April 21, 1978, between Central Canada Potash, Division of Noranda Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as amended by Canpotex S&P amending agreement dated November 4, 1987.	F-1 (File No. 33-31303)	9/28/1989	10(g)
	10	(c)	Producer Agreement dated April 21, 1978, between Canpotex Limited and PCS Sales.	F-1 (File No. 33-31303)	9/28/1989	10(h)
	10	(d)	Canpotex/PCS Amending Agreement, dated as of October 1, 1992.	10-K	12/31/1995	10(f)
	10	(e)	Canpotex PCA Collateral Withdrawing/PCS Amending Agreement, dated as of October 7, 1993.	10-K	12/31/1995	10(g)
	10	(f)	Canpotex Producer Agreement amending agreement dated as of January 1, 1999.	10-K	12/31/2000
	10	(g)	Canpotex Producer Agreement amending agreement dated as of July 1, 2002.	10-Q	6/30/2004

67

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(h)	Esterhazy Restated Mining and Processing Agreement dated January 31, 1978, between International Minerals & Chemical Corporation (Canada) Limited and the registrant’s predecessor.	F-1 (File No. 33-31303)	9/28/1989	10(e)
	10	(i)	Agreement dated December 21, 1990, between International Minerals & Chemical Corporation (Canada) Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978.	10-K	12/31/1990	10(p)
	10	(j)	Agreement effective August 27, 1998, between International Minerals & Chemical (Canada) Global Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended).	10-K	12/31/1998	10(l)
	10	(k)	Agreement effective August 31, 1998, among International Minerals & Chemical (Canada) Global Limited, International Minerals & Chemical (Canada) Limited Partnership and the registrant assigning the interest in the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended) held by International Minerals & Chemical (Canada) Global Limited to International Minerals & Chemical (Canada) Limited Partnership.	10-K	12/31/1998	10(m)
	10	(l)	Potash Corporation of Saskatchewan Inc. Stock Option Plan — Directors, as amended.	10-K	12/31/2006
	10	(m)	Potash Corporation of Saskatchewan Inc. Stock Option Plan — Officers and Employees, as amended.	10-K	12/31/2006
	10	(n)	Short-Term Incentive Plan of the registrant effective January 2000, as amended.	10-K	12/31/2008
	10	(o)	Resolution and Forms of Agreement for Supplemental Retirement Income Plan, for officers and key employees of the registrant.	10-K	12/31/1995
	10	(p)	Amending Resolution and revised forms of agreement regarding Supplemental Retirement Income Plan of the registrant.	10-Q	6/30/1996	10(x)
	10	(q)	Amended and restated Supplemental Retirement Income Plan of the registrant and text of amendment to existing supplemental income plan agreements.	10-Q	9/30/2000	10(mm)
	10	(r)	Amendment, dated February 23, 2009, to the amended and restated Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(s)	Form of Letter of amendment to existing supplemental income plan agreements of the registrant.	10-K	12/31/2002	10(cc)

68

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(t)	Amended and restated agreement dated February 20, 2007, between the registrant and William J. Doyle concerning the Supplemental Retirement Income Plan.	10-K	12/31/2006	10(s)
	10	(u)	Amendment, dated December 24, 2008, to the amended and restated agreement, dated February 20, 2007, between the registrant and William J. Doyle concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(v)	Amendment, dated February 23, 2009, to the amended and restated agreement, dated February 20, 2007, between the registrant and William J. Doyle concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(w)	Amendment, dated February 23, 2009, to the amended and restated agreement dated August 2, 2006, between the registrant and Wayne R. Brownlee concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(x)	Amendment, dated February 23, 2009, to the amended and restated agreement, dated August 2, 1996, between the registrant and Garth W. Moore concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(y)	Supplemental Retirement Benefits Plan for U.S. Executives dated effective January 1, 1999.	10-Q	6/30/2002	10(aa)
	10	(z)	Amendment No. 1, dated December 24, 2008, to the Supplemental Retirement Plan for U.S. Executives.	10-K	12/31/2008
	10	(aa)	Amendment No. 2, dated February 23, 2009, to the Supplemental Retirement Plan for U.S. Executives.	10-K	12/31/2008
	10	(bb)	Forms of Agreement dated December 30, 1994, between the registrant and certain officers of the registrant.	10-K	12/31/1995	10(p)
	10	(cc)	Form of Agreement of Indemnification dated August 8, 1995, between the registrant and certain officers and directors of the registrant.	10-K	12/31/1995	10(q)
	10	(dd)	Resolution and Form of Agreement of Indemnification dated January 24, 2001.	10-K	12/31/2000	10(ii)
	10	(ee)	Resolution and Form of Agreement of Indemnification — July 21, 2004.	10-Q	6/30/2004	10(ii)
	10	(ff)	Chief Executive Officer Medical and Dental Benefits.	10-K	12/31/2004	10(jj)
	10	(gg)	Deferred Share Unit Plan for Non-Employee Directors, as amended.	10-Q	3/31/2008	10(bb)
	10	(hh)	U.S. Participant Addendum No. 1 to the Deferred Share Unit Plan for Non-Employee Directors.	10-K	12/31/2008	10(jj)

69

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(ii)	Potash Corporation of Saskatchewan Inc. 2005 Performance Option Plan and Form of Option Agreement, as amended.	10-K	12/31/2006	10(cc)
	10	(jj)	Potash Corporation of Saskatchewan Inc. 2006 Performance Option Plan and Form of Option Agreement, as amended.	10-K	12/31/2006	10(dd)
	10	(kk)	Potash Corporation of Saskatchewan Inc. 2007 Performance Option Plan and Form of Option Agreement.	10-Q	3/31/2007	10(ee)
	10	(ll)	Potash Corporation of Saskatchewan Inc. 2008 Performance Option Plan and Form of Option Agreement.	10-Q	3/31/2008	10(ff)
	10	(mm)	Potash Corporation of Saskatchewan Inc. 2009 Performance Option Plan and Form of Option Agreement.	10-Q	3/31/2009
	10	(nn)	Medium-Term Incentive Plan of the registrant effective January 2009.	10-K	12/31/2008	10(qq)
	11		Statement re Computation of Per Share Earnings.
	31	(a)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	(b)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

70

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

POTASH CORPORATION OF
SASKATCHEWAN INC.

August 6, 2009

By:  /s/  Joseph Podwika

Joseph Podwika

Senior Vice President, General Counsel and

Secretary

August 6, 2009

By:  /s/  Wayne R. Brownlee

Wayne R. Brownlee

Executive Vice President, Treasurer and

Chief Financial Officer

(Principal Financial and Accounting Officer)

71

EXHIBIT INDEX

		Incorporated By
		Reference
Exhibit			Filing Date/	Exhibit Number
Number	Description of Document	Form	Period End Date	(if different)
3(a)	Articles of Continuance of the registrant dated May 15, 2002.	10-Q	6/30/2002
3(b)	Bylaws of the registrant effective May 15, 2002.	10-Q	6/30/2002
4(a)	Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated September 25, 2001.
4(b)	Syndicated Term Credit Facility Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 23, 2003.
4(c)	Syndicated Term Credit Facility Second Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 21, 2004.
4(d)	Syndicated Term Credit Facility Third Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 20, 2005.	8-K	9/22/2005	4(a)
4(e)	Syndicated Term Credit Facility Fourth Amending Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated as of September 27, 2006.	10-Q	9/30/2006
4(f)	Syndicated Term Credit Facility, Fifth Amending Agreement between the Bank of Nova Scotia and other financial institutions and the registrant dated as of October 19, 2007.	8-K	10/22/2007	4(a)
4(g)	Indenture dated as of June 16, 1997, between the registrant and The Bank of Nova Scotia Trust Company of New York.	8-K	6/18/1997	4(a)
4(h)	Indenture dated as of February 27, 2003, between the registrant and The Bank of Nova Scotia Trust Company of New York.	10-K	12/31/2002	4(c)
4(i)	Form of Note relating to the registrant’s offering of $600,000,000 principal amount of 7.75% Notes due May 31, 2011.	8-K	5/17/2001	4
4(j)	Form of Note relating to the registrant’s offering of $250,000,000 principal amount of 4.875% Notes due March 1, 2013.	8-K	2/28/2003	4
4(k)	Form of Note relating to the registrant’s offering of $500,000,000 principal amount of 5.875% Notes due December 1, 2036.	8-K	11/30/2006	4(a)
4(l)	Form of Note relating to the registrant’s offering of $500,000,000 principal amount of 5.25% Notes due May 15, 2014.	8-K	5/1/2009	4(a)

		Incorporated By
		Reference
Exhibit			Filing Date/	Exhibit Number
Number	Description of Document	Form	Period End Date	(if different)
4(m)	Form of Note relating to the registrant’s offering of $500,000,000 principal amount of 6.50% Notes due May 15, 2019.	8-K	5/1/2009	4(b)
4(n)	Amended and Restated Revolving Term Credit Facility Agreement between the Bank of Nova Scotia and other financial institutions and the registrant dated as of January 21, 2009.
4(o)	First Amending Agreement to the Amended and Restated Term Credit Facility Agreement between the Bank of Nova Scotia and other financial institutions and the registrant dated March 5, 2009.	8-K	3/6/2009	4(a)

The registrant hereby undertakes to file with the Securities and Exchange Commission, upon request, copies of any constituent instruments defining the rights of holders of long-term debt of the registrant or its subsidiaries that have not been filed herewith because the amounts represented thereby are less than 10% of the total assets of the registrant and its subsidiaries on a consolidated basis.

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(a)	Sixth Voting Agreement dated April 22, 1978, between Central Canada Potash, Division of Noranda, Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales and Texasgulf Inc.	F-1 (File No. 33-31303)	9/28/1989	10(f)
	10	(b)	Canpotex Limited Shareholders Seventh Memorandum of Agreement effective April 21, 1978, between Central Canada Potash, Division of Noranda Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as amended by Canpotex S&P amending agreement dated November 4, 1987.	F-1 (File No. 33-31303)	9/28/1989	10(g)
	10	(c)	Producer Agreement dated April 21, 1978, between Canpotex Limited and PCS Sales.	F-1 (File No. 33-31303)	9/28/1989	10(h)
	10	(d)	Canpotex/PCS Amending Agreement, dated as of October 1, 1992.	10-K	12/31/1995	10(f)
	10	(e)	Canpotex PCA Collateral Withdrawing/PCS Amending Agreement, dated as of October 7, 1993.	10-K	12/31/1995	10(g)
	10	(f)	Canpotex Producer Agreement amending agreement dated as of January 1, 1999.	10-K	12/31/2000
	10	(g)	Canpotex Producer Agreement amending agreement dated as of July 1, 2002.	10-Q	6/30/2004

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(h)	Esterhazy Restated Mining and Processing Agreement dated January 31, 1978, between International Minerals & Chemical Corporation (Canada) Limited and the registrant’s predecessor.	F-1 (File No. 33-31303)	9/28/1989	10(e)
	10	(i)	Agreement dated December 21, 1990, between International Minerals & Chemical Corporation (Canada) Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978.	10-K	12/31/1990	10(p)
	10	(j)	Agreement effective August 27, 1998, between International Minerals & Chemical (Canada) Global Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended).	10-K	12/31/1998	10(l)
	10	(k)	Agreement effective August 31, 1998, among International Minerals & Chemical (Canada) Global Limited, International Minerals & Chemical (Canada) Limited Partnership and the registrant assigning the interest in the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended) held by International Minerals & Chemical (Canada) Global Limited to International Minerals & Chemical (Canada) Limited Partnership.	10-K	12/31/1998	10(m)
	10	(l)	Potash Corporation of Saskatchewan Inc. Stock Option Plan — Directors, as amended.	10-K	12/31/2006
	10	(m)	Potash Corporation of Saskatchewan Inc. Stock Option Plan — Officers and Employees, as amended.	10-K	12/31/2006
	10	(n)	Short-Term Incentive Plan of the registrant effective January 2000, as amended.	10-K	12/31/2008
	10	(o)	Resolution and Forms of Agreement for Supplemental Retirement Income Plan, for officers and key employees of the registrant.	10-K	12/31/1995
	10	(p)	Amending Resolution and revised forms of agreement regarding Supplemental Retirement Income Plan of the registrant.	10-Q	6/30/1996	10(x)
	10	(q)	Amended and restated Supplemental Retirement Income Plan of the registrant and text of amendment to existing supplemental income plan agreements.	10-Q	9/30/2000	10(mm)
	10	(r)	Amendment, dated February 23, 2009, to the amended and restated Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(s)	Form of Letter of amendment to existing supplemental income plan agreements of the registrant.	10-K	12/31/2002	10(cc)

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(t)	Amended and restated agreement dated February 20, 2007, between the registrant and William J. Doyle concerning the Supplemental Retirement Income Plan.	10-K	12/31/2006	10(s)
	10	(u)	Amendment, dated December 24, 2008, to the amended and restated agreement, dated February 20, 2007, between the registrant and William J. Doyle concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(v)	Amendment, dated February 23, 2009, to the amended and restated agreement, dated February 20, 2007, between the registrant and William J. Doyle concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(w)	Amendment, dated February 23, 2009, to the amended and restated agreement dated August 2, 2006, between the registrant and Wayne R. Brownlee concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(x)	Amendment, dated February 23, 2009, to the amended and restated agreement, dated August 2, 1996, between the registrant and Garth W. Moore concerning the Supplemental Retirement Income Plan.	10-K	12/31/2008
	10	(y)	Supplemental Retirement Benefits Plan for U.S. Executives dated effective January 1, 1999.	10-Q	6/30/2002	10(aa)
	10	(z)	Amendment No. 1, dated December 24, 2008, to the Supplemental Retirement Plan for U.S. Executives.	10-K	12/31/2008
	10	(aa)	Amendment No. 2, dated February 23, 2009, to the Supplemental Retirement Plan for U.S. Executives.	10-K	12/31/2008
	10	(bb)	Forms of Agreement dated December 30, 1994, between the registrant and certain officers of the registrant.	10-K	12/31/1995	10(p)
	10	(cc)	Form of Agreement of Indemnification dated August 8, 1995, between the registrant and certain officers and directors of the registrant.	10-K	12/31/1995	10(q)
	10	(dd)	Resolution and Form of Agreement of Indemnification dated January 24, 2001.	10-K	12/31/2000	10(ii)
	10	(ee)	Resolution and Form of Agreement of Indemnification — July 21, 2004.	10-Q	6/30/2004	10(ii)
	10	(ff)	Chief Executive Officer Medical and Dental Benefits.	10-K	12/31/2004	10(jj)
	10	(gg)	Deferred Share Unit Plan for Non-Employee Directors, as amended.	10-Q	3/31/2008	10(bb)
	10	(hh)	U.S. Participant Addendum No. 1 to the Deferred Share Unit Plan for Non-Employee Directors.	10-K	12/31/2008	10(jj)

				Incorporated By
				Reference
Exhibit					Filing Date/	Exhibit Number
Number			Description of Document	Form	Period End Date	(if different)
	10	(ii)	Potash Corporation of Saskatchewan Inc. 2005 Performance Option Plan and Form of Option Agreement, as amended.	10-K	12/31/2006	10(cc)
	10	(jj)	Potash Corporation of Saskatchewan Inc. 2006 Performance Option Plan and Form of Option Agreement, as amended.	10-K	12/31/2006	10(dd)
	10	(kk)	Potash Corporation of Saskatchewan Inc. 2007 Performance Option Plan and Form of Option Agreement.	10-Q	3/31/2007	10(ee)
	10	(ll)	Potash Corporation of Saskatchewan Inc. 2008 Performance Option Plan and Form of Option Agreement.	10-Q	3/31/2008	10(ff)
	10	(mm)	Potash Corporation of Saskatchewan Inc. 2009 Performance Option Plan and Form of Option Agreement.	10-Q	3/31/2009
	10	(nn)	Medium-Term Incentive Plan of the registrant effective January 2009.	10-K	12/31/2008	10(qq)
	11		Statement re Computation of Per Share Earnings.
	31	(a)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	(b)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-4.A

                                                                    Exhibit 4(a)




                              TERM CREDIT AGREEMENT


                                     BETWEEN


                             THE BANK OF NOVA SCOTIA

                             AS ADMINISTRATIVE AGENT

                                       AND

                              ROYAL BANK OF CANADA

                              AS SYNDICATION AGENT

                                       AND

                        THE FINANCIAL INSTITUTIONS LISTED
                     IN SCHEDULE A HERETO AND THEIR ASSIGNS

                                   AS LENDERS

                                       AND

                     POTASH CORPORATION OF SASKATCHEWAN INC.

                                   AS BORROWER




                                                              September 25, 2001




                                      - i -


                                TABLE OF CONTENTS

                                                                          
ARTICLE 1
   1.01 DEFINED TERMS..........................................................2
   1.02 OTHER USAGES..........................................................14
   1.03 PLURAL AND SINGULAR...................................................14
   1.04 HEADINGS..............................................................14
   1.05 CURRENCY..............................................................14
   1.06 APPLICABLE LAW........................................................14
   1.07 TIME OF THE ESSENCE...................................................15
   1.08 NON-BANKING DAYS......................................................15
   1.09 CONSENTS AND APPROVALS................................................15
   1.10 AMOUNT OF OUTSTANDING ACCOMMODATION...................................15
   1.11 SCHEDULES.............................................................15
   1.12 RELIANCE ON DISCLOSURE................................................15
   1.13 EXTENSION OF CONVERSION DATE..........................................15
ARTICLE 2
   2.01 ESTABLISHMENT OF CREDIT FACILITY......................................17
   2.02 LENDERS' COMMITMENTS..................................................17
   2.03 CHANGE OF AMOUNT OF CREDIT FACILITY...................................18
   2.04 TERMINATION OF CREDIT FACILITY........................................18
ARTICLE 3
   3.01 TYPES OF ACCOMMODATIONS...............................................19
   3.02 FUNDING OF LOANS......................................................19
   3.03 FAILURE OF LENDER TO FUND LOAN........................................19
   3.04 INABILITY TO FUND U.S. DOLLAR ADVANCES IN CANADA......................20
   3.05 TIME AND PLACE OF PAYMENTS............................................21
   3.06 REMITTANCE OF PAYMENTS DUE TO LENDERS.................................21
   3.07 EVIDENCE OF INDEBTEDNESS..............................................22
   3.08 NOTICE PERIODS........................................................22
ARTICLE 4
   4.01 DRAWDOWN NOTICE.......................................................22
   4.02 ONE BORROWING.........................................................22
   4.03 FINANCING OF HOSTILE BID..............................................23
ARTICLE 5
   5.01 LIBOR LOANS...........................................................23
   5.02 ROLLOVER NOTICE.......................................................23
ARTICLE 6
   6.01 CONVERTING LOAN TO OTHER TYPE OF LOAN.................................24
   6.02 CONVERSION NOTICE.....................................................24
   6.03 ABSENCE OF NOTICE.....................................................24
   6.04 CONVERSION AFTER DEFAULT..............................................24
ARTICLE 7
   7.01 INTEREST RATES........................................................25





                                     - ii -


                                                                          
   7.02 CALCULATION AND PAYMENT OF INTEREST...................................25
   7.03 GENERAL INTEREST RULES................................................25
   7.04 SELECTION OF INTEREST PERIODS.........................................26
   7.05 STANDBY FEES..........................................................26
   7.06 ADJUSTMENT OF APPLICABLE MARGIN AND STANDBY FEE RATE..................26
ARTICLE 8
   8.01 CONDITIONS OF CREDIT..................................................26
   8.02 CHANGE OF CIRCUMSTANCES...............................................26
   8.03 ASSIGNMENT AS A RESULT OF CHANGE OF CIRCUMSTANCES.....................28
   8.04 INDEMNITY RELATING TO CREDITS.........................................28
   8.05 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY...............29
   8.06 PAYMENTS FREE AND CLEAR OF TAXES......................................30
ARTICLE 9
   9.01 REPAYMENT.............................................................31
   9.02 VOLUNTARY PREPAYMENTS.................................................31
   9.03 PAYMENT NOTICE........................................................31
ARTICLE 10
   10.01 REPRESENTATIONS AND WARRANTIES.......................................32
   10.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................35
ARTICLE 11
   11.01 AFFIRMATIVE COVENANTS................................................36
   11.02 PERFORMANCE OF COVENANTS BY AGENT....................................39
   11.03 RESTRICTIVE COVENANTS................................................39
ARTICLE 12
   12.01 CONDITIONS PRECEDENT TO ALL ACCOMMODATION............................40
   12.02 CONDITIONS PRECEDENT TO INITIAL ACCOMMODATION........................40
   12.03 WAIVER...............................................................42
ARTICLE 13
   13.01 EVENTS OF DEFAULT....................................................42
   13.02 REMEDIES CUMULATIVE..................................................45
   13.03 SET-OFF..............................................................45
ARTICLE 14
   14.01 APPOINTMENT AND AUTHORIZATION OF AGENT...............................46
   14.02 INTEREST HOLDERS.....................................................46
   14.03 CONSULTATION WITH COUNSEL............................................46
   14.04 DOCUMENTS............................................................46
   14.05 AGENT AS LENDER......................................................46
   14.06 RESPONSIBILITY OF AGENT..............................................46
   14.07 ACTION BY AGENT......................................................47
   14.08 NOTICE OF EVENTS OF DEFAULT..........................................47
   14.09 RESPONSIBILITY DISCLAIMED............................................47
   14.10 INDEMNIFICATION......................................................48
   14.11 CREDIT DECISION......................................................48






                                    - iii -


                                                                          
   14.12 SUCCESSOR AGENT......................................................48
   14.13 DELEGATION BY AGENT..................................................49
   14.14 WAIVERS AND AMENDMENTS...............................................49
   14.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING........................50
   14.16 REDISTRIBUTION OF PAYMENT............................................50
   14.17 DISTRIBUTION OF NOTICES..............................................50
ARTICLE 15
   15.01 WAIVERS..............................................................51
   15.02 NOTICES..............................................................51
   15.03 SEVERABILITY.........................................................51
   15.04 COUNTERPARTS.........................................................51
   15.05 SUCCESSORS AND ASSIGNS...............................................51
   15.06 ASSIGNMENT...........................................................51
   15.07 UNRELATED COSTS AND EXPENSES.........................................53
   15.08 ENTIRE AGREEMENT.....................................................53
   15.09 FURTHER ASSURANCES...................................................53
   15.10 JUDGMENT CURRENCY....................................................53



Schedule A - Individual Commitments
Schedule B - Compliance Certificate
Schedule C - Form of Assignment
Schedule D-1 - Opinion of Borrower's Ontario Counsel
Schedule D-2 - Opinion of Borrower's General Counsel
Schedule D-3 - Opinion of Guarantor's Delaware Counsel
Schedule E - Subsidiaries
Schedule F - Partnerships, Joint Ventures and Syndicates
Schedule G - Specific Permitted Liens
Schedule H - Additional Disclosure
Schedule I - Form of Guarantee
Schedule J - Material Litigation






                              TERM CREDIT AGREEMENT


         THIS AGREEMENT made as of the 25th day of September, 2001.

B E T W E E N:

                   THE BANK OF NOVA SCOTIA, a Canadian chartered bank

                   (herein, in its capacity as administrative agent of the
                   Lenders, called the "Agent")

                   - and -

                   Those financial institutions listed in Schedule A hereto and
                   those financial institutions to whom the foregoing or their
                   respective assigns may from time to time assign an undivided
                   interest in the Credit Facility (as defined herein) and who
                   agree to be bound by the terms hereof as a Lender

                   (herein, in their capacities as lenders to the Borrower under
                   the Credit Facility, collectively called the "Lenders" and
                   individually called a "Lender")

                   - and -

                   POTASH CORPORATION OF SASKATCHEWAN INC., a corporation
                   incorporated under the laws of the Province of Saskatchewan

                   (herein called the "Borrower").


         WHEREAS the Borrower has requested that the Lenders establish a certain
term credit facility for general corporate purposes to replace a certain term
credit facility under the term credit agreement dated October 4, 1996 between
the Borrower, The Bank of Nova Scotia, as Agent, the Lenders named therein and
certain Co-Agents named therein (as amended, the "Original Credit Agreement");

         AND WHEREAS the Lenders are prepared to provide such credit facility to
the Borrower for such purposes on the terms and conditions contained herein and
to concurrently cancel the Original Credit Agreement;

         NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
mutual covenants and agreements herein contained and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:


                                      - 2 -


                                    ARTICLE 1
                                 INTERPRETATION

1.01 DEFINED TERMS. The following defined terms shall for all purposes of this
agreement, or any amendment, substitute, supplement, replacement or addition
hereto, have the following respective meanings unless the context otherwise
specifies or requires or unless otherwise defined herein:

"ACCOMMODATION" means accommodation made available to the Borrower by the
Lenders under the Credit Facility, in each case in the manner provided in
Section 3.01.

"ACTING JOINTLY OR IN CONCERT" shall be interpreted in the manner described in
subsection 91(1) of the Securities Act (Ontario).

"AFFILIATE" shall have the meaning ascribed thereto in the Business Corporations
Act (Ontario).

"AGENCY FEE AGREEMENT" means the letter agreement dated September 25, 2001
between the Borrower and BNS, as the same may be amended, modified, supplemented
or replaced from time to time.

"ALTERNATE BASE RATE CANADA" means, for any particular day, the variable rate of
interest per annum, calculated on the basis of a 360-day year, which is equal to
the greater of (a) the Base Rate Canada for such day and (b) the aggregate of
(i) the Federal Funds Rate for such day and (ii) 1/2 of 1% per annum.

"APPLICABLE MARGIN" means, at any time, the applicable rate per annum set forth
in the table below for the applicable S & P rating and the applicable
Utilization Rate:



- -----------------------------------------------------------------------------------------------------
 S & P'S CORPORATE CREDIT OR                               UTILIZATION RATE
   UNSECURED DEBT RATING OF
           BORROWER
- -----------------------------------------------------------------------------------------------------
                                LESS THAN 1/3     MORE THAN 1/3 AND LESS THAN 2/3    MORE THAN 2/3
- -----------------------------------------------------------------------------------------------------
                                                                           
A- or above                    .50% per annum           .575% per annum              .65% per annum
- -----------------------------------------------------------------------------------------------------
BBB+                           .60% per annum           .675% per annum              .75% per annum
- -----------------------------------------------------------------------------------------------------
BBB                            .70% per annum           .775% per annum              .85% per annum
- -----------------------------------------------------------------------------------------------------
BBB-                           .85% per annum           .925% per annum             1.00% per annum
- -----------------------------------------------------------------------------------------------------
BB+ or below or unrated       1.10% per annum          1.175% per annum             1.25% per annum
- -----------------------------------------------------------------------------------------------------



                                      - 3 -


"AVAILABLE ACCOMMODATION" means, at any particular time, the amount, if any, by
which the amount of the Credit Facility (as such amount may be reduced from time
to time pursuant to the terms hereof) at such time exceeds the aggregate amount
of Accommodation outstanding at such time.

"BANKING DAY" means any day other than a Saturday or a Sunday on which banks
generally are open for normal banking business in Toronto and New York and, with
respect to transactions involving LIBOR Loans, on which transactions may be
undertaken in the London interbank market.

"BASE RATE CANADA" means, for any particular day, the variable rate of interest
per annum, calculated on the basis of a 360-day year, determined by the Agent
for such day as its base rate for U.S. dollar loans made by the Agent in Canada,
such base rate being a variable per annum reference rate of interest adjusted
automatically upon change by the Agent.

"BASE RATE CANADA LOAN" means an Accommodation under the Credit Facility which
is denominated in United States dollars and upon which interest accrues at a
rate referrable to the Alternate Base Rate Canada.

"BNS" means The Bank of Nova Scotia in its individual capacity and not in its
capacity as the Agent or as a Lender.

"BORROWING" means the outstanding Accommodation made available to the Borrower
under the Credit Facility from time to time, subject to rollovers from time to
time pursuant to Article 5 and conversions from time to time pursuant to Article
6.

"BRANCH OF ACCOUNT" means the Investment Banking Division, Loan Administration
and Agency Services, 44 King Street West, Toronto, Ontario, or such other branch
of the Agent located in Canada as the Borrower and the Agent may agree upon.

"CAPITAL" means, at any particular time, the aggregate of:

     (a)  Debt at such time; and

     (b)  Equity at such time.

"CODE" means the Internal Revenue Code of the United States, as amended from
time to time, and any successor statute.

"COMMITMENT SHARE" means, with respect to a particular Lender at a particular
time, the ratio of the Undrawn Commitment of such Lender at such time to the
aggregate of the Undrawn Commitments of all of the Lenders at such time.

"COMPANIES" means the Borrower and the Subsidiaries.


                                      - 4 -


"CONVERSION DATE" means September 24, 2002, as such date may be extended
pursuant to Section 1.13.

"CONVERSION NOTICE" shall have the meaning ascribed thereto in Section 6.02.

"CREDIT FACILITY" means the term credit facility established by the Lenders
pursuant to Section 2.01.

"DEBT" means, at any particular time, the aggregate of (without duplication):

     (a)  the aggregate of the amounts which would, in accordance with generally
          accepted accounting principles, be classified on the consolidated
          balance sheet of the Borrower at such time as indebtedness for
          borrowed money of the Borrower and as capital leases of the Borrower
          (but specifically excluding Subordinated Debt); and

     (b)  the aggregate indebtedness for borrowed money of entities other than
          the Companies to the extent guaranteed by any of the Companies at such
          time.

"DEFAULT" means any event which is or which, with the passage of time, the
giving of notice or both, would be an Event of Default.

"DESIGNATED ACCOUNT" means an account of the Borrower maintained by the Agent at
the Branch of Account for the purposes of transactions under this agreement.

"DRAWDOWN NOTICE" shall have the meaning ascribed thereto in Section 4.01.

"EBITDA" means, for any particular period, Net Income of the Borrower for such
period plus, to the extent deducted in the determination of Net Income of the
Borrower for such period, the aggregate of

     (a)  Interest Expense of the Borrower for such period;

     (b)  consolidated income tax expenses (both current and deferred) of the
          Borrower (including, without limitation, those reported on the
          consolidated income statement of the Borrower as "provincial mining
          and other taxes") for such period; and

     (c)  consolidated depreciation, amortization and other non-cash expenses of
          the Borrower for such period.

"ENVIRONMENTAL LAWS" means all applicable federal, state, provincial or local
statutes, laws, ordinances, codes, rules, regulations, consent decrees and
administrative orders having the force of law and relating to public health or
the protection of the environment.


                                      - 5 -


"EQUITY" means, at any particular time, the aggregate of (i) the amount which
would, in accordance with generally accepted accounting principles, be
classified upon the consolidated balance sheet of the Borrower at such time as
shareholder's equity and (ii) the amount of Subordinated Debt at such time.

"EQUITY SECURITY" shall have the meaning ascribed thereto in subsection 89(1) of
the Securities Act (Ontario).

"ERISA" means the Employee Retirement Income Security Act of 1974 of the United
States, as amended from time to time, and any successor statute.

"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

"ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

"EVENT OF DEFAULT" means any one of the events set forth in Section 13.01.

"EXCHANGE ACT" means the Securities Exchange Act of 1934 of the United States,
as amended from time to time, and any successor statute, and the regulations
promulgated thereunder.

"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Banking Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Banking Day, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in overnight
federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three leading brokers of federal funds transactions in New York City selected by
the Agent.


                                      - 6 -


"FEDERAL RESERVE BANK" means the Federal Reserve Bank of New York.

"FINANCIAL STATEMENTS" means the audited consolidated financial statements of
the Borrower for the fiscal year ended on December 31, 2000.

"FISCAL QUARTER" means any of the three-month periods ending on the last day of
March, June, September and December in each year.

"FISCAL YEAR" means any of the twelve-month periods ending on the last day of
December in each year.

"FRB" means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.

"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles in effect in Canada from time to time consistently applied.

"GOVERNMENTAL AUTHORITY" means any nation or government, any state, province or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and with respect to any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing when such
corporation or entity is acting pursuant to or performing the functions of such
nation, government, state, province, political subdivision or central bank.

"GUARANTEE" means a guarantee of the Obligations in the form set forth in
Schedule I, executed and delivered by the Guarantor.

"GUARANTOR" means PCS Nitrogen, Inc.

"HAZARDOUS MATERIALS" means any pollutant or contaminant or hazardous or toxic
chemical, material or substance within the meaning of any applicable federal,
state, provincial or local law, regulation, ordinance or requirement (including
consent decrees and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous or toxic waste, substance or
material or concerning the environment or public health, all as in effect on the
applicable date.

"INDIVIDUAL COMMITMENT" means, with respect to a particular Lender, the amount
set forth in Schedule A attached hereto, as reduced or amended from time to time
pursuant to Sections 1.13(b), 1.13(d), 2.03, 2.04, 8.03 and 15.06, as the
individual commitment of such Lender under the Credit Facility.


                                      - 7 -


"INTEREST EXPENSES" of any particular Person means, for any particular period,
the amount which would, in accordance with generally accepted accounting
principles, be classified on the consolidated income statement of such Person
for such period as gross interest expenses.

"INTEREST PERIOD" means, in the case of any LIBOR Loan, the applicable period
for which interest on such Loan shall be calculated pursuant to Article 7.

"LIBOR" means, for a particular Interest Period, the interest rate per annum,
calculated on the basis of a 360-day year, determined by the Agent to be (i) the
arithmetic average (rounded upwards to the nearest 1/16 of 1%) of the interest
rates per annum of the LIBOR Reference Lenders that appear for such Interest
Period on the Telerate Screen Page 3750 for the LIBOR Reference Lenders at
approximately 11:00 a.m. (London time) on the second Banking Day prior to the
commencement of such Interest Period or (ii) if such rate does not appear on
such Page at such time or such Page or a substitute therefor is not available at
such time, the arithmetic average (rounded upwards to the nearest 1/16 of 1%) of
the rates of interest per annum at which the LIBOR Reference Lenders offer
deposits in United States dollars to leading banks in the London interbank
market at approximately 11:00 a.m. (London time) on the second Banking Day prior
to the commencement of such Interest Period, in each case for a deposit period
comparable to such Interest Period and in an amount approximately equal to the
amount of the LIBOR Loan to be outstanding during such Interest Period.

"LIBOR LOAN" means an Accommodation under the Credit Facility which is
denominated in United States dollars and upon which interest accrues at a rate
referrable to LIBOR.

"LIBOR REFERENCE LENDERS" means The Bank of Nova Scotia, Royal Bank of Canada
and such other Lender as is mutually agreed to by the Agent and the Borrower.

"LIEN" means any deed of trust, mortgage, charge, hypothec, assignment, pledge,
lien, vendor's privilege or other security interest or encumbrance of whatever
kind or nature, regardless of form and whether consensual or arising by law
(statutory or otherwise), that secures the payment of any indebtedness or
liability or the observance or performance of any obligation.

"LOAN DOCUMENTS" means this agreement and the Guarantee.

"LOANS" means LIBOR Loans and Base Rate Canada Loans.

"LONG TERM DEBT" means, at any particular time, that portion of Debt at such
time which would not, in accordance with generally accepted accounting
principles, be considered to be current liabilities at such time.

"MAJORITY LENDERS" means (i) at any particular time that there is Accommodation
outstanding hereunder, such group of Lenders which, in the aggregate, have
Outstanding Accommodations which are equal to at least two-thirds of the total
amount of the Outstanding Accommodations of all of the Lenders at such time or
(ii) at any particular time that there is no Accommodation



                                      - 8 -


outstanding hereunder, such group of Lenders which, in the aggregate, have
Individual Commitments which are equal to at least two-thirds of the total
amount of the Individual Commitments of all of the Lenders at such time.

"MATERIAL ADVERSE CHANGE" means any change of circumstances or any event which
would have a Material Adverse Effect.

"MATERIAL ADVERSE EFFECT" means an adverse effect on the financial condition,
business, assets, properties or prospects of the Borrower on a consolidated
basis which, individually or as part of a series of adverse effects, would have
a material adverse effect on the ability of the Borrower to perform any of its
payment obligations hereunder.

"MATERIAL SUBSIDIARIES" means PCS Sales (USA) Inc., Phosphate Holding Company,
Inc., PCS Finance LLC, PCS Phosphate Company, Inc., White Springs Agricultural
Chemicals, Inc., White Springs Phosphate, Inc., the Guarantor and any other
subsidiary of the Borrower whose book value of assets is greater than 20% of the
book value of the assets of the Borrower on a consolidated basis or whose gross
sales are greater than 20% of the gross sales of the Borrower on a consolidated
basis.

"MATURITY DATE" means the day which is one year following the Conversion Date.

"MULTIEMPLOYER PLAN" means a multiemployer plan, within the meaning of Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.

"NET INCOME" of a particular Person means, for any particular period, the amount
which would, in accordance with generally accepted accounting principles, be
classified on the consolidated income statement of such Person for such period
as the net income after all unusual and extraordinary items other than any gains
or losses on the disposition of property, plant and equipment and any non-cash
writedowns of assets.

"OBLIGATIONS" means all advances, debts, liabilities, obligations, covenants and
duties arising under any Loan Document, owing by the Borrower to the Agent and
the Lenders, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising.

"OFFER TO ACQUIRE", "OFFEREE ISSUER" and "OFFEROR'S SECURITIES" shall each have
the respective meaning ascribed thereto in subsection 89(1) of the Securities
Act (Ontario).

"OFFICIAL BODY" means any national government or government of any political
subdivision thereof, or any agency, authority, board, central bank, monetary
authority, commission, department or instrumentality thereof, or any court,
tribunal, grand jury, mediator or arbitrator,



                                      - 9 -


whether foreign or domestic, or any non-governmental regulating authority to the
extent that the rules, regulations and orders of such body have the force of
law.

"OUTSTANDING ACCOMMODATION" means, with respect to a particular Lender at a
particular time, the aggregate amount of Accommodation outstanding at such time
which has been made available by such Lender.

"PAYMENT NOTICE" shall have the meaning ascribed thereto in Section 9.03.

"PAYMENT SHARE" means, with respect to a particular Lender at a particular time,
the ratio of Outstanding Accommodation of such Lender at such time to the
aggregate of Outstanding Accommodations of all of the Lenders at such time.

"PBGC" means Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to any of its principal functions under ERISA.

"PENSION PLAN" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.

"PERMITTED LIENS" means any one or more of the following with respect to the
assets of the Companies:

     (a)  inchoate or statutory Liens for taxes, assessments and other
          governmental charges or levies which are not delinquent (taking into
          account any relevant grace periods) or the validity of which are
          currently being contested in good faith by appropriate proceedings and
          in respect of which there shall have been set aside a reserve
          (segregated to the extent required by generally accepted accounting
          principles) in an amount which is adequate therefor;

     (b)  inchoate or statutory Liens of contractors, subcontractors, mechanics,
          workers, suppliers, materialmen, carriers and others in respect of
          construction, maintenance, repair or operation of assets of the
          Companies, provided that such Liens are related to obligations not due
          or delinquent (taking into account any applicable grace or cure
          periods), are not registered as encumbrances against title to any
          assets of the Companies and adequate holdbacks are being maintained as
          required by applicable legislation or such Liens are being contested
          in good faith by appropriate proceedings and in respect of which there
          shall have been set aside a reserve (segregated to the extent required
          by generally accepted accounting principles) in an amount which is
          adequate with respect thereto and provided further that such Liens do
          not in the aggregate materially detract from




                                     - 10 -


          the value of the assets of the Companies encumbered thereby or
          materially interfere with the use thereof in the operation of the
          business of the Companies;

     (c)  easements, rights-of-way, servitudes, restrictions and similar rights
          in real property comprised in the assets of the Companies or interests
          therein granted or reserved to other persons, provided that such
          rights do not in the aggregate materially detract from the value of
          the assets of the Companies subject thereto or materially interfere
          with the use thereof in the operation of the business of the
          Companies;

     (d)  title defects or irregularities which are of a minor nature and which
          do not in the aggregate materially detract from the value of the
          assets of the Companies encumbered thereby or materially interfere
          with the use thereof in the operation of the business of the
          Companies;

     (e)  Liens incidental to the conduct of the business or the ownership of
          the assets of the Companies (other than those described in clauses (f)
          and (g) of this definition) which were not incurred in connection with
          the borrowing of money or the obtaining of advances or credit
          (including, without limitation, unpaid purchase price), and which do
          not in the aggregate materially detract from the value of the assets
          of the Companies encumbered thereby or materially interfere with the
          use thereof in the operation of the business of the Companies;

     (f)  Liens securing appeal bonds and other similar Liens arising in
          connection with court proceedings (including, without limitation,
          surety bonds, security for costs of litigation where required by law
          and letters of credit) or any other instruments serving a similar
          purpose;

     (g)  attachments, judgments and other similar Liens arising in connection
          with court proceedings; provided, however, that such Liens are in
          existence for less than 30 days after the entry therefor or the
          execution or other enforcement of such Liens is effectively stayed and
          the claims secured thereby are being actively contested in good faith
          and by appropriate proceedings;

     (h)  the reservations, limitations, provisos and conditions, if any, (i)
          expressed in any original grant from the Crown of any real property or
          any interest therein or in any comparable grant in jurisdictions other
          than Canada or (ii) expressed pursuant to the Land Titles Act
          (Saskatchewan);

     (i)  Liens, charges or other security interests given to a public utility
          or any municipality or governmental or other public authority when
          required by such utility or other authority in connection with the
          operation of the business or the ownership of the assets of the
          Companies, provided that such Liens do not in the



                                     - 11 -


          aggregate reduce the value of the assets of the Companies or
          materially interfere with the use thereof in the operation of the
          business of the Companies;

     (j)  servicing agreements, development agreements, site plan agreements,
          and other agreements with governmental or public authorities
          pertaining to the use or development of any of the assets of the
          Companies, provided same are complied with including, without
          limitation, any obligations to deliver letters of credit and other
          security as required;

     (k)  applicable municipal and other governmental restrictions, including
          municipal by-laws and regulations, affecting the use of land or the
          nature of any structures which may be erected thereon, provided such
          restrictions have been complied with;

     (l)  Purchase Money Obligations arising in the ordinary course of business,
          where "Purchase Money Obligations" means any Lien created, issued or
          assumed by the Companies to secure indebtedness assumed as part of, or
          issued or incurred to pay or provide funds to pay, all or a part of
          the purchase price of any property (other than the securities of any
          Subsidiary or of any company which becomes a Subsidiary upon such
          purchase), provided that such Lien is limited to the property so
          acquired and is created, issued or assumed substantially concurrently
          with the acquisition of such property;

     (m)  Liens securing industrial revenue bonds issued by the Companies;

     (n)  the right reserved to or vested in any Official Body by any statutory
          provision, or by the terms of any lease, licence, franchise, grant or
          permit of any of the Companies, to terminate any such lease, licence,
          franchise, grant or permit, or to require annual or other payments as
          a condition to the continuance thereof;

     (o)  the Liens set forth in Schedule G;

     (p)  any amounts payable and obligations owing to any Person in respect of
          royalty interests held by such Person on the production of minerals by
          the Companies;

     (q)  the interests of lessors pursuant to all leases, including the capital
          leases, under which a Company is the lessee;

     (r)  Liens securing the indebtedness of companies which become Subsidiaries
          after the date hereof, which Liens and indebtedness are outstanding on
          the date the relevant company became a Subsidiary, provided that such
          indebtedness does not at any time exceed $75,000,000 in the aggregate;


                                     - 12 -


     (s)  any deemed security interest in accounts arising as a result of the
          securitization thereof by the transfer thereof to a securitized asset
          pool;

     (t)  the extension, renewal or refinancing of any Permitted Lien, provided
          that the amount so secured does not exceed the original amount secured
          immediately prior to such extension, renewal or refinancing; and

     (u)  Liens granted to the Agent and the Lenders to secure the indebtedness
          hereunder.

"PERSON" means any natural person, corporation, firm, partnership, joint
venture, joint stock company, incorporated or unincorporated association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.

"PLAN" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower or any of its subsidiaries sponsors or maintains or to which
the Borrower or any of its subsidiaries makes, is making, or is obligated to
make contributions and includes any Pension Plan.

"PROPERTY" means all of the property owned, operated or used by the Companies.

"PRO RATA SHARE" means, with respect to a particular Lender at a particular
time, the ratio of the Individual Commitment of such Lender at such time to the
aggregate of the Individual Commitments of all of the Lenders at such time.

"QUALIFYING BID" means a Take-Over Bid which, based on such evidence as a
particular Lender, acting reasonably and in good faith, considers to be
satisfactory, is or will be supported by the management and/or directors of the
offeree issuer, which support continues from the date upon which the Borrower
gives notice of such Take-Over Bid to the Agent pursuant to Section 4.03 to the
date upon which the offeror (as defined in the definition of Take-Over Bid)
takes up and pays for the voting securities or equity securities forming the
subject matter of the Take-Over Bid.

"REPAYMENT AMOUNT" means the aggregate amount of Accommodation outstanding under
the Credit Facility at 5:00 p.m. (Toronto time) on the Conversion Date.

"REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA
or the regulations thereunder, other than any such event for which the thirty
(30) day notice requirement under ERISA has been waived in regulations issued by
the PBGC.

"ROLLOVER NOTICE" shall have the meaning ascribed thereto in Section 5.02.

"S & P" means Standard & Poor's Rating Services and any successor thereto.

"STANDBY FEE RATE" means, at any time, the applicable rate per annum set forth
in the table below opposite the applicable S & P rating:


                                     - 13 -




- -------------------------------------------------------------------------------
   S & P'S CORPORATE CREDIT OR           STANDBY FEE RATE
UNSECURED DEBT RATING OF BORROWER
- -------------------------------------------------------------------------------
                                      
A- or above                              .10% per annum
- -------------------------------------------------------------------------------
BBB+                                     .125% per annum
- -------------------------------------------------------------------------------
BBB                                      .15% per annum
- -------------------------------------------------------------------------------
BBB-                                     .175% per annum
- -------------------------------------------------------------------------------
BB+ or below or unrated                  .25% per annum
- -------------------------------------------------------------------------------


"SUBORDINATED DEBT" means, at any particular time, unsecured indebtedness of the
Borrower (for greater certainty, excluding the Subsidiaries) which would
otherwise be Debt but which is subordinated in writing, on terms satisfactory to
the Majority Lenders acting reasonably (including, without limitation,
subordination and postponement of principal repayments and restrictions on
rights to accelerate and commence proceedings), to the indebtedness of the
Borrower to the Agent and the Lenders hereunder.

"SUBSIDIARIES" shall have the meaning ascribed thereto in the Business
Corporations Act (Ontario).

"SUBSIDIARIES" means the subsidiaries of the Borrower including, without
limitation, those identified as such in Schedule E (as such Schedule is updated
pursuant to Section 11.01(a)(iii)).

"TAKE-OVER BID" means an offer to acquire voting securities or equity securities
of a class made by the Borrower or any subsidiary or affiliate of the Borrower
alone or acting jointly in concert with any other Person (collectively, the
"offeror") to any security holder of the offeree issuer, where the securities
subject to the offer to acquire, together with the offeror's securities,
constitute in the aggregate 20% or more of the outstanding securities of that
class of securities at the date of the offer to acquire, but excluding any such
offer which, under the securities laws of the jurisdiction in which such offer
is made, would be exempt from the formal requirements of a take-over bid.

"TANGIBLE NET WORTH" means, at any particular time, Equity at such time less the
aggregate of the amounts which would, in accordance with generally accepted
accounting principles, be classified on the consolidated balance sheet of the
Borrower at such time as intangible assets, including, without limitation,
goodwill and deferred expenses.

"TOTAL ASSETS" means, at any particular time, the amount which would, in
accordance with generally accepted accounting principles, be classified on the
consolidated balance sheet of the Borrower at such time as total assets.


                                     - 14 -


"UNDRAWN COMMITMENT" means, with respect to a particular Lender at a particular
time, the Individual Commitment of such Lender at such time less the Outstanding
Accommodation of such Lender at such time.

"UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

"U.S. DOLLAR EQUIVALENT" means as of any particular date, with reference to any
amount expressed in Canadian dollars (the "Canadian Dollar Amount"), the amount
expressed in United States dollars which would be required to buy the Canadian
Dollar Amount using the noon spot rate of exchange for Canadian interbank
transactions applied in converting United States dollars into Canadian dollars
published by the Bank of Canada for such date.

"UTILIZATION RATE" means, at any particular time, the fraction obtained by
dividing the amount of Accommodation outstanding under the Credit Facility at
such time by the amount of the Credit Facility at such time.

"VOTING SECURITIES" shall have the meaning ascribed thereto in subsection 1(1)
of the Securities Act (Ontario).

1.02 OTHER USAGES. References to "this agreement", "the agreement", "hereof",
"herein", "hereto" and like references refer to this Term Credit Agreement and
not to any particular Article, Section or other subdivision of this agreement.
Any references herein to any agreements (including, without limitation, this
agreement) or documents shall mean such agreements or documents as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.

1.03 PLURAL AND SINGULAR. Where the context so requires, words importing the
singular number shall include the plural and vice versa.

1.04 HEADINGS. The division of this agreement into Articles and Sections and the
insertion of headings in this agreement are for convenience of reference only
and shall not affect the construction or interpretation of this agreement.

1.05 CURRENCY. Unless otherwise specified herein, all statements of or
references to dollar amounts in this agreement shall mean lawful money of the
United States of America.

1.06 APPLICABLE LAW. This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein. Any legal action or proceeding with respect to this
agreement may be brought in the courts of the Province of Ontario and, by
execution and delivery of this agreement, the parties hereby accept for
themselves and in respect of their property, generally and unconditionally, the
non-exclusive



                                     - 15 -


jurisdiction of the aforesaid courts. Each party irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party to the address prescribed by Section 15.02, such
service to become effective when received. Nothing herein shall limit the right
of any party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against any other party in any other
jurisdiction.

1.07 TIME OF THE ESSENCE. Time shall in all respects be of the essence of this
agreement.

1.08 NON-BANKING DAYS. Subject to Section 7.04(c), whenever any payment to be
made hereunder shall be stated to be due or any action to be taken hereunder
shall be stated to be required to be taken on a day other than a Banking Day,
such payment shall be made or such action shall be taken on the next succeeding
Banking Day and, in the case of the payment of any amount, the extension of time
shall be included for the purposes of computation of interest, if any, thereon.

1.09 CONSENTS AND APPROVALS. Whenever the consent or approval of a party hereto
is required in a particular circumstance, unless otherwise expressly provided
for herein, such consent or approval shall not be unreasonably withheld or
delayed by such party.

1.10 AMOUNT OF OUTSTANDING ACCOMMODATION. Any reference herein to the amount of
Accommodation outstanding shall mean, at any particular time, in the case of a
Base Rate Canada Loan or a LIBOR Loan, the principal amount thereof.

1.11 SCHEDULES. Each and every one of the schedules which is referred to in this
agreement and attached to this agreement shall form a part of this agreement.

1.12 RELIANCE ON DISCLOSURE. Where in connection with any representation or
warranty or event of default, the Borrower has made a disclosure of certain
facts herein, it is acknowledged by all of the parties hereto that such
disclosure has been made in good faith by the Borrower and for purposes of
greater certainty and that:

     (a)  such disclosure is not an admission by the Borrower that such facts
          constitute a Material Adverse Change or Material Adverse Effect; and

     (b)  the nature of such disclosure shall not be relied upon by any of the
          parties hereto as evidence of what constitutes a Material Adverse
          Change or Material Adverse Effect.

1.13 EXTENSION OF CONVERSION DATE.

     (a) The Borrower may, by written notice given to the Agent at least 60 days
but not more than 90 days prior to the then current Conversion Date, request
that the Conversion Date be extended to a date which is 364 days following the
then current Conversion Date. Such



                                     - 16 -


extension shall become effective on the then current Conversion Date if, but
only if, all of the Lenders notify the Agent in writing that they consent to
such extension (whether such notification is provided either initially or after
the completion of the procedures set forth in clauses (b), (c) and (d) below) at
least 10 days prior to the then current Conversion Date, which consent may be
withheld by the Lenders in their sole and absolute discretion. Any such notice
to the Agent of consent to such extension which is given to the Agent more than
30 days prior to the then current Conversion Date shall be revocable by the
Lender until the 30th day prior to the then current Conversion Date.

     (b) If the Borrower makes a request for an extension of the then current
Conversion Date pursuant to Section 1.13(a), the Agent shall forthwith notify
the Lenders of such request and each Lender shall, at least 30 days prior to the
then current Conversion Date, notify the Agent as to whether or not it consents
to such extension. If a group of Lenders (collectively, the "Extending Lenders"
and individually, an "Extending Lender") whose Individual Commitments constitute
in the aggregate at the time of such request at least 80% of the total
Individual Commitments at such time have so notified the Agent that they consent
to such extension (which notices have not been revoked) at least 30 days prior
to the then current Conversion Date, and the remaining Lenders (collectively,
the "Non-Extending Lenders" and individually, a "Non-Extending Lender") have
either failed to so notify the Agent or have so notified the Agent that they do
not consent to such extension at least 30 days prior to the then current
Conversion Date, then the Borrower may indicate to the Agent in writing that it
desires to replace the Non-Extending Lenders with one or more of the Extending
Lenders, and the Agent shall then forthwith give notice to the Extending Lenders
that any Extending Lender or Extending Lenders may, in the aggregate, assume all
(but not part) of the Non-Extending Lenders' Individual Commitments and
obligations hereunder and, in the aggregate, acquire all (but not part) of the
rights of the Non-Extending Lenders hereunder (but in no event shall any
Extending Lender or the Agent be obliged to so do). If one or more Extending
Lenders shall so agree in writing (collectively, the "Assenting Lenders" and
individually, an "Assenting Lender") with respect to such acquisition and
assumption, the Individual Commitments and the rights and obligations of each
such Assenting Lender hereunder shall be increased by its respective pro rata
share (based on the relative Individual Commitments of the Assenting Lenders) of
the Non-Extending Lenders' Individual Commitments and rights and obligations
hereunder on a date no later than 20 days prior to the then current Conversion
Date but otherwise mutually acceptable to the Assenting Lenders and the
Borrower. On such date, the Assenting Lender shall pay to each Non-Extending
Lender the advances of such Non-Extending Lender then outstanding, together with
all interest accrued thereon and all other amounts owing to such Non-Extending
Lender hereunder, and, upon such payment by the Assenting Lenders, such
Non-Extending Lender shall cease to be a "Lender" for purposes of this agreement
and shall no longer have any obligations hereunder. Upon the assumption of such
Non-Extending Lender's Individual Commitment as aforesaid by an Assenting
Lender, Schedule A hereto shall be deemed to be amended to increase the
Individual Commitment of such Assenting Lender by the respective amounts of such
assumption and to reduce the Individual Commitment of such Non-Extending Lender
to nil.


                                     - 17 -


     (c) If all of the Non-Extending Lenders' Individual Commitments and rights
and obligations hereunder are not acquired and assumed by the Extending Lenders
pursuant to Section 1.13(b), each Non-Extending Lender shall use its best
efforts to sell on a timely basis (i.e., on or before a date no later than 10
days prior to the then current Conversion Date) its remaining Individual
Commitment and rights and obligations hereunder to a Purchasing Lender (as
defined in Section 15.06(c)) pursuant to Section 15.06(c), which Purchasing
Lender is prepared to consent to the requested extension of the Conversion Date.
If the Borrower identifies to a Non-Extending Lender such a specific Purchasing
Lender, such Non-Extending Lender shall sell its remaining Individual Commitment
and rights and obligations hereunder to such Purchasing Lender.

         (d) If no sale has been made pursuant to Section 1.13(c) by the date
which is 10 days prior to the then Conversion Date, the Borrower may prepay on
such date all Accommodations made available to it by each Non-Extending Lender
together with all accrued and unpaid fees and interest with respect thereto
(provided that, with respect to any such Accommodations which are LIBOR Loans,
they may be so prepaid as they mature), whereupon the Individual Commitment of
such Non-Extending Lender shall be reduced to nil and such Non-Extending Lender
shall cease to be a Lender hereunder.

                                    ARTICLE 2
                                 CREDIT FACILITY

2.01 ESTABLISHMENT OF CREDIT FACILITY. Subject to the terms and conditions
hereof, the Lenders hereby establish in favour of the Borrower a term credit
facility (the "Credit Facility") in the amount of U.S. $650,000,000.

2.02 LENDERS' COMMITMENTS. Subject to the terms and conditions hereof, the
Lenders severally agree to make Accommodation available to the Borrower under
the Credit Facility from time to time provided that the aggregate amount of
Accommodation to be made available by each Lender under the Credit Facility
shall not at any time exceed the Individual Commitment of such Lender and
further provided that the aggregate amount of Accommodation outstanding under
the Credit Facility shall not at any time exceed the amount of the Credit
Facility. All Accommodation requested under the Credit Facility shall be made
available to the Borrower contemporaneously by all of the Lenders. Each Lender
shall provide to the Borrower its Commitment Share of each Accommodation,
whether such Accommodation is made available or continued, as the case may be,
by way of drawdown, rollover or conversion. The number of different types of
Accommodations outstanding at any time shall not exceed ten and, for such
purposes, LIBOR Loans having different Interest Periods shall constitute
different types of Accommodations. No Lender shall be responsible for any
default by any other Lender in its obligation to provide its Commitment Share of
any Accommodation nor shall the Individual Commitment of any Lender be increased
as a result of any such default of another Lender. The failure of any Lender to
make available to the Borrower its Commitment Share of any Accommodation shall
not relieve any other Lender of its obligation hereunder to make available




                                     - 18 -


to the Borrower its Commitment Share of such Accommodation. Notwithstanding any
other provision hereof, the Agent is authorized by the Borrower and the Lenders
to allocate amongst the Lenders the LIBOR Loans to be advanced in such manner
and amounts as the Agent may, in its sole and unfettered discretion acting
reasonably, consider necessary, rounding up or down, so as to ensure that no
Lender is required to advance a LIBOR Loan for a fraction of U.S. $100,000.

2.03 CHANGE OF AMOUNT OF CREDIT FACILITY. At 5:00 p.m. (Toronto time) on the
Conversion Date, the amount of the Credit Facility shall be permanently reduced
to the aggregate amount of Accommodation outstanding under the Credit Facility
at such time. The amount of the Credit Facility will be permanently reduced at
the time of and by the amount of each prepayment pursuant to Section 1.13(d) and
each prepayment or repayment after the Conversion Date pursuant to Article 9.
The Borrower may, from time to time on or prior to the Conversion Date and upon
two Banking Days' notice to the Agent, reduce the amount of the Credit Facility
to the extent the Credit Facility is not utilized. Upon any change in the amount
of the Credit Facility (other than a reduction thereof by reason of a prepayment
pursuant to Section 1.13(d)), the Individual Commitment of each Lender shall
thereupon be correspondingly changed by an amount equal to such Lender's Pro
Rata Share of the amount of such change in the amount of the Credit Facility.

2.04 TERMINATION OF CREDIT FACILITY. The Credit Facility shall terminate upon
the earliest to occur of:

     (a)  the Maturity Date;

     (b)  the termination of the Credit Facility in accordance with Section
          13.01; and

     (c)  the date on which the Credit Facility has been permanently reduced to
          zero pursuant to Section 2.03.

Upon the termination of the Credit Facility, (i) the right of the Borrower to
obtain or maintain Accommodation under the Credit Facility and all of the
obligations of the Lenders to make Accommodation available under the Credit
Facility shall automatically terminate and (ii) the Individual Commitment of
each Lender shall be reduced to nil.


                                     - 19 -



                                    ARTICLE 3
                  GENERAL PROVISIONS RELATING TO ACCOMMODATIONS

3.01 TYPES OF ACCOMMODATIONS. Subject to the terms and conditions hereof, the
Borrower may obtain and maintain Accommodation under the Credit Facility by way
of one or more Base Rate Canada Loans and, subject to availability of LIBOR
funding in the financial markets, LIBOR Loans.

3.02 FUNDING OF LOANS. Each Lender shall make available to the Agent its
Commitment Share of the principal amount of each Loan under the Credit Facility
prior to 11:30 a.m. (Toronto time) on the date of the Accommodation. The Agent
shall, upon fulfilment by the Borrower or waiver by the Majority Lenders of the
terms and conditions set forth in Article 12, make such funds available to the
Borrower on the date of the Accommodation by crediting the Designated Account
unless otherwise irrevocably authorized and directed in the Drawdown Notice.
Unless the Agent has been notified by a Lender prior to 11:30 a.m. (Toronto
time) on the date of the Accommodation that such Lender will not make available
to the Agent its Commitment Share of such Loan, the Agent may assume that such
Lender has made such portion of the Loan available to the Agent on the date of
the Accommodation in accordance with the provisions hereof and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Agent has made such assumption, to the extent such
Lender shall not have so made its Commitment Share of the Loan available to the
Agent, such corresponding amount made available by the Agent shall not
constitute a Loan hereunder, and the Agent shall be entitled to recover from
such Lender, by way of reimbursement, such corresponding amount together with
all reasonable costs incurred by the Agent in connection therewith and interest
thereon (calculated at the then prevailing interbank rate for each day from the
date such amount is made available to the Borrower until such amount is
reimbursed to the Agent), for each day from the date such amount was made
available to the Borrower until such amounts are reimbursed; provided that if
the Lender fails to pay then the Borrower shall reimburse such amounts to the
Agent. The amount payable by such Lender to the Agent pursuant hereto shall be
set forth in a certificate delivered by the Agent to such Lender and the
Borrower (which certificate shall contain reasonable details of how the amount
payable is calculated) and shall constitute prima facie evidence of such amount
payable. If such Lender makes the payment to the Agent required herein, the
amount so paid shall constitute such Lender's Commitment Share of the Loan for
purposes of this agreement and shall entitle the Lender to all rights and
remedies against the Borrower in respect of such Loan. The failure of any Lender
to make available to the Agent its Commitment Share of a Loan shall not relieve
any other Lender of its obligation hereunder to make available to the Agent its
Commitment Share of the Loan on the date of the Accommodation.

3.03 FAILURE OF LENDER TO FUND LOAN. If any Lender fails to make available to
the Agent its Commitment Share of any Loan under the Credit Facility as required
(such Lender being herein called the "Defaulting Lender") and the Agent has not
funded pursuant to Section 3.02, the Agent shall forthwith give notice of such
failure by the Defaulting Lender to the Borrower



                                     - 20 -


and the other Lenders and such notice shall state that any Lender may make
available to the Agent all or any portion of the Defaulting Lender's Commitment
Share of such Loan (but in no way shall any other Lender or the Agent be obliged
to do so) in the place and stead of the Defaulting Lender. If more than one
Lender gives notice that it is prepared to make funds available in the place and
stead of a Defaulting Lender in such circumstances and the aggregate of the
funds which such Lenders (herein collectively called the "Contributing Lenders"
and individually called the "Contributing Lender") are prepared to make
available exceeds the amount of the advance which the Defaulting Lender failed
to make, then each Contributing Lender shall be deemed to have given notice that
it is prepared to make available its pro rata share of such advance based on the
Contributing Lenders' relative commitments to advance in such circumstances. If
any Contributing Lender makes funds available in the place and stead of a
Defaulting Lender in such circumstances, then the Defaulting Lender shall pay to
any Contributing Lender making the funds available in its place and stead,
forthwith on demand, any amount advanced on its behalf together with interest
thereon at the then prevailing interbank rate for each day from the date of
advance to the date of payment, against payment by the Contributing Lender
making the funds available of all interest received in respect of the Loan from
the Borrower. In addition to interest as aforesaid, the Borrower shall pay all
amounts owing by the Borrower to the Defaulting Lender hereunder (with respect
to the amounts advanced by the Contributing Lenders on behalf of the Defaulting
Lender) to the Contributing Lenders in accordance with Section 3.04 until such
time as the Defaulting Lender pays to the Agent for the Contributing Lenders all
amounts advanced by the Contributing Lenders on behalf of the Defaulting Lender.

3.04 INABILITY TO FUND U.S. DOLLAR ADVANCES IN CANADA. If any Lender (the
"Affected Lender") determines in good faith, which determination shall be final,
conclusive and binding on the Borrower, and the Affected Lender notifies the
Borrower that (i) by reason of circumstances affecting financial markets inside
or outside Canada, deposits of United States dollars are unavailable to the
Affected Lender in Canada, (ii) adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided in the
definition of LIBOR, (iii) the making or continuation of United States dollar
advances in Canada has been made impracticable by the occurrence of a
contingency (other than a mere increase in rates payable by the Affected Lender
to fund the advance) which materially and adversely affects the funding of the
advances at any interest rate computed on the basis of LIBOR, or by reason of a
change in any applicable law or government regulation, guideline or order
(whether or not having the force of law but, if not having the force of law, one
with which a responsible bank would comply) or in the interpretation thereof by
any Official Body affecting the Affected Lender or any relevant financial
market, which results in LIBOR no longer representing the effective cost to the
Affected Lender of deposits in such market for a relevant Interest Period, or
(iv) any change to present law or any future law, regulation, order, treaty or
official directive (whether or not having the force of law but, if not having
the force of law, one with which a responsible bank would comply) or any change
therein or any interpretation or application thereof by any Official Body has
made it unlawful for the Affected Lender to make or maintain or give effect to
its obligations in respect of United States dollar advances in Canada as
contemplated herein, then


                                     - 21 -


     (a)  the right of the Borrower to obtain any affected type of Accommodation
          from the Affected Lender shall be suspended until the Affected Lender
          determines that the circumstances causing such suspension no longer
          exist and the Affected Lender so notifies the Borrower;

     (b)  if any affected type of Accommodation is not yet outstanding, any
          applicable Drawdown Notice, Rollover Notice or Conversion Notice shall
          be cancelled and the advance requested therein shall not be made; and

     (c)  if any LIBOR Loan is already outstanding at any time when the right of
          the Borrower to obtain Accommodation by way of a LIBOR Loan is
          suspended, it shall be converted on the last day of the Interest
          Period applicable thereto (or on such earlier date as may be required
          to comply with any applicable law) to a Base Rate Canada Loan in the
          principal amount equal to the principal amount of the LIBOR Loan.

3.05 TIME AND PLACE OF PAYMENTS. The Borrower shall make all payments pursuant
to this agreement or pursuant to any document, instrument or agreement delivered
pursuant hereto by deposit to the applicable Designated Account before 12:00
noon (Toronto time) on the day specified for payment and the Agent shall be
entitled to withdraw the amount of any payment due to the Agent or the Lenders
from such account on the day specified for payment.

3.06 REMITTANCE OF PAYMENTS DUE TO LENDERS. Forthwith after the withdrawal from
the applicable Designated Account by the Agent of any payment of principal,
interest, fees, or other amounts for the benefit of the Lenders pursuant to
Section 3.05, the Agent shall, subject to Section 8.03, remit to each Lender
entitled thereto, in immediately available funds, such Lender's Payment Share of
such payment (or such Lender's Commitment Share of such payment in the case of
standby fees, calculated on a daily average basis); provided that if the Agent,
on the assumption that it will receive, on any particular date, a payment of
principal (including, without limitation, a prepayment), interest, fees or other
amount hereunder, remits to each Lender entitled thereto its Payment Share or
Commitment Share, as the case may be, of such payment and the Borrower fails to
make such payment, each of the Lenders agrees to repay to the Agent, forthwith
on demand, to the extent that such amount is not recovered from the Borrower on
demand and after reasonable efforts by the Agent to collect such amount (without
in any way obligating the Agent to take any legal action with respect to such
collection), such Lender's Payment Share or Commitment Share, as the case may
be, of the payment made to it pursuant hereto together with interest thereon at
the then prevailing interbank rate for each day from the date such amount is
remitted to the Lenders until the date such amount is paid or repaid to the
Agent, the exact amount of the repayment required to be made by the Lenders
pursuant hereto to be as set forth in a certificate delivered by the Agent to
each Lender, which certificate shall constitute prima facie evidence of such
amount of repayment.


                                     - 22 -


3.07 EVIDENCE OF INDEBTEDNESS. The Agent shall open and maintain accounts
wherein the Agent shall record the amount and type of Accommodation outstanding,
each advance and each payment of principal and interest on account of each Loan
and all other amounts becoming due to and being paid to the Lenders or the Agent
hereunder. The Agent's accounts constitute, in the absence of manifest error,
prima facie evidence of the indebtedness of the Borrower to the Lenders and the
Agent hereunder.

3.08 NOTICE PERIODS. Each Drawdown Notice, Rollover Notice, Conversion Notice
and Payment Notice shall be given to the Agent:

     (a)  prior to 11:30 a.m. (Toronto time) on the third Banking Day prior to
          the date of a drawdown of, rollover of, conversion into, conversion
          of, conversion into, repayment of or prepayment of a LIBOR Loan; and

     (b)  prior to 11:30 a.m. (Toronto time) on the second Banking Day prior to
          the date of any other drawdown, rollover, conversion, repayment or
          prepayment.


                                    ARTICLE 4
                                    DRAWDOWN

4.01 DRAWDOWN NOTICE. Provided that all of the applicable conditions precedent
set forth in Article 12 have been fulfilled by the Borrower or waived by the
Majority Lenders and subject to Section 4.03, the Borrower may have
Accommodation made available to it under the Credit Facility from time to time
prior to the Conversion Date by giving to the Agent an irrevocable notice
("Drawdown Notice") in accordance with Section 3.08 and specifying

     (a)  the date such Accommodation is to be made available;

     (b)  whether such Accommodation is to be made available by way of LIBOR
          Loan or Base Rate Canada Loan;

     (c)  the principal amount of the Loan, and, in the case of any LIBOR Loan,
          the Interest Period with respect thereto;

     (d)  the details of any irrevocable authorization and direction with
          respect to the disbursement of the proceeds of such drawdowns; and

     (e)  confirmation that the conditions precedent set out in Section 12.01
          have been fulfilled.

4.02 ONE BORROWING. For greater certainty, there shall only be one Borrowing
under the Credit Facility after the Conversion Date. Rollovers of Accommodations
pursuant to Article 5



                                     - 23 -


and conversions from one type of Accommodation to another pursuant to Article 6
represent variations only in the terms of the outstanding Borrowing that is a
continuous obligation.

4.03 FINANCING OF HOSTILE BID. If the Borrower wishes to have an Accommodation
made available to it under the Credit Facility for the purpose of financing a
Take-Over Bid, the Borrower shall deliver to the Agent a written notice
("Take-Over Bid Notice") thereof at least 10 days prior to the date on which it
gives to the Agent a Drawdown Notice requesting such Accommodation. Such
Take-Over Bid Notice shall include the details of such Take-Over Bid and any
evidence that such Take-Over Bid is a Qualifying Bid. As soon as possible but in
any event within 3 days of the giving of the Take-Over Bid Notice, each Lender
shall, acting reasonably and in good faith, determine whether or not it
considers the Take-Over Bid to be a Qualifying Bid and shall so notify the Agent
and the Borrower and, if the Lender so determines that the Take-Over Bid is not
a Qualifying Bid, the Lender shall, in such notice, elect whether or not it
wishes to fund its Commitment Share of such drawdown. Notwithstanding any other
provisions hereof, if any Lender so determines that the Take-Over Bid is not a
Qualifying Bid and elects not to fund its Commitment Share of the drawdown, such
Lender shall not be required to fund its Commitment Share of such drawdown and
the drawdown shall be reduced accordingly.


                                    ARTICLE 5
                                    ROLLOVERS

5.01 LIBOR LOANS. Provided that the Borrower has, by giving notice to the Agent
in accordance with Section 5.02, requested the Lenders to continue to make
Accommodation available by way of LIBOR Loan at the end of the then outstanding
Interest Period, each Lender shall, at the end of such Interest Period, continue
to make Accommodation available to the Borrower by way of LIBOR Loan (without a
further advance of funds to the Borrower) for the Interest Period specified in
the Rollover Notice and in the principal amount equal to the principal amount of
the outstanding LIBOR Loan to the extent it was made available by such Lender.

5.02 ROLLOVER NOTICE. The notice to be given to the Agent pursuant to Section
5.01 ("Rollover Notice") shall be irrevocable, shall be given in accordance with
Section 3.08 and shall specify:

     (a)  the expiry date of the Interest Period of the outstanding LIBOR Loan;

     (b)  the principal amount of the LIBOR Loan;

     (c)  the new Interest Period of the LIBOR Loan; and

     (d)  confirmation that the conditions precedent set out in Section 12.01
          have been fulfilled.


                                     - 24 -



                                    ARTICLE 6
                                   CONVERSIONS

6.01 CONVERTING LOAN TO OTHER TYPE OF LOAN. Provided that the Borrower has, by
giving notice to the Agent in accordance with Section 6.02, requested that all
or a portion of an outstanding Loan of a particular type be converted into
another type of Loan, each Lender shall, on the date of conversion (which, in
the case of the conversion of all or a portion of an outstanding LIBOR Loan,
shall be the last day of the Interest Period of such Loan), continue to make
Accommodation available to the Borrower by way of the type of Loan into which
the outstanding Loan or a portion thereof is converted (without a further
advance of funds to the Borrower) in the aggregate principal amount equal to the
principal amount of the outstanding Loan or the portion thereof which is being
converted to the extent it was made available by such Lender.

6.02 CONVERSION NOTICE. The notice to be given to the Agent pursuant to Section
6.01 ("Conversion Notice") shall be irrevocable, shall be given in accordance
with Section 3.08 and shall specify:

     (a)  the type of Loan to be converted;

     (b)  the date on which the conversion is to take place;

     (c)  the principal amount of the Loan or the portion thereof which is to be
          converted;

     (d)  the type and amount of the Loan into which the outstanding Loan is to
          be converted;

     (e)  if outstanding Accommodation is to be converted into a LIBOR Loan, the
          applicable Interest Period; and

     (f)  confirmation that the conditions precedent set out in Section 12.01
          have been fulfilled.

6.03 ABSENCE OF NOTICE. In the absence of a Rollover Notice or Conversion Notice
within the appropriate time periods referred to herein, a LIBOR Loan at the end
of its Interest Period shall be automatically converted to a Base Rate Canada
Loan as though a notice to such effect had been given in accordance with Section
6.02.

6.04 CONVERSION AFTER DEFAULT. If an Event of Default has occurred and is
continuing at 10:00 a.m. (Toronto time) on the third Banking Day prior to the
last day of the Interest Period of a LIBOR Loan, the Agent may, with the
approval of the Majority Lenders and upon notice to the Borrower, convert such
LIBOR Loan to a Base Rate Canada Loan as though a notice to such effect had been
given in accordance with Section 6.02.












                                     - 25 -


                                    ARTICLE 7
                                INTEREST AND FEES

7.01 INTEREST RATES. The Borrower shall pay to the Lenders, in accordance with
Section 3.08, interest on the outstanding principal amount from time to time of
each such Loan at the rate per annum equal to:

     (a)  the Alternate Base Rate Canada in the case of each Base Rate Canada
          Loan; and

     (b)  LIBOR plus the Applicable Margin in the case of each LIBOR Loan.

After the Conversion Date, the Applicable Margin shall increase by 0.15% per
annum.

7.02 CALCULATION AND PAYMENT OF INTEREST.

     (a)  Interest on the outstanding principal amount from time to time of each
LIBOR Loan and Base Rate Canada Loan shall accrue from day to day from and
including the date on which Accommodation is made available by way of such Loan
to but excluding the date on which such Loan is repaid in full (both before and
after maturity and before and after judgment) and shall be calculated on the
basis of the actual number of days elapsed divided by 360.

     (b)  Accrued interest shall be paid,

          (i)  in the case of interest on Base Rate Canada Loans, monthly in
               arrears on the last Banking Day of each calendar month; and

          (ii) in the case of interest on LIBOR Loans, on the last day of the
               applicable Interest Period and, where the Interest Period is
               longer than three months, every three months after the beginning
               of such Interest Period.

7.03 GENERAL INTEREST RULES.

     (a)  For the purposes hereof, whenever interest is calculated on the basis
of a year of 360 days, each rate of interest determined pursuant to such
calculation expressed as an annual rate for the purposes of the Interest Act
(Canada) is equivalent to such rate as so determined multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by 360.

     (b)  Interest on each Loan shall be payable in United States dollars.

     (c)  If the Borrower fails to pay any principal, interest, fee or other
amount of any nature payable by it hereunder on the due date therefor, the
Borrower shall pay to the Lenders to whom such amount is due interest on such
overdue amount in the same currency as such overdue amount is payable from and
including such due date to but excluding the date of actual payment



                                     - 26 -


(as well after as before judgment) at the rate per annum, calculated and
compounded monthly, which is equal to the Alternate Base Rate Canada plus 1%.

7.04 SELECTION OF INTEREST PERIODS. With respect to each LIBOR Loan, the
Borrower shall specify in the Drawdown Notice, Rollover Notice or Conversion
Notice, the duration of the Interest Period provided that:

     (a)  Interest Periods for LIBOR Loans shall have a duration of one, two,
          three, six, nine or twelve months and shall end on or before the
          Maturity Date;

     (b)  the first Interest Period for a LIBOR Loan shall commence on and
          include the day on which Accommodation is made available by way of
          such Loan and each subsequent Interest Period applicable thereto shall
          commence on and include the date of the expiry of the immediately
          preceding Interest Period applicable thereto; and

     (c)  if any Interest Period would end on a day which is not a Banking Day,
          such Interest Period shall be extended to the next succeeding Banking
          Day unless such next succeeding Banking Day falls in the next calendar
          month, in which case such Interest Period shall be shortened to end on
          the immediately preceding Banking Day.

7.05 STANDBY FEES. Upon the first Banking Day immediately following the
completion of each Fiscal Quarter and upon the termination of the Credit
Facility pursuant to Section 2.04, the Borrower shall pay to the Lenders, in
arrears, a standby fee, calculated and accruing daily from the date of the
execution and delivery of this agreement at the rate per annum, calculated on
the basis of a year of 365 days or 366 days in the case of a leap year, equal to
the Standby Fee Rate on the Available Accommodation during such Fiscal Quarter.
Such standby fee shall be non-refundable and shall be fully earned when due.

7.06 ADJUSTMENT OF APPLICABLE MARGIN AND STANDBY FEE RATE. The Applicable Margin
and the Standby Fee Rate shall be adjusted on, and any such adjustment shall be
effective as of, the Banking Day immediately following any announcement, change,
or withdrawal of S & P's corporate credit or debt rating of the Borrower which
results in a different Applicable Margin or Standby Fee Rate being applicable.


                                    ARTICLE 8
                 RESERVE, CAPITAL, INDEMNITY AND TAX PROVISIONS

8.01 CONDITIONS OF CREDIT. The obtaining or maintaining of Accommodation
hereunder shall be subject to the terms and conditions contained in this Article
8.

8.02 CHANGE OF CIRCUMSTANCES.


                                     - 27 -


     (a)  If, after the date hereof, the introduction of or any change in or in
the interpretation of, or any change in its application to any Lender of, any
law or any regulation or guideline issued by any Official Body, including,
without limitation, any reserve or special deposit requirement or any tax (other
than tax on a Lender's general income) or any capital requirement, has, due to a
Lender's compliance, the effect, directly or indirectly, of (i) increasing the
cost to such Lender of performing its obligations hereunder; (ii) reducing any
amount received or receivable by such Lender hereunder or its effective return
hereunder or on its capital; or (iii) causing such Lender to make any payment or
to forego any return based on any amount received or receivable by such Lender
hereunder, then the Lender shall deliver to the Borrower a certificate setting
out the reason for and the calculation of the relevant amount and, upon demand
from time to time, the Borrower shall pay such amount as shall compensate such
Lender for any such cost, reduction, payment or foregone return (but no earlier
than the amount to which it pertains would have been required to be paid
hereunder) provided that the Borrower shall be obligated under this Section
8.02(a) to compensate such Lender for capital adequacy requirements measured
against its outstanding obligations hereunder only to the extent such capital
adequacy requirements are in excess of the capital adequacy requirements as of
the date hereof. Any certificate of a Lender in respect of the foregoing will be
conclusive and binding upon the Borrower, except for manifest error, provided
that such Lender shall determine the amounts owing to it in good faith using any
reasonable averaging and attribution methods.

     (b)  Each Lender agrees that, as promptly as practicable after it becomes
aware of the occurrence of an event or the existence of a condition that would
cause it to seek additional amounts from the Borrower pursuant to Section
8.02(a), it will use reasonable efforts to make, fund or maintain the affected
Accommodation through another lending office or take such other actions as it
deems appropriate if as a result thereof the additional moneys which would
otherwise be required to be paid in respect of such Accommodation pursuant to
Section 8.02(a) would be reduced and if, as determined by such Lender in its
sole discretion, the making, funding or maintaining of such Accommodation
through such other lending office or the taking of such other actions would not
otherwise adversely affect such Accommodation or such Lender and would not, in
such Lender's sole discretion, be commercially unreasonable.

     (c)  Notwithstanding Section 8.02(a), the Borrower shall not be liable to
compensate a Lender for any such cost, reduction, payment or foregone return:

          (i)  resulting from any law, regulation or guideline now in effect or
               of which such Lender has received actual notice as of the date
               hereof and which will take effect during the term of this
               agreement;

          (ii) occurring more than 60 days before receipt by the Borrower of the
               certificate described in Section 8.02(a); or


                                     - 28 -


          (iii) if such compensation is not being claimed as a general practice
                from customers of such Lender who by agreement are liable to pay
                such or similar compensation.

In determining the amount of compensation payable by the Borrower under Section
8.02(a), such Lender shall use all reasonable efforts to minimize the
compensation payable by the Borrower including, without limitation, using all
reasonable efforts to obtain refunds or credits in the ordinary course of its
business, and any compensation paid by the Borrower which is later determined
not to have been properly payable or in respect of which a refund, credit or
compensation has been received shall forthwith be reimbursed by such Lender to
the Borrower.

8.03 ASSIGNMENT AS A RESULT OF CHANGE OF CIRCUMSTANCES. If any Lender but not
all of the Lenders seeks additional compensation pursuant to Section 8.02(a)
(the "Affected Lender"), then the Borrower may indicate to the Agent in writing
that it desires the Affected Lender to be replaced with one or more of the other
Lenders, and the Agent shall then forthwith give notice to the other Lenders
that any Lender or Lenders may, in the aggregate, assume all (but not part) of
the Affected Lender's Individual Commitment and obligations hereunder and
acquire all (but not part) of the rights of the Affected Lender and assume all
(but not part) of the obligations of the Affected Lender under each of the other
agreements and instruments delivered pursuant hereto (but in no event shall any
other Lender or the Agent be obliged to do so). If one or more Lenders shall so
agree in writing (herein collectively called the "Assenting Lenders" and
individually called an "Assenting Lender") with respect to such acquisition and
assumption, the Individual Commitment and the obligations of such Assenting
Lender under this agreement and the rights and obligations of such Assenting
Lender under each of the other agreements and instruments delivered pursuant
hereto shall be increased by its respective pro rata share (based on the
relative Individual Commitments of the Assenting Lenders) of the Affected
Lender's Outstanding Accommodation and Individual Commitment and obligations
under this agreement and rights and obligations under each of the other
agreements and instruments delivered pursuant hereto on a date mutually
acceptable to the Assenting Lenders and the Borrower. On such date, the
Assenting Lenders shall pay to the Affected Lender the amount of the outstanding
Accommodations which it has made available to the Borrower and the Affected
Lender shall cease to be a "Lender" for purposes of this agreement and shall no
longer have any obligations hereunder. Upon the assumption of the Affected
Lender's Individual Commitment as aforesaid by an Assenting Lender, Schedule A
hereto shall be deemed to be amended to increase the Individual Commitment of
such Assenting Lender by the respective amounts of such assumption. If there are
no Assenting Lenders, the Borrower may designate to the Agent by written notice
a Canadian chartered bank which is not a Lender and, for all purposes of this
Section 8.03, such bank shall be the sole Assenting Lender.

8.04 INDEMNITY RELATING TO CREDITS. Upon notice from the Agent to the Borrower
(which notice shall be accompanied by a detailed calculation of the amount to be
paid by the Borrower), the Borrower shall pay to the Agent or the Lenders such
amount or amounts as will compensate the Agent or the Lenders for any loss, cost
or expense incurred by them in the liquidation or



                                     - 29 -


redeposit of any funds acquired by the Lenders to fund or maintain any portion
of a LIBOR Loan as a result of:

     (a)  the failure of the Borrower to borrow or make repayments on the dates
          specified under this agreement or in any notice from the Borrower to
          the Agent; or

     (b)  the repayment or prepayment of any amounts on a day other than the
          payment dates prescribed herein or in any notice from the Borrower to
          the Agent.

8.05 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY.

     (a)  The Borrower hereby agrees to indemnify, exonerate and hold the Agent
and each Lender and each of their respective officers, directors and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
and all claims, demands, actions, causes of action, suits, losses, costs
(including, without limitation, all documentary, recording, filing, mortgage or
other stamp taxes or duties), charges, liabilities and damages, and expenses in
connection therewith (irrespective of whether such Indemnified Party is a party
to the action for which indemnification hereunder is sought), and including,
without limitation, reasonable legal fees and out of pocket disbursements
(collectively, in this Section 8.05(a), the "Indemnified Liabilities"), paid,
incurred or suffered by the Indemnified Parties or any of them as a result of,
or arising out of, or relating to (i) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of any
Accommodation obtained hereunder, or (ii) the execution, delivery, performance
or enforcement of this agreement and any instrument, document or agreement
executed pursuant hereto, except for any such Indemnified Liabilities that a
court of competent jurisdiction determined arose on account of the relevant
Indemnified Party's gross negligence or willful misconduct.

     (b)  Without limiting the generality of the indemnity set out in Section
8.05(a), the Borrower hereby further agrees to indemnify, exonerate and hold the
Indemnified Parties free and harmless from and against any and all claims,
demand, actions, causes of action, suits, losses, costs, charges, liabilities
and damages, and expenses in connection therewith, including, without
limitation, reasonable legal fees and out of pocket disbursements, of any and
every kind whatsoever (collectively, in this Section 8.05(b), the "Indemnified
Liabilities"), paid, incurred or suffered by the Indemnified Parties or any of
them for, with respect to, or as a direct or indirect result of, (i) the
presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission or release from, any Property of any Hazardous Material or (ii) the
breach or violation of any Environmental Law by any of the Companies, except for
any such Indemnified Liabilities that a court of competent jurisdiction
determined arose on account of the relevant Indemnified Party's gross negligence
or willful misconduct.

     (c)  All obligations provided for in this Section 8.05 shall survive any
termination of the Credit Facilities or this agreement and shall not be reduced
or impaired by any investigation made by or on behalf of the Agent or any of the
Lenders.



                                     - 30 -


     (d)  The Borrower hereby agrees that, for the purposes of effectively
allocating the risk of loss placed on the Borrower by this Section 8.05, the
Agent and each of the Lenders shall be deemed to be acting as the agent or
trustee on behalf of and for the benefit of its officers, directors and agents.

     (e)  If, for any reason, the obligations of the Borrower pursuant to this
Section 8.05 shall be unenforceable, the Borrower agrees to make the maximum
contribution to the payment and satisfaction of each obligation that is
permissible under applicable law, except to the extent that a court of competent
jurisdiction determines such obligations arose on account of the gross
negligence or willful misconduct of any Indemnified Party.

8.06 PAYMENTS FREE AND CLEAR OF TAXES. The Borrower hereby agrees, in favour of
the Agent and each Lender that:

     (a)  Any and all payments made by the Borrower under or pursuant to this
          agreement or any agreement or instrument delivered pursuant hereto
          shall be made free and clear of, and without deduction for, any and
          all present or future taxes, levies, imposts, deductions, charges,
          fees, duties or withholding or other charges of any nature imposed by
          any taxing authority, whether domestic or foreign, and all liabilities
          with respect thereto, imposed as a consequence of the making of any
          payment under or pursuant to this agreement or any agreement or
          instrument delivered pursuant hereto excluding, in the case of the
          Agent or any Lender, taxes imposed on its net income or capital taxes
          or receipts and franchise taxes (all such non-excluded taxes, levies,
          imposts, deductions, charges, withholdings and liabilities being
          hereinafter referred to as "Taxes"). If the Borrower shall be required
          by law to deduct any Taxes from or in respect of any sum payable to
          the Agent or any Lender under or pursuant to this agreement or any
          agreement or instrument delivered pursuant hereto, the sum so payable
          shall be increased as may be necessary so that after making all
          required deductions (including deductions applicable to additional
          sums payable under this Section 8.06) the Agent or such Lender, as the
          case may be, receives an amount equal to the sum it would have
          received had no such deductions been made.

     (b)  The Borrower hereby indemnifies and holds harmless the Agent and each
          Lender for the full amount of Taxes, and for any incremental Taxes due
          to the Borrower's failure to remit to the Agent and the Lenders the
          required receipts or other required documentary evidence or due to the
          Borrower's failure to pay any Taxes when due to the appropriate taxing
          authority (including, without limitation, any taxes imposed by any
          jurisdiction on amounts payable under this Section 8.06) which are
          paid by the Agent or any Lender, as the case may be, and any liability
          (including penalties, interest and expenses) arising therefrom or with
          respect thereto, whether or not such Taxes or taxes were correctly or
          legally assessed. The Agent or any Lender who pays any Taxes or taxes
          shall promptly



                                     - 31 -


          notify the Borrower of such payment and, if such payment was made
          pursuant to an incorrect or illegal assessment, shall reasonably
          cooperate with the Borrower, at the expense of the Borrower, in any
          dispute of such assessment. Payment pursuant to this indemnification
          shall be made within 30 days from the date the Agent or such Lender,
          as the case may be, makes written demand therefor.

     (c)  Without prejudice to the survival of any other agreement of the
          Borrower hereunder, the agreements and obligations of the Borrower
          contained in this Section 8.06 shall survive the repayment of the
          outstanding Accommodation hereunder and the termination of the Credit
          Facility or this agreement.

     (d)  Notwithstanding any other provision hereof, any Lender which is not a
          resident of Canada for the purpose of the Income Tax Act (Canada)
          shall not be entitled to the benefits of Section 8.05(a), (b) and (c)
          to the extent they relate to withholding tax on payments to be made by
          the Borrower to such Lender.


                                    ARTICLE 9
                            REPAYMENT AND PREPAYMENTS

9.01 REPAYMENT. The Borrower shall repay to the Lenders the balance of the
outstanding Accommodation under the Credit Facility on the Maturity Date.
Amounts which are repaid as aforesaid may not be reborrowed.

9.02 VOLUNTARY PREPAYMENTS.

     (a)  Subject to Section 9.03, the Borrower shall be entitled, at its
option, to prepay all or any portion of the Accommodation under the Credit
Facility which is outstanding by way of Loan at any time provided that Section
8.04 shall be complied with in connection with any such prepayment.

     (b)  Amount which are prepaid pursuant to this Section 9.02 prior to the
Conversion Date may be reborrowed. Amounts which are prepaid pursuant to this
Section 9.02 on or after the Conversion Date may not be reborrowed.

9.03 PAYMENT NOTICE. The Borrower shall give written notice ("Payment Notice")
to the Agent of each repayment pursuant to Section 9.01 and each voluntary
prepayment pursuant to Section 9.02. Such notice shall be irrevocable, shall be
given in accordance with Section 3.08 and shall specify:

     (a)  the date on which the repayment or prepayment is to take place; and

     (b)  the manner in which the repayment or prepayment is to be effected.


                                     - 32 -


                                   ARTICLE 10
                         REPRESENTATIONS AND WARRANTIES

10.01 REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the Agent to
enter into this agreement and to make Accommodation available to the Borrower
hereunder from time to time, the Borrower hereby represents and warrants to the
Lenders and the Agent, as at the date hereof and, with respect to Sections
10.01(e) to (h), as at the date of each drawdown pursuant to Article 4, each
rollover pursuant to Article 5 and each conversion pursuant to Article 6 and as
at the last day of each Fiscal Quarter, as follows and acknowledges and confirms
that the Lenders and the Agent are relying upon such representations and
warranties in executing this agreement and in making Accommodation available
hereunder:

     (a)  STATUS AND POWER. The Borrower is a corporation duly incorporated and
          organized and validly subsisting in good standing under the laws of
          the Province of Saskatchewan. Each of the Material Subsidiaries (other
          than PCS Finance LLC) is a corporation duly incorporated and organized
          and validly subsisting in good standing under the laws of its
          jurisdiction of incorporation as set forth in Schedule E. PCS Finance
          LLC is a limited liability company validly subsisting under the laws
          of the State of Delaware. The Borrower and each of the Material
          Subsidiaries is duly qualified, registered or licensed in all
          jurisdictions where such qualification, registration or licensing is
          required. The Borrower and each of the Material Subsidiaries has all
          requisite corporate capacity, power and authority to own, hold under
          licence or lease its properties and to carry on its business as now
          conducted. The Borrower has all requisite corporate capacity, power
          and authority to enter into and carry out the transactions
          contemplated by this agreement.

     (b)  AUTHORIZATION AND ENFORCEMENT. All necessary action, corporate or
          otherwise, has been taken to authorize the execution, delivery and
          performance by the Borrower of this agreement. The Borrower has duly
          executed and delivered this agreement. This agreement is a legal,
          valid and binding obligation of the Borrower enforceable against the
          Borrower by the Agent and the Lenders in accordance with its terms,
          subject to the qualifications contained in the opinion of the
          Borrower's counsel delivered pursuant to Section 12.02(d)(vii).

     (c)  COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
          performance by the Borrower of this agreement and the consummation of
          the transactions contemplated herein do not conflict with, result in
          any breach or violation of, or constitute a default under the terms,
          conditions or provisions of the charter or constating documents or
          by-laws of, or any unanimous shareholder agreement relating to, the
          Borrower or of any law, regulation, judgment, decree or order binding
          on or applicable to the Borrower or to which its property is subject
          or of any material agreement, lease, licence, permit or other
          instrument to



                                     - 33 -


          which the Borrower is a party or is otherwise bound or by which the
          Borrower benefits or to which its property is subject and do not
          require the consent or approval of any Official Body or any other
          party.

     (d)  FINANCIAL STATEMENTS. The Financial Statements were prepared in
          accordance with generally accepted accounting principles and no
          Material Adverse Change has occurred since December 31, 2000. The
          balance sheets contained in the Financial Statements fairly present
          the consolidated financial condition of the Borrower as at the
          respective dates thereof and the statements of income contained in the
          Financial Statements fairly present the consolidated results of
          operations of the Borrower during the respective fiscal periods
          covered thereby.

     (e)  LITIGATION. There are no actions, suits, inquiries, claims or
          proceedings (whether or not purportedly on behalf of any of the
          Companies) which have been commenced against or affecting any of the
          Companies before any Official Body which could reasonably be expected
          to have a Material Adverse Effect other than as disclosed in Schedule
          J.

     (f)  OUTSTANDING DEFAULTS. No event has occurred which constitutes or
          which, with the giving of notice, lapse of time or both, would
          constitute a default under or in respect of any agreement, undertaking
          or instrument to which any of the Companies is a party or to which its
          property or assets may be subject, where such default could reasonably
          be expected to have a Material Adverse Effect, other than as disclosed
          in Schedule H.

     (g)  ERISA COMPLIANCE. Except as specifically disclosed in Schedule H:

          (i)   Each Plan is in compliance in all material respects with the
                applicable provisions of ERISA, the Code and other federal or
                state law. Each Plan which is intended to qualify under Section
                401(a) of the Code has received a favorable determination letter
                from the IRS or an application for such a letter is currently
                being processed by the IRS with respect thereto or an
                application for such a letter will be made on or before December
                31, 2001 and nothing has occurred which would prevent, or cause
                the loss of, such qualification. The Borrower and each ERISA
                Affiliate has made all required contributions to any Plan
                subject to Section 412 of the Code, and no application for a
                funding waiver or an extension of any amortization period
                pursuant to Section 412 of the Code has been made with respect
                to any Plan.

          (ii)  There are no pending or threatened claims, actions or lawsuits,
                or action by any Governmental Authority, with respect to any
                Plan which has resulted or could reasonably be expected to
                result in a Material Adverse Effect. There has been no
                prohibited transaction or violation of the



                                     - 34 -


                fiduciary responsibility rules with respect to any Plan which
                has resulted or could reasonably be expected to result in a
                Material Adverse Effect.

          (iii) (A) No ERISA Event has occurred or is reasonably expected to
                occur; (B) no Pension Plan has any Unfunded Pension Liability;
                (C) neither the Borrower nor any ERISA Affiliate has incurred,
                or reasonably expects to incur, any liability under Title IV of
                ERISA with respect to any Pension Plan (other than premiums due
                and not delinquent under Section 4007 of ERISA); (D) neither the
                Borrower nor any ERISA Affiliate has incurred, or reasonably
                expects to incur, any liability (and no event has occurred
                which, with the giving of notice under Section 4219 of ERISA,
                would result in such liability) under Section 4201 or 4243 of
                ERISA with respect to a Multiemployer Plan; and (E) neither the
                Borrower nor any ERISA Affiliate has engaged in a transaction
                that could be subject to Section 4069 or 4212(c) of ERISA.

     (h)  ENVIRONMENTAL COMPLIANCE.

          (i)   The Property (including underlying groundwater) has, since the
                date of its acquisition by the applicable Company, been owned,
                operated and used in compliance with all Environmental Laws
                except where such failure could not reasonably be expected to
                have a Material Adverse Effect.

          (ii)  There are no actions or proceedings which have been commenced in
                connection with an alleged violation of any Environmental Law by
                any Company which could reasonably be expected to have a
                Material Adverse Effect.

          (iii) There have been no releases of Hazardous Materials at, on or
                under the Property in violation of Environmental Law where such
                releases could reasonably be expected to have a Material Adverse
                Effect.

          (iv)  Each of the Companies has been issued and is in compliance with
                all permits, certificates, approvals, licenses and other
                authorizations required under any Environmental Laws to own its
                properties and assets and to carry on its businesses except
                where such non-issuance or noncompliance could not reasonably be
                expected to have a Material Adverse Effect.

     (i)  CORPORATE NAME. The corporate name of the Borrower as it appears in
          its articles of incorporation is Potash Corporation of Saskatchewan
          Inc.


                                     - 35 -


     (j)  INTER-CORPORATE RELATIONSHIPS. The share ownership of each of the
          Subsidiaries is as set forth in Schedule E (as such Schedule is
          updated pursuant to Section 11.01(a)(iii)).

     (k)  SUBSIDIARIES AND PARTNERSHIPS. There are no subsidiaries of the
          Borrower other than the Subsidiaries. The jurisdiction of
          incorporation of each of the Subsidiaries is as set forth in Schedule
          E (as such Schedule is updated pursuant to Section 11.01(a)(iii)).
          None of the companies is, directly or indirectly, a member of or
          participant in any partnership, joint venture or syndicate other than
          as described in Schedule F (as such Schedule is updated pursuant to
          Section 11.01(a)(iii)).

     (l)  REGULATION U OR X. None of the Companies is engaged in the business
          of extending credit for the purpose of purchasing or carrying margin
          stock, and no proceeds of any Accommodation made hereunder shall be
          used for a purpose which violates, or would be inconsistent with,
          Regulation U or X of the Board of Governors of the Federal Reserve
          System.

10.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrower contained in Section 10.01 shall survive the
execution and delivery of this agreement and shall continue (with reference to
the actual dates at which such representations and warranties are made) until
all outstanding Accommodation hereunder has been repaid and the Credit
Facilities have been terminated notwithstanding any investigation made at any
time by or on behalf of the Agent or any of the Lenders.



                                     - 36 -


                                   ARTICLE 11
                                    COVENANTS

11.01 AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees with the
Agent and the Lenders that, until all outstanding Accommodation hereunder has
been repaid in full and the Credit Facility has been terminated, and unless the
Agent with the approval of the Majority Lenders otherwise expressly consents in
writing:

     (a)  FINANCIAL REPORTING. The Borrower shall furnish the Agent with the
          following documents, statements and reports:

          (i)   within 120 days after the end of each Fiscal Year, a copy of the
                audited consolidated financial statements of the Borrower with
                respect thereto and the auditors' report thereon;

          (ii)  within 120 days after the end of each Fiscal Year, a copy of the
                unaudited unconsolidated financial statements of each Material
                Subsidiary with respect thereto;

          (iii) within 120 days after the end of each Fiscal Year, an updated
                Schedule E, an updated Schedule F and an updated list of the
                Material Subsidiaries, each certified by a senior officer of the
                Borrower to be true and correct as of the date thereof;

          (iv)  within 60 days after the end of each of the first three Fiscal
                Quarters of each Fiscal Year, a copy of the unaudited
                consolidated financial statements of the Borrower with respect
                thereto;

          (v)   within 120 days after the end of each Fiscal Year and within 60
                days after the end of each Fiscal Quarter, a duly executed and
                completed compliance certificate, in the form attached as
                Schedule B hereto, evidencing compliance with the terms of this
                agreement; and

          (vi)  such additional financial or operating reports or statements as
                the Agent on the instructions of the Majority Lenders may, from
                time to time, reasonably require.

     (b)  CORPORATE EXISTENCE. Except as expressly permitted in Section
          11.03(b), the Borrower shall, and shall cause each of the Material
          Subsidiaries to, maintain its corporate existence in good standing and
          shall, and shall cause each of the Subsidiaries to, qualify and remain
          duly qualified to carry on business and own property in each
          jurisdiction in which such qualification is necessary to the extent
          that a failure to so qualify could reasonably be expected to have a
          Material Adverse Effect.


                                     - 37 -


     (c)  CONDUCT OF BUSINESS. The Borrower shall, and shall cause each of the
          Subsidiaries to, conduct its business in such a manner so as to comply
          in all respects with all laws and regulations, so as to observe and
          perform all its obligations under leases, licences and agreements
          necessary for the proper conduct of its business and so as to preserve
          and protect its property and assets and the earnings, income and
          profits therefrom (including, without limitation, Environmental Laws
          and laws relating to the discharge, spill, disposal or emission of
          Hazardous Materials) to the extent that such non-compliance,
          non-observance or non-performance could reasonably be expected to have
          a Material Adverse Effect. The Borrower shall, and shall cause each of
          the Subsidiaries to, obtain and maintain all material licenses,
          certificates of approval, consents, registrations, permits, government
          approvals, franchises, authorizations and other rights necessary for
          the operation of its business to the extent that a failure to do so
          could reasonably be expected to have a Material Adverse Effect.

     (d)  USE OF PROCEEDS. The Borrower shall apply all of the proceeds of the
          drawdowns pursuant to Section 4.01 to general corporate purposes.

     (e)  LONG TERM DEBT TO EBITDA. The Borrower shall maintain or cause to be
          maintained the ratio of Long Term Debt as at the last day of each
          Fiscal Quarter to EBITDA for the four consecutive Fiscal Quarters
          ending on such day in a ratio of less than or equal to 3.5 to 1.

     (f)  DEBT TO CAPITAL. The Borrower shall at all times maintain or cause to
          be maintained the ratio of Debt to Capital in a ratio of less than or
          equal to 0.55 to 1.

     (g)  TANGIBLE NET WORTH. The Borrower shall at all times maintain or cause
          to be maintained Tangible Net Worth in an amount greater than or equal
          to $1,250,000,000.

     (h)  INSURANCE. The Borrower shall, and shall cause each of the Material
          Subsidiaries to, maintain insurance with respect to its properties and
          business against loss or damage of the kind customarily insured
          against by companies engaged in the same or similar business, of such
          types and in such amounts as are customarily carried under such
          circumstances by such other companies.

     (i)  TAXES. The Borrower shall, and shall cause each of the Material
          Subsidiaries to, file all tax returns and tax reports required by law
          to be filed by it and pay all material taxes, rates, government fees
          and dues levied, assessed or imposed upon it and upon its property or
          assets or any part thereof, as and when the same become due and
          payable (save and except when and so long as the validity of any such
          taxes, rates, fees, dues, levies, assessments or imposts is being
          contested in good faith by appropriate proceedings and adequate
          reserves are being maintained in accordance with generally accepted
          accounting principles), and the



                                      - 38 -


          Borrower shall deliver to the Agent, when requested, written evidence
          of such filings and payments.

     (j)  REIMBURSEMENT OF EXPENSES. The Borrower shall reimburse the Agent, on
          demand, for all reasonable out-of-pocket costs, charges and expenses
          incurred by or on behalf of the Agent (including, without limitation,
          travel costs and the reasonable fees and out-of-pocket disbursements
          of its counsel) in connection with:

          (i)   the development, negotiation, preparation, execution,
                delivery, interpretation and enforcement of this agreement and
                all other documentation ancillary to the completion of the
                transactions contemplated hereby and any amendments hereto or
                thereto and any waivers of any provisions hereof or thereof
                (whether or not consummated or entered into);

          (ii)  the syndication of the Credit Facility; and

          (iii) any lien search fees relating to the transactions contemplated
                hereby;

          and the Borrower may contest the reasonableness of such costs, charges
          and expenses in good faith.

     (k)  BOOKS AND RECORDS. The Borrower shall, and shall cause each of the
          Subsidiaries to, keep proper books of account and records covering all
          its business and affairs on a current basis, make full, true and
          correct entries in all material respects of their transactions in such
          books, set aside on their books from their earnings all such proper
          reserves as required by generally accepted accounting principles and
          permit representatives of the Agent to inspect such books of account,
          records and documents and to make copies therefrom during reasonable
          business hours and upon reasonable notice and to discuss the affairs,
          finances and accounts of the Companies with the officers of the
          Companies and their auditors during reasonable business hours and upon
          reasonable notice.

     (l)  ENVIRONMENTAL MATTERS. The Borrower shall, as soon as practicable and
          in any event within 30 days, notify the Agent and provide copies upon
          receipt of all written claims, complaints, notices or inquiries from
          an Official Body relating to the condition of the facilities and
          properties of the Companies or compliance with Environmental Laws,
          which claims, complaints, notices or inquiries relate to matters which
          would have, or may reasonably be expected to have, a Material Adverse
          Effect, and shall, and shall cause each of the Subsidiaries to,
          proceed diligently to resolve any such claims, complaints, notices or
          inquiries relating to compliance with Environmental Laws and provide
          such information and



                                     - 39 -


          certifications which the Agent may reasonably request from time to
          time to evidence compliance with this provision.

     (m)  NOTICE OF DEFAULT OR EVENT OF DEFAULT. Upon the occurrence of a
          Default or an Event of Default, the Borrower shall promptly deliver to
          the Agent a notice specifying the nature and date of occurrence of
          such Default or Event of Default and the action which the Borrower
          proposes to take with respect thereto.

11.02 PERFORMANCE OF COVENANTS BY AGENT. The Agent may, on the instructions of
the Majority Lenders and upon notice by the Agent to the Borrower, perform any
covenant of the Borrower under this agreement which the Borrower fails to
perform or cause to be performed and which the Agent is capable of performing,
including any covenants the performance of which requires the payment of money,
provided that the Agent shall not be obligated to perform any such covenant on
behalf of the Borrower (unless so instructed by the Majority Lenders) and no
such performance by the Agent shall require the Agent to further perform the
Borrower's covenants or shall operate as a derogation of the rights and remedies
of the Agent or the Lenders under this agreement or as a waiver of such covenant
by the Agent or the Lenders. Any amounts paid by the Agent as aforesaid shall be
reimbursed by the Lenders in their Pro Rata Shares and shall be repaid by the
Borrower to the Agent on behalf of the Lenders on demand.

11.03 RESTRICTIVE COVENANTS. The Borrower hereby covenants and agrees with the
Agent and the Lenders that, until all outstanding Accommodation hereunder has
been repaid in full and the Credit Facility has been terminated, and unless the
Agent with the approval of the Majority Lenders otherwise expressly consents in
writing:

     (a)  ENCUMBRANCES. The Borrower shall not, and shall not suffer or permit
          any of the Subsidiaries to, enter into or grant, create, assume or
          suffer to exist any Lien affecting any of its property, assets or
          undertaking, save and except only for the Permitted Liens.

     (b)  CORPORATE EXISTENCE. The Borrower shall not change its jurisdiction of
          incorporation except that it may continue under the Canada Business
          Corporations Act. The Borrower shall not, and shall not suffer or
          permit any of the Material Subsidiaries to, take part in any
          amalgamation, merger, winding-up, dissolution, capital or corporate
          reorganization or similar proceeding or arrangement, except that any
          of them may amalgamate or merge with any Subsidiary which is a direct
          or indirect wholly-owned subsidiary of the Borrower and any Material
          Subsidiary may wind up into any other Subsidiary or the Borrower if it
          is a direct wholly-owned subsidiary of the entity or entities into
          which it is winding up and any of them may transfer any or all of its
          assets to any Subsidiary which is a direct or indirect wholly-owned
          subsidiary of the Borrower.

     (c)  CHANGE IN OPERATIONS. The Borrower shall not materially change the
          nature or conduct of its consolidated operations as carried on as at
          the date hereof.


                                     - 40 -


     (d)  DISPOSITION OF ASSETS. During any Fiscal Year, the aggregate net book
          value of the assets disposed of by the Companies (including any
          disposition by reason of an expropriation of such assets but excluding
          any disposition of inventory in the ordinary course of business) shall
          not exceed 25% of Total Assets as at the last day of the immediately
          preceding Fiscal Year. Notwithstanding the foregoing but for greater
          certainty, the disposition of assets as a result of the securitization
          of assets shall only be included in the foregoing calculation if the
          assets are transferred to create a securitized asset pool or to
          increase the overall size of a securitized asset pool but not if the
          assets are transferred to replenish a depleting securitized asset
          pool.

     (e)  DEBT OF SUBSIDIARIES. Debt of the Subsidiaries (other than the
          Guarantor) shall not at any time exceed $250,000,000 in the aggregate.
          Debt attributable to the Guarantor shall not at any time exceed
          $340,000,000.


                                   ARTICLE 12
                      CONDITIONS PRECEDENT TO ACCOMMODATION

12.01 CONDITIONS PRECEDENT TO ALL ACCOMMODATION. The obligation of the Lenders
to make Accommodation available under the Credit Facility (whether by drawdown,
rollover or conversion) is subject to fulfilment of the following conditions
precedent at the time such Accommodation is made available:

     (a)  no Event of Default has occurred and is continuing or would arise
          immediately after giving effect to or as a result of such
          Accommodation;

     (b)  the Borrower shall have complied with the requirements of Article 4, 5
          or 6, as the case may be, in respect of the relevant Accommodation;
          and

     (c)  the representations and warranties of the Borrower contained in
          Sections 10.01(e) to (h) shall be true and correct in all material
          respects on the date such Accommodation is made available as if such
          representations and warranties were made on such date.

12.02 CONDITIONS PRECEDENT TO INITIAL ACCOMMODATION. The obligation of the
Lenders to make Accommodation available under the Credit Facility for the first
time is subject to fulfilment of the following conditions precedent at the time
such Accommodation is made available:

     (a)  no Default has occurred or is continuing or would arise immediately
          after giving effect to or as a result of such Accommodation;


                                     - 41 -


     (b)  the Borrower shall have complied with the requirement of Article 4 in
          respect of such Accommodation;

     (c)  the representations and warranties of the Borrower contained in
          Section 10.01 shall be true and correct in all material respects on
          the date such Accommodation is made available as if such
          representations and warranties were made on such date;

     (d)  the Agent has received, in form and substance satisfactory to the
          Agent:

          (i)     a duly certified resolution of the board of directors of the
                  Borrower authorizing the Borrower to execute, deliver and
                  perform its obligations under this agreement;

          (ii)    a certificate of a senior officer of the Borrower setting
                  forth specimen signatures of the individuals authorized to
                  sign this agreement on behalf of the Borrower;

          (iii)   a duly certified resolution of the board of directors of the
                  Guarantor authorizing the Guarantor to execute, deliver and
                  perform its obligations under the Guarantee;

          (iv)    a certificate of a senior officer of the Guarantor setting
                  forth specimen signatures of the individuals authorized to
                  sign the Guarantee on behalf of the Guarantor;

          (v)     a certificate of a senior officer of the Borrower certifying
                  that, to the best of his knowledge after due inquiry, no
                  Default has occurred and is continuing or would arise
                  immediately after giving effect to or as a result of such
                  Accommodation;

          (vi)    insurance binders, certificates of insurance and statements of
                  coverage with respect to the insurance referred to in Section
                  11.01(h);

          (vii)   all duly completed current account documentation which is
                  required to open the Designated Account;

          (viii)  an opinion of the Borrower's Ontario counsel in substantially
                  the form of Schedule D-1 hereto;

          (ix)    an opinion of the General Counsel of the Borrower in
                  substantially the form of Schedule D-2 hereto;

          (x)     an opinion of the Guarantor's Delaware counsel in
                  substantially the form of Schedule D-3 hereto; and


                                     - 42 -


              (xi)   an opinion of the Agent's counsel with respect to such
                     matters as may be reasonably required in connection with
                     the transactions hereunder;

     (e)  the Borrower has executed and delivered the Agency Fee Agreement and
          all fees payable thereunder shall have been paid by the Borrower to
          BNS;

     (f)  the Guarantor has executed and delivered the Guarantee;

     (g)  there has not occurred a Material Adverse Change; and

     (h)  there has not occurred, in the sole and absolute judgment of the
          Agent, a material adverse change in the financial markets in Canada.

12.03 WAIVER. The terms and conditions of Sections 12.01 and 12.02 are inserted
for the sole benefit of the Agent and the Lenders. The Agent, insofar as it
relates to Section 12.02(g), and otherwise the Agent with the approval of the
Majority Lenders, may waive such terms and conditions in whole or in part, with
or without terms or conditions, in respect of any Accommodation, without
prejudicing their right to assert them in whole or in part in respect of any
other Accommodation.


                                   ARTICLE 13
                              DEFAULT AND REMEDIES

13.01 EVENTS OF DEFAULT. Upon the occurrence of any one or more of the following
events, unless expressly waived in writing by the Majority Lenders:

     (a)  a breach of Section 9.01;

     (b)  the non-payment of any amount due hereunder (other than the repayment
          pursuant to Section 9.01) within five Banking Days after notice of
          non-payment has been given to the Borrower by the Agent;

     (c)  the commencement by the Borrower or a Material Subsidiary of
          proceedings for its dissolution, liquidation or winding up or for the
          suspension of its operations except as permitted under Section
          11.03(b);

     (d)  the commencement by any person (other than the Companies) of
          proceedings for the dissolution, liquidation or winding-up of, or for
          the suspension of the operations of, the Borrower or a Material
          Subsidiary unless such proceedings are dismissed or stayed within 20
          Banking Days of the commencement thereof;

     (e)  the Borrower or any Material Subsidiary:


                                     - 43 -


          (i)   admits its inability to pay its debts generally as they become
                due or fails to pay its debts generally as they become due;

          (ii)  files an assignment or petition in bankruptcy or a petition to
                take advantage of any insolvency statute;

          (iii) makes an assignment for the benefit of its creditors;

          (iv)  consents to the appointment of a receiver, trustee, sequestrator
                or other custodian of the whole or any part of its assets;

          (v)   files a petition, notice or answer seeking a reorganization,
                proposal, arrangement, adjustment or composition under
                applicable bankruptcy laws or any other applicable law or
                statute; or

          (vi)  is adjudged by a court having jurisdiction a bankrupt or
                insolvent, or a decree or order of a court having jurisdiction
                is entered for the appointment of a receiver, liquidator,
                trustee or assignee in bankruptcy with such decree or order
                remaining in force and undischarged or unstayed for a period of
                30 days;

     (f)  any representation or warranty made by any of the Companies in any
          Loan Document or in any other document, agreement or instrument
          delivered pursuant hereto or referred to herein proves to have been
          incorrect when made or furnished except to the extent that the
          circumstances giving rise to this Event of Default are cured within 10
          Banking Days of the occurrence thereof;

     (g)  a writ, execution, attachment or similar process is issued or levied
          against all or any portion of the property or assets of the Borrower
          or any Material Subsidiary in connection with any judgment against the
          Borrower or any Material Subsidiary in an amount exceeding Cdn.
          $40,000,000 or the U.S. Dollar Equivalent thereof and such writ,
          execution, attachment or similar process is not released, bonded,
          satisfied, discharged, vacated or stayed within thirty days after its
          entry, commencement or levy;

     (h)  the breach or failure of due observance or performance by the Borrower
          of any of Sections 11.01(e), (f) or (g) or 11.03(d);

     (i)  the breach or failure of due observance or performance by the Borrower
          of any covenant or provision of this agreement other than those
          heretofore or hereafter dealt with in this Section 13.01, or the
          breach or failure of due observance or performance by any of the
          Companies of any covenant or provision of any other document,
          agreement or instrument delivered pursuant hereto or referred to
          herein (including, without limitation, the Guarantee and the Agency
          Fee




                                     - 44 -


          Agreement), which is not remedied within 10 Banking Days after written
          notice to do so has been given by the Agent to the Borrower;

     (j)  one or more encumbrancers, lienors or landlords take possession of
          property or assets of the Borrower or any Material Subsidiary in
          respect of a claim in excess of Cdn. $40,000,000 or the U.S. Dollar
          Equivalent thereof or attempt to enforce their security or other
          remedies against any part of the property or assets of the Borrower or
          any Material Subsidiary in respect of a claim in excess of Cdn.
          $40,000,000 or the U.S. Dollar Equivalent thereof and such possession
          or enforcement is not released, bonded, satisfied, discharged, vacated
          or stayed within thirty days after its entry, commencement or levy;

     (k)  other than as disclosed in Schedule H, an event of default (after the
          expiry of all applicable grace periods) under any one or more
          agreements, indentures or instruments under which the Borrower or any
          Material Subsidiary has outstanding Debt in excess of Cdn. $40,000,000
          or the U.S. Dollar Equivalent thereof shall happen and be continuing
          without being cured or discharged by repayment, or any Debt of the
          Borrower or any Material Subsidiary in excess of Cdn. $40,000,000 or
          the U.S. Dollar Equivalent thereof which is payable on demand is not
          paid on demand;

     (l)  this agreement is determined by a court of competent jurisdiction not
          to be valid and enforceable by the Agent and the Lenders against the
          Borrower, and this agreement has not been replaced by a valid and
          enforceable document which is prepared by the Agent and presented to
          the Borrower and is equivalent in effect and commercial terms (where
          possible) to this agreement (other than its validity and
          enforceability) and is executed and delivered by the Borrower within
          thirty days following such presentment;

     (m)  the Guarantee is determined by a court of competent jurisdiction not
          to be valid and enforceable by the Agent and the Lenders against the
          Guarantor, and the Guarantee has not been replaced by a valid and
          enforceable document which is prepared by the Agent and presented to
          the Borrower and is equivalent in effect and commercial terms (where
          possible) to the Guarantee (other than its validity and
          enforceability) and is executed and delivered by the Guarantor within
          thirty days following such presentment;

     (n)  any ERISA Affiliate shall fail to pay when due an amount or amounts
          aggregating in excess of the U.S. Dollar Equivalent of Cdn.
          $40,000,000 which it shall have become liable to pay under Section
          4062, 4063 or 4064 of ERISA; or notice of intent to terminate a Plan
          shall be filed under Title IV of ERISA by any ERISA Affiliate, any
          plan administrator or any combination of the foregoing if such
          termination would result in a Material Adverse Effect; or the PBGC
          shall



                                     - 45 -


          institute proceedings under Title IV of ERISA to terminate, to impose
          liability (other than for premiums under Section 4007 of ERISA) in
          respect of, or to cause a trustee to be appointed to administer any
          Plan, if such action by the PBGC would result in a Material Adverse
          Effect; or there shall occur a complete or partial withdrawal from, or
          a default, within the meaning of Section 4219(c)(5) of ERISA, with
          respect to, one or more Multiemployer Plans which could cause one or
          more ERISA Affiliates to incur a current annual payment obligation in
          excess of U.S. Dollar Equivalent of Cdn. $40,000,000; or

     (o)  any Person alone or acting jointly in concert with any other Person
          owns more than one-third of the outstanding voting securities of the
          Borrower;

the Agent, by notice to the Borrower and subject to Section 14.08, may terminate
the Credit Facility and may declare all indebtedness of the Borrower to the
Lenders pursuant to this agreement to be immediately due and payable whereupon
all such indebtedness shall immediately become and be due and payable (provided,
however, that the Credit Facility shall terminate and all such indebtedness of
the Borrower to the Lenders shall automatically become due and payable, without
notice of any kind, upon the occurrence of an event described in clause (c), (d)
or (e) above).

13.02 REMEDIES CUMULATIVE. The Borrower expressly agrees that the rights and
remedies of the Agent and the Lenders under this agreement are cumulative and in
addition to and not in substitution for any rights or remedies provided by law.
Any single or partial exercise by the Agent or any of the Lenders of any right
or remedy for a default or breach of any term, covenant or condition in this
agreement does not waive, alter, affect or prejudice any other right or remedy
to which the Agent or such Lender may be lawfully entitled for the same default
or breach. Any waiver by the Agent with the approval of the Majority Lenders of
the strict observance, performance or compliance with any term, covenant or
condition of this agreement is not a waiver of any subsequent default and any
indulgence by the Lenders with respect to any failure to strictly observe,
perform or comply with any term, covenant or condition of this agreement is not
a waiver of the entire term, covenant or condition or any subsequent default.

13.03 SET-OFF. In addition to any rights now or hereafter granted under
applicable law, and not by way of limitation of any such rights, after the
occurrence of an Event of Default which is continuing, the Agent and each Lender
is authorized, without notice to the Borrower or to any other person, any such
notice being expressly waived by the Borrower, to set-off, appropriate and apply
any and all deposits, matured or unmatured, general or special, and any other
indebtedness at any time held by or owing by the Agent or such Lender, as the
case may be, to or for the credit of or the account of the Borrower against and
on account of the obligations and liabilities of the Borrower which are due and
payable to the Agent or such Lender, as the case may be, under this agreement.


                                     - 46 -



                                   ARTICLE 14
                                    THE AGENT

14.01 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby appoints and
authorizes, and hereby agrees that it will require any assignee of any of its
interests herein (other than the holder of a participation in its interests
herein) to appoint and authorize the Agent to take such actions as agent on its
behalf and to exercise such powers hereunder as are delegated to the Agent by
such Lender by the terms hereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable to any of the Lenders for any action taken
or omitted to be taken by it or them hereunder or in connection herewith, except
for its own gross negligence or wilful misconduct and each Lender hereby
acknowledges that the Agent is entering into the provisions of this Section
14.01 on its own behalf and as agent and trustee for its directors, officers,
employees and agents.

14.02 INTEREST HOLDERS. The Agent may treat each Lender set forth in Schedule A
hereto or the person designated in the last notice delivered to it under Section
15.06 as the holder of all of the interests of such Lender hereunder.

14.03 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it as counsel for the Agent and the Lenders and shall not be liable
for any action taken or not taken or suffered by it in good faith and in
accordance with the advice and opinion of such counsel.

14.04 DOCUMENTS. The Agent shall not be under any duty to the Lenders to
examine, enquire into or pass upon the validity, effectiveness or genuineness of
this agreement or any instrument, document or communication furnished pursuant
to or in connection herewith and the Agent shall, as regards the Lenders, be
entitled to assume that the same are valid, effective and genuine, have been
signed or sent by the proper parties and are what they purport to be.

14.05 AGENT AS LENDER. With respect to those portions of the Credit Facility
made available by it, the Agent shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not the Agent.
The Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower and its affiliates
and persons doing business with the Borrower and/or any of its affiliates as if
it were not the Agent and without any obligation to account to the Lenders
therefor.

14.06 RESPONSIBILITY OF AGENT. The duties and obligations of the Agent to the
Lenders hereunder are only those expressly set forth herein. The Agent shall not
have any duty to the Lenders to investigate whether a Default or an Event of
Default has occurred. The Agent shall, as regards the Lenders, be entitled to
assume that no Default or Event of Default has occurred and is continuing unless
the Agent has actual knowledge or has been notified by the Borrower of such fact
or has been notified by a Lender that such Lender considers that a Default or
Event of Default has occurred and is continuing, such notification to specify in
detail the nature thereof.


                                     - 47 -


14.07 ACTION BY AGENT. The Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it on behalf of the Lenders by and under this agreement; provided,
however, that the Agent shall not exercise any rights under Section 13.01 or
expressed to be on behalf of or with the approval of the Majority Lenders
without the request, consent or instructions of the Majority Lenders.
Furthermore, any rights of the Agent expressed to be on behalf of or with the
approval of the Majority Lenders shall be exercised by the Agent upon the
request or instructions of the Majority Lenders. Subject to the foregoing, the
Agent shall incur no liability to the Lenders hereunder with respect to anything
which it may do or refrain from doing in the reasonable exercise of its judgment
or which may seem to it to be necessary or desirable in the circumstances,
except for its gross negligence or wilful misconduct. The Agent shall in all
cases be fully protected in acting or refraining from acting hereunder in
accordance with the instructions of the Majority Lenders and any action taken or
failure to act pursuant to such instructions shall be binding on all Lenders. In
respect of any notice by or action taken by the Agent hereunder, the Borrower
shall at no time be obliged to enquire as to the right or authority of the Agent
to so notify or act.

14.08 NOTICE OF EVENTS OF DEFAULT. In the event that the Agent shall acquire
actual knowledge or shall have been notified of any Default or Event of Default,
the Agent shall promptly notify the Lenders and shall take such action and
assert such rights under Section 13.01 of this agreement as the Majority Lenders
shall request in writing and the Agent shall not be subject to any liability by
reason of its acting pursuant to any such request. If the Majority Lenders shall
fail for five Banking Days after receipt of the notice of any Default or Event
of Default to request the Agent to take such action or to assert such rights in
respect of such Default or Event of Default, the Agent may, but shall not be
required to, and subject to subsequent specific instructions from the Majority
Lenders, take such action or assert such rights (other than rights under Section
13.01 of this agreement and other than giving an express waiver of any Default
or any Event of Default) as it deems in its discretion to be advisable for the
protection of the Lenders except that, if the Majority Lenders have instructed
the Agent not to take such action or assert such rights, in no event shall the
Agent act contrary to such instructions unless required by law to do so.

14.09 RESPONSIBILITY DISCLAIMED. The Agent shall be under no liability or
responsibility whatsoever as agent hereunder:

     (a)  to the Borrower or any other person as a consequence of any failure or
          delay in the performance by, or any breach by, any Lender or Lenders
          of any of its or their obligations hereunder;

     (b)  to any Lender or Lenders as a consequence of any failure or delay in
          performance by, or any breach by, the Borrower of any of its
          obligations hereunder; or

     (c)  to any Lender or Lenders for any statements, representations or
          warranties herein or in any other documents contemplated hereby or in
          any other information



                                     - 48 -


          provided pursuant to this agreement or any other documents
          contemplated hereby or for the validity, effectiveness, enforceability
          or sufficiency of this agreement or any other document contemplated
          hereby.

14.10 INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the extent
not reimbursed by the Borrower) pro rata according to the Pro Rata Share of each
of them from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this agreement or any other
document contemplated hereby or any action taken or omitted by the Agent under
this agreement or any document contemplated hereby, except that no Lender shall
be liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or wilful misconduct of the Agent.

14.11 CREDIT DECISION. Each Lender represents and warrants to the Agent that:

     (a)  in making its decision to enter into this agreement and to make its
          Commitment Share of Accommodation available to the Borrower, it is
          independently taking whatever steps it considers necessary to evaluate
          the financial condition and affairs of the Borrower and that it has
          made an independent credit judgment without reliance upon any
          information furnished by the Agent; and

     (b)  so long as any portion of the Credit Facility is being utilized by the
          Borrower, it will continue to make its own independent evaluation of
          the financial condition and affairs of the Borrower.

14.12 SUCCESSOR AGENT. Subject to the appointment and acceptance of a successor
Agent as provided below, the Agent may resign at any time by giving 30 days
written notice thereof to the Lenders. Upon any such resignation, the Majority
Lenders shall have the right to appoint a successor Agent who shall be one of
the Lenders unless none of the Lenders wishes to accept such appointment. If no
successor Agent shall have been so appointed and shall have accepted such
appointment by the time of such resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank listed in
Schedule 1 to the Bank Act (Canada) which has an office in Toronto. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties and obligations of the retiring Agent (in its
capacity as Agent but not in its capacity as a Lender) and the retiring Agent
shall be discharged from its duties and obligations hereunder (in its capacity
as Agent but not in its capacity as a Lender). After any retiring Agent's
resignation or removal hereunder as the Agent, provisions of this Article 14
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent.



                                      - 49 -


14.13 DELEGATION BY AGENT. With the prior approval of the Majority Lenders, the
Agent shall have the right to delegate any of its duties or obligations
hereunder as Agent to any affiliate of the Agent so long as the Agent shall not
thereby be relieved of such duties or obligations.

14.14 WAIVERS AND AMENDMENTS.

     (a)  Subject to Sections 14.14(b), (c) and (d), any term, covenant or
condition of this agreement may only be amended with the consent of the Borrower
and the Majority Lenders or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively) by the
Majority Lenders and in any such event the failure to observe, perform or
discharge any such covenant, condition or obligation, so amended or waived
(whether such amendment is executed or such consent or waiver is given before or
after such failure), shall not be construed as a breach of such covenant,
condition or obligation or as a Default or Event of Default.

     (b)  Notwithstanding Section 14.14(a), without the prior written consent of
each Lender, no such amendment or waiver shall:

          (i)    increase the amount of the Credit Facility or the amount of the
                 Individual Commitment of any Lender (other than as contemplated
                 in Sections 1.13, 2.03, 8.03 and 15.06);

          (ii)   extend the Maturity Date or the time for the payment under
                 Section 9.01;

          (iii)  extend the time for the payment of the interest on any Loan,
                 forgive any portion of principal thereof, reduce the stated
                 rate of interest thereon or amend the requirement of pro rata
                 application of all amounts received by the Agent in respect
                 thereof (other than payments pursuant to Section 1.13(d));

          (iv)   change the percentage of the Lenders' requirement to constitute
                 the Majority Lenders or otherwise amend the definition of
                 Majority Lenders;

          (v)    reduce the stated amount of any fees to be paid pursuant to
                 Article 7 of this agreement;

          (vi)   permit any subordination of the indebtedness hereunder;

          (vii)  release or discharge, in whole or in part, the liability or
                 obligations of the Guarantor under the Guarantee;


                                     - 50 -


          (viii) alter the terms of any provision hereof to the extent that such
                 provision provides for the consent or approval of all of the
                 Lenders to any action or course of action; or

          (ix)   alter the terms of this Section 14.14.

     (c)  Without the prior written consent of the Agent, no amendment to or
          waiver of Sections 14.01 through 14.13 or any other provision hereof
          to the extent it affects the rights or obligations of the Agent shall
          be effective.

     (d)  Notwithstanding Sections 14.14(a) and (b), an amendment of the Agency
          Fee Agreement shall only require the consent of the Borrower and the
          Agent and compliance therewith may be waived by the Agent alone.

14.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING. Any determination to be
made by the Agent on behalf of or with the approval of the Lenders or the
Majority Lenders under this agreement shall be made by the Agent in good faith
and, if so made, shall be binding on all parties, absent manifest error.

14.16 REDISTRIBUTION OF PAYMENT. If a Lender shall receive payment of a portion
of the aggregate amount of principal and interest due to it hereunder which is
greater than the proportion received by any other Lender in respect of the
aggregate amount of principal and interest due hereunder (having regard to the
respective Payment Shares of the Lenders), the Lender receiving such
proportionately greater payment shall purchase a participation (which shall be
deemed to have been done simultaneously with receipt of such payment) in that
portion of the aggregate outstanding Accommodation of the other Lender or
Lenders under the Credit Facility so that the respective receipts shall be pro
rata to their respective participation in the Accommodations under the Credit
Facility; provided, however, that if all or part of such proportionately greater
payment received by such purchasing Lender shall be recovered from the Borrower,
such purchase shall be rescinded and the purchase price paid for such
participation shall be returned by such selling Lender or Lenders to the extent
of such recovery, but without interest.

14.17 DISTRIBUTION OF NOTICES. With respect to each notice which is delivered to
the Agent hereunder on behalf of certain of or all of the Lenders, the Agent
shall provide a copy of such notice to each of such Lenders no later than 5:00
p.m. (Toronto time) on the date it is received by the Agent if such date is a
Banking Day and it is received by the Agent prior to noon (Toronto time) on such
date; otherwise, the Agent shall provide a copy of such notice to each of such
Lenders within one Banking Day of receipt by the Agent. With respect to each
other document which is delivered to the Agent hereunder on behalf of certain of
or all of the Lenders, the Agent shall provide a copy of such document to each
of such Lenders within one Banking Day of receipt by the Agent.



                                     - 51 -


                                   ARTICLE 15
                                  MISCELLANEOUS

15.01 WAIVERS. No failure or delay by the Agent, the Lenders or the Majority
Lenders in exercising any remedy, right or power hereunder or otherwise shall
operate as a waiver thereof, except a waiver which is specifically given in
writing by the Agent, and no single or partial exercise of any power, right or
privilege hereunder will preclude any other or further exercise thereof or the
exercise of any other power, right or privilege.

15.02 NOTICES. Subject to Section 1.06, all notices, demands and other
communications provided for herein shall be in writing and shall be personally
delivered to an officer or other responsible employee of the addressee or sent
by telefacsimile, charges prepaid, at or to the applicable addresses or
telefacsimile numbers, as the case may be, set opposite the party's name on the
signature page hereof (in the case of the Borrower and the Agent) or set forth
in Schedule A hereto (in the case of the Lenders) or at or to such other address
or addresses or telefacsimile number or numbers as any party hereto may from
time to time designate to the other parties in such manner. Any communication
which is personally delivered as aforesaid shall be deemed to have been validly
and effectively given on the date of such delivery if such date is a Banking Day
and such delivery was made during normal business hours of the recipient;
otherwise, it shall be deemed to have been validly and effectively given on the
Banking Day next following such date of delivery. Any communication which is
transmitted by telefacsimile as aforesaid shall be deemed to have been validly
and effectively given on the date of transmission if such date is a Banking Day
and such transmission was made during normal business hours of the recipient;
otherwise, it shall be deemed to have been validly and effectively given on the
Banking Day next following such date of transmission.

15.03 SEVERABILITY. Any provision hereof which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof.

15.04 COUNTERPARTS. This agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which taken together
shall be deemed to constitute one and the same instrument binding upon the
parties hereto and their respective successors and permitted assigns.

15.05 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit and
shall be binding upon the parties hereto and their respective successors and
permitted assigns.

15.06 ASSIGNMENT.

     (a)  Neither this agreement nor the benefit hereof may be assigned by the
Borrower.

     (b)  Subject to five Banking Days' prior written notice to the Borrower and
consultation with the Borrower during such period, a Lender may at any time sell
to one or more




                                      - 52 -


other persons ("Participants") participating interests in any Accommodation
outstanding hereunder, any commitment of the Lender hereunder or any other
interest of the Lender hereunder. In the event of any such sale by a Lender of a
participating interest to a Participant, the Lender's obligations under this
agreement to the Borrower shall remain unchanged, the Lender shall remain solely
responsible for the performance thereof and the Borrower shall continue to be
obligated to the Lender in connection with the Lender's rights under this
agreement. The Borrower agrees that if amounts outstanding under this agreement
are due and unpaid, or shall have been declared to be or shall have become due
and payable further to the occurrence of an Event of Default, or any Default
which might mature into an Event of Default, each Participant shall be deemed to
have the right of setoff in respect of its participating interest in amounts
owing under this agreement to the same extent as if the amount of its
participating interest were owing directly to it as the Lender under this
agreement. The Borrower also agrees that each Participant shall be entitled to
the benefits of Section 8.06 with respect to its participation hereunder;
provided, that no Participant shall be entitled to receive any greater amount
pursuant to such Section than the Lender would have been entitled to receive in
respect of the amount of the participation transferred by the Lender to such
Participant had no such transfer occurred.

     (c)  Subject to obtaining the prior written consent of the Borrower (which
consent shall not be unreasonably withheld), a Lender may at any time sell all
or any part of its rights and obligations hereunder to one or more persons
("Purchasing Lenders") for an aggregate amount exceeding U.S. $20,000,000 in the
case of a partial sale. Notwithstanding the preceding sentence, a Lender may
sell all or any part of its rights and obligations hereunder to a Purchasing
Lender without the consent of the Borrower (i) for so long as an Event of
Default has occurred and is continuing, or (ii) if the Purchasing Lender is
another Lender. Upon such sale, the Lender shall, to the extent of such sale, be
released from its obligations hereunder and each of the Purchasing Lenders shall
become a party hereto to the extent of the interest so purchased. Any such
assignment by a Lender shall not be effective unless and until such Lender has
paid to the Agent an assignment fee in the amount of $2,500 for each Purchasing
Lender (except where the Purchasing Lender is an affiliate or a branch of such
Lender), unless and until the assignee has executed an instrument substantially
in the form of Schedule C hereto whereby such assignee has agreed to be bound by
the terms hereof as a Lender and has agreed to a specific Individual Commitment
and a specific address and telefacsimile number for the purpose of notices as
provided in Section 15.02 and unless and until a copy of a fully executed copy
of such instrument has been delivered to each of the Agent and the Borrower.
Upon any such assignment becoming effective, Schedule A hereto shall be deemed
to be amended to include the assignee as a Lender with the specific Individual
Commitment, address and telefacsimile number as aforesaid and the Individual
Commitment of the Lender making such assignment shall be deemed to be reduced by
the amount of the Individual Commitment of the assignee. The Borrower also
agrees that each Purchasing Lender shall be entitled to the benefits of Article
8 with respect to its purchase hereunder.



                                     - 53 -


     (d)  The Borrower authorizes the Agent and the Lenders to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee and authorizes each of the Lenders to disclose to any other Lender
any and all financial information in their possession concerning the Borrower
which has been delivered to them by or on behalf of the Borrower pursuant to
this agreement or which has been delivered to them by or on behalf of the
Borrower in connection with their credit evaluation of the Borrower prior to
becoming a party to this agreement, so long as any such Transferee agrees not to
disclose any confidential, non-public information to any person other than its
non-brokerage affiliates, employees, accountants or legal counsel, unless
required by law.

15.07 UNRELATED COSTS AND EXPENSES. The Borrower shall not be responsible for
any failure by the Agent to distribute funds received by the Agent from the
Borrower among the Lenders in accordance with their respective interests or for
any costs incurred by the Agent or any Lender by reason of any such failure by
the Agent or by reason of any dispute which may arise between the Agent and any
one or more of the Lenders or for any costs or expenses incurred by any Lender
or Participant or Purchasing Lender in connection with the utilization of the
provisions of Section 15.06.

15.08 ENTIRE AGREEMENT. This agreement and the agreements referred to herein and
delivered pursuant hereto constitute the entire agreement between the parties
hereto and supersede any prior agreements, commitment letters, undertakings,
declarations, representations and understandings, both written and verbal, in
respect of the subject matter hereof.

15.09 FURTHER ASSURANCES. The Borrower shall from time to time and at all times
hereafter, upon every reasonable request of the Agent, make, do, execute, and
deliver or cause to be made, done, executed and delivered all such further acts,
deeds, assurances and things as may be necessary in the opinion of the Agent for
more effectually implementing and carrying out the true intent and meaning of
this agreement or any agreement delivered pursuant thereto as the Agent may from
time to time request, in form and substance satisfactory to the Agent.

15.10 JUDGMENT CURRENCY.

     (a)  If, for the purpose of obtaining or enforcing judgment against the
Borrower in any court in any jurisdiction, it becomes necessary to convert into
a particular currency (such currency being hereinafter in this Section 15.10
referred to as the "Judgment Currency") an amount due in another currency (such
other currency being hereinafter in this Section 15.10 referred to as the
"Indebtedness Currency") under this agreement, the conversion shall be made at
the rate of exchange prevailing on the Banking Day immediately preceding:

          (i)  the date of actual payment of the amount due, in the case of any
               proceeding in the courts of the Province of Ontario or in the
               courts of any other jurisdiction that will give effect to such
               conversion being made on such date; or



                                     - 54 -


          (ii) the date on which the judgment is given, in the case of any
               proceeding in the courts of any other jurisdiction (the date as
               of which such conversion is made pursuant to this Section
               15.10(a)(ii) being hereinafter in this Section 15.10 referred to
               as the "Judgment Conversion Date").

     (b)  If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 15.10(a)(ii), there is a change in the rate of exchange
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the Borrower shall pay to the appropriate judgment creditor
or creditors such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of the Indebtedness Currency which could have
been purchased with the amount of Judgment Currency stipulated in the judgment
or judicial order at the rate of exchange prevailing on the Judgment Conversion
Date.

     (c)  Any amount due from the Borrower under the provisions of Section
15.10(b) shall be due to the appropriate judgment creditor or creditors as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of this agreement.

     (d)  The term "rate of exchange" in this Section 15.10 means the noon spot
rate of exchange for Canadian interbank transactions applied in converting the
Indebtedness Currency into the Judgment Currency published by the Bank of Canada
for the day in question.



                                     - 55 -




     IN WITNESS WHEREOF the parties hereto have executed this agreement.

THE BANK OF NOVA SCOTIA                  THE BANK OF NOVA SCOTIA,
Corporate Banking                        AS AGENT
44 King Street West, 16th Floor
Toronto, Ontario
M5H 1H1
                                         By: /s/
                                             -------------------------------
Attention: Syndication Department            Name:  R. Hosie
Telefax:   (416) 866-3229                    Title: M.D.


                                         By: /s/
                                             -------------------------------
                                             Name:  T. Decker
                                             Title: Associate


POTASH CORPORATION OF                    POTASH CORPORATION OF
SASKATCHEWAN INC.                        SASKATCHEWAN INC.
Suite 500, 122-1st Avenue South
Saskatoon, Saskatchewan
S7K 7G3                                  By: /s/
                                             -------------------------------
                                             Name:  Wayne R. Brownlee       c.s.
Attention: Chief Financial Officer           Title: Sr. VP Treasurer & CFO
Telefax:   (306) 933-8844

                                         By: /s/
                                             -------------------------------
                                             Name:  Betty-Ann Heggie
                                             Title: Sr. VP Corporate Relations


                                         THE BANK OF NOVA SCOTIA,
                                         AS LENDER


                                         By: /s/
                                             -------------------------------
                                             Name:  Jeff Cebryk
                                             Title: Director


                                         By:
                                             -------------------------------
                                             Name:
                                             Title:



                                     - 56 -


                                         ROYAL BANK OF CANADA


                                         By: /s/
                                             -------------------------------
                                             Name:  Allan Fordyce
                                             Title: Manager


                                         By: /s/
                                             -------------------------------
                                             Name:  Allan Yarish
                                             Title: Managing Director


                                         CREDIT SUISSE FIRST BOSTON CANADA


                                         By: /s/
                                             -------------------------------
                                             Name:  Alain Daoust
                                             Title: Director


                                         By: /s/
                                             -------------------------------
                                             Name:  Peter Chauvin
                                             Title: Vice President


                                         BANK OF AMERICA CANADA


                                         By: /s/
                                             -------------------------------
                                             Name:  D.B. Linkletter
                                             Title: Managing Director



                                         By:
                                             -------------------------------
                                             Name:
                                             Title:


                                         THE TORONTO-DOMINION BANK


                                         By: /s/
                                             -------------------------------
                                             Name:  Mohnish Kamat
                                             Title: VP


                                         By:
                                             -------------------------------
                                             Name:
                                             Title:


                                     - 57 -



                                         COMERICA BANK - CANADA


                                         By: /s/
                                             -------------------------------
                                             Name:  Marc J. Drouin
                                             Title: Assistant Vice President


                                         By:
                                             -------------------------------
                                             Name:
                                             Title:


                                          CITIBANK CANADA


                                         By: /s/
                                             -------------------------------
                                             Name:  W. Terry Marshall
                                             Title: Managing Director


                                         By:
                                             -------------------------------
                                             Name:
                                             Title:


                                         EXPORT DEVELOPMENT
                                         CORPORATION


                                         By: /s/
                                             -------------------------------
                                             Name:  Myles Edwards
                                             Title: FSM


                                         By: /s/
                                             -------------------------------
                                             Name:  Johane Seguin
                                             Title: FSM


                                         BANK OF MONTREAL


                                         By: /s/
                                             -------------------------------
                                             Name:  R. Wright
                                             Title: Vice-President


                                         By:
                                             -------------------------------
                                             Name:
                                             Title:


                                   SCHEDULE A

                             INDIVIDUAL COMMITMENTS



NAME AND ADDRESS OF LENDER                           INDIVIDUAL COMMITMENT

                                                  
The Bank of Nova Scotia                              $170,000,000
Saskatoon Commercial Banking Centre
111 - 2nd Avenue South
Saskatoon, Saskatchewan
S7K 1K6

Attention: Manager
Telefax:   306-668-1438


Royal Bank of Canada                                 $150,000,000
13th Floor, South Tower
Royal Bank Plaza
Toronto, Ontario
M5J 2J5

Attention: Allan Fordyce
Telefax:   416-974-8400


Credit Suisse First Boston Canada                    $100,000,000
1 First Canadian Place, Suite 3000
P.O. Box 301
Toronto, Ontario
M5X 1C9

Attention: Alain Daoust
Telefax:   416-352-4576

Bank of America Canada                               $60,000,000
1900, 855 - 2nd Street S.W.
Calgary, Alberta
T2P 4J7

Attention: D.B. Linkletter, Managing Director
Telefax:   403-232-8848



                                      A-2

                                                  
The Toronto-Dominion Bank                            $50,000,000
8th Floor
66 Wellington Street West
Toronto, Ontario
M5K 1A2


Attention: Monish Kamat
Telefax:   416-944-5630


Comerica Bank - Canada                               $35,000,000
Suite 2210, Royal Bank Plaza, South Tower
200 Bay Street
P.O. Box 61
Toronto, Ontario
M5J 2J2

Attention: Marc J. Drouin
Telefax:   416-367-2460


Citibank Canada                                      $30,000,000
123 Front Street West, 10th Floor
Toronto, Ontario
M5J 2M3

Attention: Chris Dunlop
Telefax:   416-947-5650


Export Development Corporation                       $30,000,000
151 O'Connor Street
Ottawa, Ontario
K1A 1K3

Attention: Myles Edwards
Telefax:   613-237-2690




                                      A-3

                                                  
Bank of Montreal                                     $25,000,000
4th Floor
1 First Canadian Place
P.O. Box 150
Toronto, Ontario
M5X 1H3

Attention: Robert Wright
Telefax:   416-359-4796







                                   SCHEDULE B

                             COMPLIANCE CERTIFICATE

TO:  THE BANK OF NOVA SCOTIA

     I, _________________________, the Chief Financial Officer of Potash
Corporation of Saskatchewan Inc. (the "Borrower") in such capacity and not
personally, hereby certify that:

1.   I am the duly appointed Chief Financial Officer of the Borrower, the
borrower named in the term credit agreement made as of September 25, 2001
between the Borrower, The Bank of Nova Scotia, as agent, and the Lenders
referred to therein (the "Credit Agreement") and as such I am providing this
certificate for and on behalf of the Borrower pursuant to the Credit Agreement.

2.   I am familiar with and have examined the provisions of the Credit Agreement
including, without limitation, those of Articles 10, 11 and 13 therein.

3.   To the best of my knowledge, information and belief and after due inquiry,
no Default has occurred and is continuing as at the date hereof.

4.   As of the last day of or for the [Fiscal Quarter/Fiscal Year] ending
_______________, the amounts and financial ratios referred to in Sections
11.01(e), 11.01(f) and 11.01(g) and Sections 11.03(d) and (e) of the Credit
Agreement are as follows:



                                                               Required Amount
                                              Actual Amount       or Limit
                                              -------------    ---------------
                                                          
     (a)  Debt to Capital                         _____:1       0.55:1

     (b)  Long Term Debt to EBIDTA                _____:1       3.5:1

     (c)  Tangible Net Worth                     $_____         $1,250,000,000

     (d)  Net Book Value of Disposed Assets      $_____         N/A

     (e)  25% of Total Assets                    $_____         N/A

     (f)  Debt of Subsidiaries                   $_____         $250,000,000
          (other than Guarantor)

     (g)  Debt of Guarantor                      $_____         $19,000,000


5.   Unless the context otherwise requires, capitalized terms in the Credit
Agreement which appear herein without definitions shall have the meanings
ascribed thereto in the Credit Agreement.


                                      B-2


         DATED this _____ day of __________________, __________.


                                                   _______________________
                                                   Chief Financial Officer



                                   SCHEDULE C

                               FORM OF ASSIGNMENT

                                                         Dated __________, _____

     Reference is made to the Term Credit Agreement made as of September 25,
2001, as amended (the "Credit Agreement"), between Potash Corporation of
Saskatchewan Inc., The Bank of Nova Scotia, as agent (in that capacity, the
"Agent") and the Lenders referred to therein. Terms defined in the Credit
Agreement are used herein as therein defined.

     ______________________________ (the "Assignor") and ___________________
(the "Assignee") agree as follows:

1.   The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, a ___% interest in and to all of
the Assignor's rights and obligations under the Credit Agreement and any
agreements, documents and instruments delivered pursuant thereto (collectively,
the "Loan Documents") as of the Effective Date (as defined below) (including,
without limitation, such percentage interest in the Assignor's Individual
Commitment as in effect on the Effective Date and the Accommodation made
available by the Assignor under the Credit Facility and outstanding on the
Effective Date).

2.   The Assignor (i) represents and warrants that as of the date hereof its
Individual Commitment is U.S. $_________ (without giving effect to assignments
thereof which have not yet become effective, including, but not limited to, the
assignment contemplated hereby), and the aggregate outstanding amount of
Accommodation made available by the Assignor under the Credit Facility is U.S.
$_________ (without giving effect to assignments thereof which have not yet
become effective, including, but not limited to, the assignment contemplated
hereby); (ii) represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any of the Companies or the
performance or observance by the Borrower of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant thereto;
and (v) gives notice to the Agent of the assignment to the Assignee hereunder.

3.   The effective date of this Assignment (the "Effective Date") shall be the
later of ____________ and the date on which a copy of a fully executed copy of
this Assignment has been delivered to Potash Corporation of Saskatchewan Inc.
and the Agent in accordance with Section 15.02 of the Credit Agreement.


                                      C-2


4.   The Assignee hereby agrees to the specific Individual Commitment in the
amount of U.S. $_________ and to the address and telefacsimile number set out
after its name on the signature page hereof for the purpose of notices as
provided in Section 15.02 of the Credit Agreement.

5.   As of the Effective Date (i) the Assignee shall, in addition to any rights
and obligations under the Loan Documents held by it immediately prior to the
Effective Date, have the rights and obligations under the Loan Documents that
have been assigned to it pursuant to this Assignment and (ii) the Assignor
shall, to the extent provided in this Assignment, relinquish its rights and be
released from its obligations under the Loan Documents.

6.   The Assignor and Assignee shall make all appropriate adjustments in
payments under the Loan Documents for periods prior to the Effective Date
directly between themselves.

7.   This Assignment shall be governed by, and construed in accordance with, the
laws of the Province of Ontario and the laws of Canada applicable therein.

8.   There shall be no novation or recreation of any of the obligations of the
Borrower under any of the Loan Documents by reason of the assignment provided
for herein.


                                    [ASSIGNOR]


                                    By: ___________________________________
                                    Title:

                                    [ASSIGNEE]


                                    By: ___________________________________
                                    Title:

                                    Address
                                    -------

                                    _______________________________________

                                    _______________________________________

                                    _______________________________________


                                    Attention: ____________________________

                                    Telefax: ______________________________


                                      C-3


If no Event of Default has occurred and is continuing, insert the following:

Potash Corporation of Saskatchewan Inc. hereby consents to the foregoing
assignment as of the _________ day of ____________ , _____.


                                    POTASH CORPORATION OF
                                    SASKATCHEWAN INC.

                                    Per: __________________________________
                                         Name:
                                         Title:



                                  SCHEDULE D-1

              OPINION OF BORROWER'S AND GUARANTOR'S ONTARIO COUNSEL

           [LETTERHEAD OF BORROWER'S AND GUARANTOR'S ONTARIO COUNSEL]


_______________ , 2001

The Bank of Nova Scotia
Corporate Banking - Syndications
44 King Street West
16th Floor
Toronto, Ontario
M5H 1H1

Dear Sirs:

Re:  U.S. $650,000,000 Term Credit Facility provided to Potash Corporation of
     Saskatchewan Inc. (the "Borrower") pursuant to a Term Credit Agreement made
     as of September 25, 2001 between the Borrower, The Bank of Nova Scotia, as
     Agent, and the Lenders referred to therein (the "Credit Agreement") and
     Guarantee Agreement made as of September 25, 2001 by PCS Nitrogen, Inc.
     (the "Guarantor") in favour of The Bank of Nova Scotia, as Agent (The
     "Guarantee")

                           -------------------------

We have acted as Ontario counsel to the Borrower in connection with the
negotiation, execution, and delivery by the Borrower of the Credit Agreement and
as Ontario counsel to the Guarantor in connection with the negotiation of the
Guarantee. This opinion is being provided to The Bank of Nova Scotia as agent
for and on behalf of itself and the Lenders. All capitalized terms which are
used herein and not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.

In connection with the foregoing, we have examined certified copies of certain
corporate proceedings of the Borrower, certificates of public officials and an
officer's certificate of the Borrower, a copy of which is annexed hereto as
Schedule "A", and have made such other investigations of fact and law as we have
deemed relevant and necessary as the basis for the opinions herein expressed. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of documents submitted as originals and the conformity to originals
of all documents submitted as copies thereof.

For the purposes of our opinions expressed herein, we have relied on the opinion
of Mr. John L.M. Hampton, General Counsel of the Borrower, of even date herewith
as to the matters set out therein (the "Borrower Opinion") and the opinion of
Arent Fox, Delaware counsel to the Guarantor, of even date herewith as to the
matters set out therein (the "Guarantor Opinion"). The Borrower Opinion is
attached hereto as Schedule "B". The Guarantor Opinion is attached hereto


                                      D-2


as Schedule "C". Each of the Borrower Opinion and the Guarantor Opinion is
satisfactory in form and we consider that you and we are justified in relying
thereon.

Our opinion expressed below in paragraph 5 is based upon, among other things,
the provisions of the Income Tax Act (Canada) including the regulations
promulgated thereunder (the "Act"), and the equivalent provisions of the tax
legislation of the Province of Ontario in force at the date of this letter, and
takes into account all proposed amendments to such law that have been publicly
announced as at such date as well as our understanding of the published
administrative practice of Revenue Canada, Customs, Excise and Taxation.

Based upon the foregoing and subject to the qualifications hereinafter set
forth, we are of the opinion that:

1.   Each of the Credit Agreement and the Agency Fee Agreement (collectively,
     the "Borrower Documents") has been duly executed and delivered by the
     Borrower.

2.   There are no consents, approvals, orders, authorizations, licences,
     exemptions or designations or registrations, qualifications, declarations,
     or filings of or by any governmental or regulatory body or person which are
     necessary as of the date hereof in order for the Borrower to execute and
     deliver the Borrower Documents and to perform its obligations thereunder or
     in order for the Guarantor to execute and deliver the Guarantee and to
     perform its obligations thereunder.

3.   Each Borrower Document is a legal, valid and binding obligation of the
     Borrower, enforceable against the Borrower in accordance with its terms.

4.   The Guarantee is a legal, valid and binding obligation of the Guarantor,
     enforceable against the Guarantor in accordance with its terms.

5.   No stamp tax or similar duty or levy is payable in connection with the
     execution and delivery of the Borrower Documents or the Guarantee.

The opinions set forth above as to the enforceability of the Borrower Documents
and the Guarantee are subject to:

     (a)  applicable, bankruptcy, insolvency, preference, winding up,
          reorganization, arrangement, moratorium or other similar laws
          affecting creditors rights generally;

     (b)  the enforceability of the Borrower Documents and the Guarantee and the
          rights and remedies set out therein may be limited by general
          principles of equity;

     (c)  a court may not treat as conclusive those certificates and
          determinations which the Borrower Documents or the Guarantee state are
          to be so treated;


                                      D-3


     (d)  the ability to recover or claim for certain costs or expenses may be
          subject to judicial discretion;

     (e)  pursuant to the Currency Act (Canada), judgment by a court in any
          province in Canada may be awarded in Canadian currency only;

     (f)  validity and enforceability of the severability provisions contained
          in the Borrower Documents and the Guarantee may be subject to judicial
          discretion;

     (g)  the requirement in the Borrower Documents or the Guarantee that
          interest be paid at a higher rate after than before default may not be
          enforceable as it may be construed as a penalty; and

     (h)  the effectiveness of provisions which purport to relieve a person from
          a liability or duty otherwise owed may be limited by law, and
          provisions requiring indemnification or reimbursement may not be
          enforced by a court to the extent that they relate to the failure of
          such person to have performed such duty or liability.

The opinions expressed herein are limited to matters governed by the laws of the
Province of Ontario and the law of Canada applicable therein.

The opinions expressed herein are provided totally for the benefit of The Bank
of Nova Scotia, as agent for and on behalf of itself and the Lenders, in
connection with the financing transaction described above. The opinion letter
may not be quoted or relied upon by anyone else without our prior written
consent.

Yours truly,



                                      D-4


                                  SCHEDULE D-2

                      OPINION OF BORROWER'S GENERAL COUNSEL

                   [LETTERHEAD OF BORROWER'S GENERAL COUNSEL]


_______________ , 2001

The Bank of Nova Scotia
Corporate Banking - Syndications
44 King Street West
16th Floor
Toronto, Ontario
M5H 1H1

Stikeman, Elliott
Commerce Court West
Suite 5300
Toronto, Ontario
M5L 1B9

Dear Sirs:

Re:  U.S. $650,000,000 Term Credit Facility provided to Potash Corporation of
     Saskatchewan Inc. (the "Borrower") pursuant to a Term Credit Agreement made
     as of September 25, 2001 between the Borrower, The Bank of Nova Scotia, as
     Agent, and the Lenders referred to therein (the "Credit Agreement")

                           -------------------------

I am the Vice-President, General Counsel and Secretary of the Borrower and in
that capacity have acted on behalf of the Borrower in connection with the
authorization, execution, and delivery by the Borrower of the Credit Agreement.
This opinion is being provided to The Bank of Nova Scotia as agent for and on
behalf of itself and the Lenders. All capitalized terms which are used herein
and not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement.

In connection with the foregoing, I have examined originals of the articles of
incorporation, and such other corporate proceedings and records of the Borrower,
and certificates of public officials and have made such other investigations of
fact and law as I have deemed relevant and necessary as the basis for the
opinions herein expressed. In such examination I have assumed the genuineness of
all signatures and the authenticity of documents submitted as originals and the
conformity to originals of all documents submitted as copies thereof.

Based upon the foregoing and subject to the qualifications hereinafter set
forth, I am of the opinion that:


                                      D-5


1.   The Borrower is a corporation duly incorporated and validly existing under
     the laws of the Province of Saskatchewan.

2.   The Borrower has full corporate capacity, power and authority to enter into
     the Credit Agreement and the Agency Fee Agreement (collectively, the
     "Documents") and to observe and perform the obligations on its part to be
     observed and performed thereunder.

3.   The entering into of the Documents and the observance and performance by
     the Borrower of the obligations on its part to be observed and performed
     thereunder do not (a) violate any provision of its articles or bylaws, or
     (b) contravene any existing law, regulation or authorization to which the
     Borrower is subject.

4.   Each Document has been duly authorized by all necessary corporate action on
     the part of the Borrower.

5.   There are no consents, approvals, orders, authorizations, licences,
     exemptions or designations or registrations, qualifications, declarations,
     or filings of or by any governmental or regulatory body or person which are
     necessary in order for the Borrower (a) to execute and deliver the
     Documents and (b) to perform its obligations thereunder.

6.   As the Credit Agreement is stated to be governed by the laws of the
     Province of Ontario, I am unable to opine as to whether the Credit
     Agreement constitutes a legal, valid and binding obligation of the
     Borrower, enforceable against it in accordance with its terms. However,
     there is nothing in Saskatchewan law which would prohibit the Borrower from
     entering into the Credit Agreement or from performing its obligations
     thereunder. I am not aware of any provision of the Credit Agreement which
     would appear to violate the public policy of Saskatchewan.

7.   The courts of Saskatchewan would give a judgment based on a judgment
     obtained in the courts of the Province of Ontario against the Borrower with
     respect to the Credit Agreement without re-examination of the merits,
     assuming proper service of process in respect of the proceeding in which
     such Ontario judgment was obtained in accordance with the laws of Ontario
     and assuming such process was duly served on the Borrower and provided that
     such judgment was for a debt or fixed sum of money, not obtained by fraud
     or any manner contrary to the principles of natural justice, not for a
     claim in respect of any laws of Ontario which a court in Saskatchewan would
     characterize as revenue, expropriating, penal or similar laws, and not
     contrary to public policy, as that term is understood under the laws of
     Saskatchewan.


                                      D-6


The opinions expressed herein are limited to matters governed by the laws of the
Province of Saskatchewan and the laws of Canada applicable therein.

Yours truly,

POTASH CORPORATION OF SASKATCHEWAN INC.




John L.M. Hampton
Vice-President, General Counsel and Secretary




                                      D-7


                                  SCHEDULE D-3

                     OPINION OF GUARANTOR'S DELAWARE COUNSEL

                  [LETTERHEAD OF GUARANTOR'S DELAWARE COUNSEL]


_______________ , 2001

The Bank of Nova Scotia
Corporate Banking - Syndications
44 King Street West
16th Floor
Toronto, Ontario
M5H 1H1

Dear Sirs:

Re:  Guarantee Agreement made as of September 25, 2001 by PCS Nitrogen, Inc.
     (the "Guarantor") in favour of The Bank of Nova Scotia, as Agent (the
     "Guarantee")

                           -------------------------

We have acted as Delaware counsel to the Guarantor in connection with the
authorization, execution, and delivery by the Guarantor of the Guarantee. This
opinion is being provided to The Bank of Nova Scotia as agent for and on behalf
of itself and the Lenders. All capitalized terms which are used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Guarantee.

In connection with the foregoing, we have examined originals of the articles of
incorporation, and such other corporate proceedings and records of the
Guarantor, and certificates of public officials and have made such other
investigations of fact and law as we have deemed relevant and necessary as the
basis for the opinions herein expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of documents submitted as
originals and the conformity to originals of all documents submitted as copies
thereof.

Based upon the foregoing and subject to the qualifications hereinafter set
forth, I am of the opinion that:

1.   The Guarantor is a corporation duly incorporated and validly existing under
     the laws of the State of Delaware.

2.   The Guarantor has full corporate capacity, power and authority to enter
     into the Guarantee and to observe and perform the obligations on its part
     to be observed and performed thereunder.


                                      D-8


3.   The entering into of the Guarantee and the observance and performance by
     the Guarantor of the obligations on its part to be observed and performed
     thereunder do not (a) violate any provision of its articles or bylaws, or
     (b) contravene any existing law, regulation or authorization to which the
     Guarantor is subject.

4.   The Guarantee has been duly authorized by all necessary corporate action on
     the part of the Guarantor.

5.   There are no consents, approvals, orders, authorizations, licences,
     exemptions or designations or registrations, qualifications, declarations,
     or filings of or by any governmental or regulatory body or person which are
     necessary in order for the Guarantor (a) to execute and deliver the
     Guarantee and (b) to perform its obligations thereunder.

6.   As the Guarantee is stated to be governed by the laws of the Province of
     Ontario, we are unable to opine as to whether the Guarantee constitutes a
     legal, valid and binding obligation of the Guarantor, enforceable against
     it in accordance with its terms. However, there is nothing in Delaware law
     which would prohibit the Guarantor from entering into the Guarantee or from
     performing its obligations thereunder. We are not aware of any provision of
     the Guarantee which would appear to violate the public policy of Delaware.

7.   The courts of Delaware would give a judgment based on a judgment obtained
     in the courts of the Province of Ontario against the Guarantor with respect
     to the Guarantee without re-examination of the merits, assuming proper
     service of process in respect of the proceeding in which such Ontario
     judgment was obtained in accordance with the laws of Ontario and assuming
     such process was duly served on the Guarantor and provided that such
     judgment was for a debt or fixed sum of money, not obtained by fraud or any
     manner contrary to the principles of natural justice, not for a claim in
     respect of any laws of Ontario which a court in Delaware would characterize
     as revenue, expropriating, penal or similar laws, and not contrary to
     public policy, as that term is understood under the laws of Delaware.

The opinions expressed herein are limited to matters governed by the laws of the
State of Delaware and the laws of the United States of America applicable
therein.

Yours truly,





                                   SCHEDULE E

                                  SUBSIDIARIES




                                                                  JURISDICTION OF
                                                                  INCORPORATION OR
NAME OF ENTITY                                                    FORMATION
- ----------------------------------------------------------------------------------
                                                               
609430 Saskatchewan Ltd.                                          Saskatchewan
628550 Saskatchewan Ltd.                                          Saskatchewan
AA Sulfuric Corporation                                           Louisiana
Canpotex Bulk Terminals Limited                                   Canada
Chilkap Resources Ltd.                                            Yukon
Inversiones PCS Chile Limitada                                    Chile
Minera Saskatchewan Limitada                                      Chile
PCS Administration (USA), Inc.                                    Delaware
PCS (Barbados) Shipping, Ltd.                                     Barbados
PCS Cassidy Lake Company                                          Ontario
PCS Chile I LLC                                                   Delaware
PCS Chile II LLC                                                  Delaware
PCS Fosfatos do Brasil Ltda.                                      Brazil
PCS Hungary Holding Limited                                       Hungary
PCS Industrial Products Inc.                                      Delaware
PCS Joint Venture, LP                                             Florida
PCS L.P. Inc.                                                     Delaware
PCS Luxembourg Finance S.a.r.l.                                   Luxembourg
PCS Nitrogen Ammonia Terminal Corporation I                       Texas
PCS Nitrogen Ammonia Terminal Corporation II                      Delaware
PCS Nitrogen Cayman Limited                                       Cayman Islands
PCS Nitrogen Fertilizer, L.P.                                     Delaware
PCS Nitrogen Fertilizer Operations, Inc.                          Delaware
PCS Nitrogen Holding Company                                      Delaware
PCS Nitrogen, Inc.                                                Delaware
PCS Nitrogen LCD Corporation                                      Delaware
PCS Nitrogen Limited                                              Trinidad
PCS Nitrogen Ohio, L.P.                                           Delaware
PCS Nitrogen Payroll Corporation                                  Delaware
PCS Nitrogen Trinidad Corporation                                 Delaware
PCS Nitrogen Trinidad Fertilizer Corporation                      Delaware
PCS Nitrogen Trinidad Finance Ltd.                                United Kingdom
PCS Nitrogen Trinidad Limited                                     Trinidad
PCS Phosphate Company, Inc.                                       Delaware
PCS Purified Phosphates                                           Virginia
PCS Sales (Canada) Inc.                                           Saskatchewan
PCS Sales (Indiana), Inc.                                         Indiana
PCS Sales (Iowa), Inc.                                            Iowa
PCS Sales (USA), Inc.                                             Delaware
PCS Yumbes S.C.M.                                                 Chile
Phosphate Holding Company, Inc.                                   Delaware
Potash Corporation of Saskatchewan (Florida) Inc.                 Florida
Potash Corporation of Saskatchewan Transport Limited              Saskatchewan
Potash Holding Company, Inc.                                      Delaware
Texasgulf Aircraft Inc.                                           Delaware
TG Corporation                                                    Delaware
White Springs Agricultural Chemicals, Inc.                        Delaware



                                   SCHEDULE F

                   PARTNERSHIPS, JOINT VENTURES AND SYNDICATES


                                 See Schedule E






                                   SCHEDULE G

                            SPECIFIC PERMITTED LIENS



                            Intentionally left blank





                                   SCHEDULE H

                              ADDITIONAL DISCLOSURE



                            Intentionally left blank






                                   SCHEDULE I

                               GUARANTEE AGREEMENT


To:         The Bank of Nova Scotia (the "Agent")
            Corporate Banking - Syndications
            44 King Street West, 16th Floor
            Toronto, Ontario M5H 1H1

And To:     The Lenders under the Credit Agreement (defined below)

            WHEREAS PCS Nitrogen, Inc. (hereinafter called the "Guarantor") is
an indirect wholly-owned subsidiary of Potash Corporation of Saskatchewan Inc.
(hereinafter called the "Borrower");

            AND WHEREAS, pursuant to the terms of a term credit agreement, dated
as of September 25, 2001 (as it may be amended, modified or supplemented from
time to time, the "Credit Agreement") between the Borrower, the Lenders named
therein and The Bank of Nova Scotia, as Agent, the Lenders established a certain
term credit facility in favour of the Borrower;

            AND WHEREAS, as security for the payment of the full amount of the
indebtedness, liabilities and obligations of the Borrower to the Agent and the
Lenders under the Credit Agreement, the Guarantor has agreed to guarantee
payment of the Borrower's indebtedness, liabilities and obligations to the Agent
and the Lenders under the Credit Agreement on the terms and subject to the
conditions hereinafter set forth;

            AND WHEREAS, it is in the best interests of the Guarantor to execute
and deliver this agreement, inasmuch as the Guarantor will derive the
substantial direct and indirect benefits from the establishment of the aforesaid
credit facility by the Lenders in favour of the Borrower;

            NOW THEREFORE, for good and valuable consideration, the Guarantor
hereby covenants to and for the benefit of the Agent and the Lenders as follows:


                                    ARTICLE 1
                                 INTERPRETATION

1.01 DEFINED TERMS. In this agreement or any amendment to this agreement, unless
the context clearly indicates to the contrary:

"BANKING DAY" means any day other than a Saturday or a Sunday on which banks
generally are open for business in Toronto, Ontario.

"CREDIT AGREEMENT" is defined in the second recital.

"DESIGNATED CURRENCY" shall have the meaning ascribed thereto in Section 2.01.


                                      I-2


"EVENT OF DEFAULT" shall have the meaning ascribed thereto in the Credit
Agreement.

"OBLIGATIONS" means all advances, debts, liabilities, obligations, covenants and
duties arising under the Credit Agreement, owing by the Borrower to the Agent
and the Lenders, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising.

"OTHER TAXES" shall have the meaning ascribed thereto in Section 2.10(b).

"PERSON" means any natural person, corporation, firm, partnership, joint
venture, joint stock company, incorporated or unincorporated association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.

"TAXES" shall have the meaning ascribed thereto in Section 2.10(a).

1.02 OTHER USAGES. References to "this agreement", "the agreement", "hereof",
"herein", "hereto" and like references refer to this Guarantee Agreement, as
amended, modified, supplemented or replaced from time to time, and not to any
particular Article, Section or other subdivision of this agreement.

1.03 PLURAL AND SINGULAR. Where the context so requires, words importing the
singular number shall include the plural and vice versa.

1.04 HEADINGS. The division of this agreement into Articles and Sections and the
insertion of headings in this agreement are for convenience of reference only
and shall not affect the construction or interpretation of this agreement.

1.05 APPLICABLE LAW. This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario. Any legal action or
proceeding with respect to this agreement may be brought in the courts of the
Province of Ontario and, by execution and delivery of this agreement, the
Guarantor hereby accepts for itself and in respect of it property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The
Guarantor irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Guarantor at
the address set opposite its name on the signature page hereof, such service to
become effective 5 Banking Days after such mailing. Nothing herein shall limit
the right of the Agent or the Lenders to serve process in any manner permitted
by law or to commence legal proceedings or otherwise proceed against the
Guarantor in any other jurisdiction.

1.06 TIME OF THE ESSENCE. Time shall in all respects be of the essence of this
agreement, and no extension or variation of this agreement or any obligation
hereunder shall operate as a waiver of this provision.


                                      I-3


                                    ARTICLE 2
                                    GUARANTEE

2.01 GUARANTEE. The Guarantor hereby unconditionally, absolutely and irrevocably
guarantees the full and punctual payment to the Agent and the Lenders, as and
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all of the Obligations in the same
currency (the "Designated Currency") as the currency of the Obligations, whether
for principal, interest, fees, expenses, indemnities or otherwise.

2.02 ACCELERATION OF GUARANTEE. The Guarantor agrees that, in the event of the
dissolution or insolvency of the Guarantor, or the inability or failure (after
any applicable grace periods) of the Guarantor to pay debts as they become due,
or an assignment by the Guarantor for the benefit of creditors, or the
commencement of any proceeding in respect of the Guarantor under any bankruptcy,
insolvency or similar laws (and, if such proceedings are commenced by a person
other than the Guarantor, such proceedings are not dismissed or stayed within 90
days of the commencement thereof), and if such event shall occur at a time when
any of the Obligations may not then be due and payable, the Guarantor will pay
to the Agent and the Lenders forthwith the full amount which would be payable
hereunder by the Guarantor if all such Obligations were then due and payable.

2.03 NATURE OF GUARANTEE. Subject to Section 2.02, the Guarantee shall in all
respects be a continuing, absolute, unconditional and irrevocable guarantee of
payment when due and not of collection, and shall remain in full force and
effect until all Obligations have been paid in full, all obligations of the
Guarantor hereunder have been paid in full and the commitments of the Lenders
under the Credit Agreement have been permanently terminated. The Guarantor
guarantees that the Obligations will be paid strictly in accordance with the
terms of the Credit Agreement, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The liability of the
Guarantor under this agreement shall be absolute, unconditional and irrevocable
irrespective of, and without being lessened or limited by:

     (a)  any lack of validity, legality, effectiveness or enforceability of the
          Credit Agreement;

     (b)  the failure of the Agent or the Lenders:

          (i)    to assert any claim or demand or to enforce any right or remedy
                 against the Borrower or any other Person (including any other
                 guarantor) under the provisions of the Credit Agreement, or
                 otherwise, or

          (ii)   to exercise any right or remedy against any other guarantor of,
                 or collateral securing, any of the Obligations;

     (c)  any change in the time, manner or place of payment of, or in any other
          term of, all or any of the Obligations, or any other extension,
          compromise, indulgence or renewal of any Obligation;


                                      I-4


     (d)  any reduction, limitation, variation, impairment, discontinuance or
          termination of the Obligations for any reason (other than by reason of
          any payment which is not required to be rescinded), including any
          claim of waiver, release, discharge, surrender, alteration or
          compromise, and shall not be subject to (and the Guarantor hereby
          waives any right to or claim of) any defence or setoff, counterclaim,
          recoupment or termination whatsoever by reason of the invalidity,
          illegality, nongenuineness, irregularity, compromise, unenforceability
          of, or any other event or occurrence affecting, the Obligations or
          otherwise (other than by reason of any payment which is not required
          to be rescinded);

     (e)  any amendment to, rescission, waiver or other modification of, or any
          consent to any departure from, any of the terms of the Credit
          Agreement or any other guarantees or security;

     (f)  any addition, exchange, release, discharge, renewal, realization or
          non-perfection of any collateral security for the Obligations or any
          amendment to, or waiver or release or addition of, or consent to
          departure from, any other guarantee held by the Bank as security for
          any of the Obligations;

     (g)  the loss of or in respect of or the unenforceability of any other
          guarantee or other security which the Agent or the Lenders may now or
          hereafter hold in respect of the Obligations, whether occasioned by
          the fault of the Agent or the Lenders or otherwise;

     (h)  any change in the name of the Borrower or in the constating documents,
          capital structure, capacity or constitution of the Borrower, the
          bankruptcy or insolvency of the Borrower, the sale of any or all of
          the Borrower's business or assets or the Borrower being consolidated,
          merged or amalgamated with any other Person; or

     (i)  any other circumstance (other than final payment in full of all
          Obligations) which might otherwise constitute a defence available to,
          or a legal or equitable discharge of, the Borrower, any surety or any
          guarantor.

2.04 ENFORCEMENT. Upon any of the Obligations becoming due and payable and not
being paid by the Borrower, the Guarantor shall, within 2 Banking Days after
notice thereof has been given to the Guarantors by the Agent, pay to the Agent
and the Lenders, the total amount of such Obligations and the Agent and the
Lenders may apply the sum so paid against such of such Obligations as the Agent
and the Lenders may see it and change any such application in whole or in part
from time to time. A written statement of the Borrower as to the amount
remaining unpaid to the Agent and the Lenders by the Borrower at any time shall
be conclusive evidence against the Guarantor, absent manifest error, as to the
amount remaining unpaid to the Agent and the Lenders by the Borrower at such
time. A written statement of the Agent as to the amount remaining unpaid to the
Agent and the Lenders by the Borrower at any time shall be prima facie evidence
against the Guarantor, absent manifest error, as to the amount remaining unpaid
to the Agent and the Lenders by the Borrower at such time.


                                      I-5


2.05 GUARANTEE IN ADDITION TO OTHER SECURITY. This guarantee shall be in
addition to and not in substitution for any other guarantee or other security
which the Agent and the Lenders may now or hereafter hold in respect of the
Obligations, and the Agent and the Lenders shall be under no obligation to
marshal in favour of the Guarantor any other guarantee or other security or any
moneys or other assets which the Agent and the Lenders may be entitled to
receive or may have a claim upon.

2.06 REINSTATEMENT. This guarantee and all other terms of this agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be returned or restored by the Agent or the Lenders by reason of
the insolvency, bankruptcy or reorganization of the Borrower or for any other
reason not involving the wilful misconduct or gross negligence of the Agent or
the Lenders, all as though such payment had not been made.

2.07 WAIVER OF NOTICE, ETC. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice (other than the notice referred to in
Section 2.04) with respect to any of the Obligations and this agreement.

2.08 SUBROGATION RIGHTS. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this agreement, by any payment made
hereunder or otherwise, until the prior satisfaction in full of all of the
Obligations. Any amount paid to the Guarantor on account of any such subrogation
rights prior to the satisfaction in full of all Obligations shall be held in
trust for the Agent and the Lenders and shall immediately be paid to the Agent
and credited and applied against the Obligations, whether matured or unmatured,
in accordance with the terms of the Credit Agreement; provided, however, that if

     (a)  the Guarantor has made payment to the Agent of all or any part of the
          Obligations, and

     (b)  all Obligations have been paid in full and all commitments of the
          Lenders under the Credit Agreement have been permanently terminated,

the Agent and the Lenders agree that, at the Guarantor's request, the Agent and
the Lenders will execute and deliver to the Guarantor appropriate documents
(without recourse and without representation and warranty) necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor. In furtherance of the foregoing,
for so long as any Obligations or any commitments of the Lenders to the Borrower
remain outstanding, the Guarantor hereby postpones any and all claims it may
have against the Borrower to the Obligations and agrees to refrain from taking
any action or commencing any proceeding against the Borrower or its successors
or assigns, whether in connection with a bankruptcy proceeding or otherwise, to
recover any amounts in respect of payments made under this agreement to the
Agent or the Lenders, provided, however, that so long as no Event of Default has
occurred and is continuing, the foregoing postponement shall not apply.


                                      I-6


2.09 ADVANCES AFTER CERTAIN EVENTS. All advances, renewals and credits made or
granted by the Lenders purportedly to or for the Borrower after the bankruptcy
or insolvency of the Borrower, but before the Agent or the Lenders have received
notice thereof, shall be deemed to form part of the Obligations, and all
advances, renewals and credits obtained from the Lenders purportedly by or on
behalf of the Borrower shall be deemed to form part of the Obligations,
notwithstanding any lack or limitation of power, incapacity or disability of the
Borrower or of the directors or agents thereof and notwithstanding that the
Borrower may not be a legal entity and notwithstanding any irregularity, defect
or informality in the obtaining of such advances, renewals or credits. The
Guarantor will indemnify the Agent and the Lenders for any such advance, renewal
or credit that is not repaid to the Agent and the Lenders.

2.10 PAYMENTS FREE AND CLEAR OF TAXES, ETC. The Guarantor hereby agrees that:

     (a)  Any and all payments made by the Guarantor hereunder shall be made
          free and clear of, and without deduction for, any and all present or
          future taxes, levies, imposts, deductions, charges or withholdings,
          and all liabilities with respect thereto, excluding, in the case of
          the Agent or any Lender, taxes imposed on its net income (all such
          non-excluded taxes, levies, imposts, deductions, charges, withholdings
          and liabilities being hereinafter referred to as "Taxes"). If the
          Guarantor shall be required by law to deduct any Taxes from or in
          respect of any sum payable hereunder to the Agent or any Lender

          (i)    the sum payable shall be increased as may be necessary so that
                 after making all required deductions (including deductions
                 applicable to additional sums payable under this Section 2.10)
                 the Agent or such Lender receives an amount equal to the sum it
                 would have received had no such deductions been made,

          (ii)   the Guarantor shall make such deductions, and

          (iii)  the Guarantor shall pay the full amount deducted to the
                 relevant taxation authority or other authority in accordance
                 with applicable law.

     (b)  The Guarantor shall pay any present or future stamp or documentary
          taxes or any other excise or property taxes, charges or similar levies
          which arise from any payment made hereunder or from the execution,
          delivery or registration of, or otherwise with respect to, this
          agreement (hereinafter referred to as "Other Taxes").

     (c)  The Guarantor hereby indemnifies and holds harmless the Agent and the
          Lenders for the full amount of Taxes or Other Taxes (including,
          without limitation, any Taxes or Other Taxes imposed by any
          jurisdiction on amounts payable under this Section 2.10) paid by the
          Agent or any Lender and any liability (including penalties, interest
          and expenses) arising therefrom or with respect thereto, whether or
          not such Taxes or Other Taxes were correctly or legally assessed.


                                      I-7


     (d)  Within 30 days after the date of any payment of Taxes or Other Taxes
          by the Guarantor, the Guarantor will furnish to the Agent the original
          or a certified copy of a receipt evidencing payment thereof. If no
          Taxes or Other Taxes are payable in respect of any payment hereunder
          to the Agent, the Guarantor will, upon the request of the Agent,
          furnish to the Agent a certificate from each appropriate taxing
          authority, or an opinion of counsel acceptable to the Agent, in either
          case stating that such payment is exempt from or not subject to Taxes
          or Other Taxes.

     (e)  Without prejudice to the survival of any other agreement of the
          Guarantor hereunder, the agreements and obligations of the Guarantor
          contained in this Section 2.10 shall survive the payment in full of
          the Obligations.


                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

3.01 REPRESENTATIONS AND WARRANTIES. To induce the Agent and the Lenders to
extend credit to the Borrower, the Guarantor hereby represents and warrants to
the Agent and the Lenders as follows and acknowledges and confirms that the
Agent and the Lenders are relying upon such representations and warranties in
extending credit to the Borrower:

     (a)  STATUS AND POWER. The Guarantor is a corporation duly incorporated and
          organized and validly subsisting in good standing under the laws of
          the State of Delaware. The Guarantor has all requisite corporate
          capacity, power and authority to own, hold under licence or lease its
          properties, to carry on its business as now conducted and to otherwise
          enter into, and carry out the transactions contemplated by, this
          agreement.

     (b)  AUTHORIZATION AND ENFORCEMENT OF DOCUMENTS. All necessary action has
          been taken to authorize the execution, delivery and performance of
          this agreement by the Guarantor. The Guarantor has duly executed and
          delivered this agreement. This agreement is a legal, valid and binding
          obligation of the Guarantor, enforceable against the Guarantor by the
          Agent and the Lenders in accordance with its terms, except to the
          extent that the enforceability thereof may be limited by applicable
          bankruptcy, insolvency, moratorium, reorganization and other similar
          laws limiting the enforcement of creditors' rights generally and the
          fact that the courts may deny the granting or enforcement of equitable
          remedies.

     (c)  COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
          performance of this agreement by the Guarantor, and the consummation
          of the transactions contemplated herein do not and will not conflict
          with, result in any material breach or violation of, or constitute a
          material default under, the terms, conditions or provisions of the
          charter or constating documents or by-laws of, or any shareholder
          agreement relating to, the Guarantor or of any law, regulation,
          judgment, decree or order binding on or applicable to the Guarantor or
          to which


                                      I-8

          its property is subject or of any material agreement, lease, licence,
          permit or other instrument to which the Guarantor is a party or is
          otherwise bound or by which the Guarantor benefits or to which its
          property is subject and do not require the consent or approval of any
          Person except any conflicts, breaches, violations or defaults which do
          not have a material adverse effect on the Guarantor.

3.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Guarantor contained in Section 3.01 shall survive the
execution and delivery of this agreement notwithstanding any investigation made
at any time by or on behalf of the Agent or any Lender.


                                    ARTICLE 4
                           GENERAL CONTRACT PROVISIONS

4.01 NOTICES. All notices, requests, demands, directions and other
communications provided for herein shall be in writing and shall be personally
delivered to an officer or other responsible employee of the addressee or sent
by telefacsimile, charges prepaid, at or to, in the case of the Agent or any
Lender, the address or telefacsimile number of the Agent set forth on the first
page hereof and, in the case of the Guarantor, the address or telefacsimile
number set opposite its name on the signature page hereof, or to such other
address or addresses or telefacsimile number or numbers as either party hereto
may from time to time designate to the other party in such manner. Any
communication which is personally delivered as aforesaid shall be deemed to have
been validly and effectively given on the date of such delivery if such date is
a Banking Day and such delivery was made during normal business hours of the
recipient; otherwise, it shall be deemed to have been validly and effectively
given on the Banking Day next following such date of delivery. Any communication
which is transmitted by telefacsimile as aforesaid shall be deemed to have been
validly and effectively given on the date of transmission if such date is a
Banking Day and such transmission was made during normal business hours of the
recipient; otherwise, it shall be deemed to have been validly and effectively
given on the Banking Day next following such date of transmission.

4.02 FURTHER ASSURANCES. The Guarantor shall do, execute and deliver or shall
cause to be done, executed and delivered all such further acts, documents and
things as the Agent may reasonably request for the purpose of giving effect to
this agreement.

4.03 SEVERABILITY. Wherever possible, each provision of this agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement shall be prohibited by or invalid under
such 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 agreement.

4.04 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit of the
Agent and the Lenders and their respective successors and assigns and shall be
binding upon the Guarantor and its successors and assigns.


                                      I-9


4.05 AMENDMENTS AND WAIVERS. No amendment to or waiver of any provision of this
agreement, nor consent to any departure by the Guarantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Agent
and all of the Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

4.06 ENTIRE AGREEMENT. This agreement and the agreements referred to herein
constitute the entire agreement between the parties hereto and supersede any
prior agreements, undertakings, declarations, representations and
understandings, both written and verbal, in respect of the subject matter
hereof.

4.07 JUDGMENT CURRENCY.

     (a) If, for the purpose of obtaining or enforcing judgment against the
Guarantor in any court in any jurisdiction, it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 4.07
referred to as the "Judgment Currency") an amount due in a Designated Currency
under this agreement, the conversion shall be made at the rate of exchange
prevailing on the Banking Day immediately preceding:

          (i)    the date of actual payment of the amount due, in the case of
                 any proceeding in the courts of the Province of Ontario or in
                 the courts of any other jurisdiction that will give effect to
                 such conversion being made on such date; or

          (ii)   the date on which the judgment is given, in the case of any
                 proceeding in the courts of any other jurisdiction (the date as
                 of which such conversion is made pursuant to this Section
                 4.07(a)(ii) being hereinafter in this Section 4.07 referred to
                 as the "Judgment Conversion Date").

     (b) If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 4.07(a)(ii), there is a change in the rate of exchange
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the Guarantor shall pay such additional amount (if any, but
in any event not a lesser amount) as may be necessary to ensure that the amount
paid in the Judgment Currency, when converted at the rate of exchange prevailing
on the date of payment, will produce the amount of the Designated Currency which
could have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date.

     (c) Any amount due from the Guarantor under the provisions of Section
4.07(b) shall be due as a separate debt and shall not be affected by judgment
being obtained for any other amounts due under or in respect of this agreement.

     (d) The term "rate of exchange" in this Section 4.07 means the noon rate of
exchange of the Judgment Currency into the Designated Currency published by the
Bank of Canada for the day in question for Canadian interbank transactions.


                                      I-10


4.08 SET-OFF. In addition to any rights now or hereafter granted under
applicable law, and not by way of limitation of any such rights, the Agent and
each Lender is authorized upon any amounts being payable by the Guarantor to the
Agent or such Lender hereunder, without notice to the Guarantor or to any other
Person, any such notice being expressly waived by the Guarantor, to setoff,
appropriate and apply any and all deposits, matured or unmatured, general or
special, and any other indebtedness at any time held by or owing by the Agent or
such Lender to or for the credit of or the account of the Guarantor against and
on account of the obligations and liabilities of the Guarantor which are due and
payable to the Agent and the Lenders under this agreement.

4.09 NO WAIVER; REMEDIES; NO DUTY. In addition to, and not in limitation of,
Section 2.03 and Section 2.07, no failure on the part of the Agent or any Lender
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Neither the Agent nor any Lender has any duty or
responsibility to provide the Guarantor with any credit or other information
concerning the Borrower's affairs, financial condition or business which may
come into the Agent's or such Lender's possession.

            IN WITNESS WHEREOF the Guarantor has executed this agreement as of
the 25th day of September, 2001.



PCS Nitrogen, Inc.                       PCS NITROGEN, INC.
1101 Skokie Boulevard
Suite 400
Northbrook, IL  60062
Attention:  Legal Department                                              c.s.
Telefax:    (847) 849-4663               Per: /s/
                                              -------------------------------
                                              Name:  Wayne R. Brownlee
                                              Title: Vice President & Treasurer

- - with a copy to -

Potash Corporation of Saskatchewan Inc.
Suite 500, 122 First Ave. South
Saskatoon, Saskatchewan S7K 7G3
Attention: General Counsel
Telefax: (306) 933-8877




                                   SCHEDULE J

                               MATERIAL LITIGATION


(a)  As described in Note 27 to the Borrower's consolidated financial statements
     for 2000, a copy of which is attached hereto as Appendix I.

(b)  As described in the Borrower's Annual Report on Form 10-K for 2000, Item 3
     Legal proceedings (and items incorporated by reference therein), a copy of
     which is attached hereto as Appendix II.

(c)  As described in the Borrower's Quarterly Report on Form 10-Q for the
     quarterly period ended March 31, 2001, Part II, Item 1 Legal Proceedings, a
     copy of which Item 1 is attached as Appendix III.


                                   APPENDIX I

27.  Contingencies

     PCS is a shareholder in Canpotex which markets potash offshore. Should any
operating losses or other liabilities be incurred by Canpotex, the shareholders
have contractually agreed to reimburse Canpotex for such losses or liabilities
in proportion to their productive capacity. There were no such operating losses
or other liabilities in 2000.

     In common with other companies in the industry, the Company is unable to
acquire insurance for underground assets.

     In 1997, five former officers of Arcadian Corporation filed lawsuits
against PCS. The complaints allege that PCS breached employment agreements
between Arcadian and the officers and breached the related assumption agreement
among PCS, PCS Nitrogen and Arcadian. Two of the claims were settled in January
1999. On December 1, 1998, the court entered judgments in the amount of $18.5
(plus additional amounts to offset the effect of excise taxes) with respect to
three of the claims. The Company appealed these judgments. On February 2, 2001,
the Appellate Court substantially affirmed the judgments and remanded the case
for further proceedings, which are expected to result in a reduction of the
judgments by approximately $1.0 million. Management of the Company believes that
the lawsuits will not have a material adverse effect on the Company's financial
condition or results of operations.

     On May 11 and 12, 1999, representatives of the United States Environmental
Protection Agency ("EPA"), Federal Bureau of Investigation and other state and
local agencies executed a search warrant on the Company's Geismar facility in
connection with a grand jury investigation. The grand jury investigation is
continuing. The Company cannot predict at this time what may result from the
government investigation, or whether any such result would have a material
adverse effect on the Company.

     In 1999, pursuant to an Administrative Order by Consent, PCS Joint Venture
submitted to the EPA Phase I of a work plan to conduct a Remedial Investigation
and Feasibility Study ("RI/FS") of certain releases to the soil and groundwater
of the PCS Joint Venture facility in Lakeland, Florida and other area properties
(collectively, "the site"). The Florida Department of Environmental Protection
("FDEP") had also commenced an investigation and filed a lawsuit against PCS
Joint Venture and a number of other defendants regarding the site, but this
action has been relatively inactive since EPA became involved. In 2000, PCS
Joint Venture and another party completed an interim removal action in which
contaminated soils at the site were excavated. PCS Joint Venture continued to
assess and evaluate the nature and extent of the impacts at the site. No final
determination has yet been made of the nature, timing or cost of remedial action
that may be needed nor to what extent costs incurred may be recoverable from
third parties.

     Various other claims and lawsuits are pending against the Company. While it
is not possible to determine the ultimate outcome of such actions at this time,
it is management's opinion that the ultimate resolution of such items, including
those pertaining to environmental matters, will not have a material effect on
the Company's financial condition or results of operations.





                                   APPENDIX II

ITEM 3.  Legal Proceedings.

Civil Antirust Complaints

     In June 1993, PCS and PCS Sales (Canada) Inc. ("PCS Sales (Canada)") were
served with a complaint relating to a suit filed in the United States District
Court for Minnesota against most North American potash producers, including the
Company. The complaint alleged a conspiracy among the defendants to fix the
price of potash purchased by the plaintiffs as well as potash purchased by the
members of a class of certain purchasers proposed by the plaintiffs. Similar
complaints were filed in the United States District Courts for the Northern
District of Illinois and the Western District of Virginia. On motion of the
defendants, all of the complaints were transferred and consolidated for
pre-trial purposes in the United States District Court for Minnesota. The
complaint sought treble damages and other relief. PCS and PCS Sales (Canada)
filed a motion for summary judgment on December 22, 1995. On January 2, 1997,
Judge Richard H. Kyle issued an order granting the defendants' motions for
summary judgment and dismissing the lawsuit. The plaintiffs appealed that order
to the United States Court of Appeals for the Eighth Circuit. On February 17,
2000, the Eighth Circuit, en banc, affirmed Judge Kyle's summary judgment
ruling. On October 2, 2000, the United States Supreme Court denied the
plaintiffs' petition for writ of certiori. Accordingly, the claims of the
federal court plaintiffs have now been fully and finally dismissed.

     Additional complaints were filed in the California and Illinois state
courts on behalf of purported classes of indirect purchasers of potash in those
states. PCS moved to dismiss the California State Court lawsuits for lack of
personal jurisdiction and the court ruled that it does not have personal
jurisdiction over PCS but that it does have personal jurisdiction over PCS Sales
(Canada). Following Judge Kyle's summary judgment decision, the California
litigation was stayed, and the plaintiffs agreed to dismiss their lawsuit if
Judge Kyle's summary judgment ruling withstood appeal. The claims have now been
fully and finally dismissed. The Illinois State Court complaint was dismissed
for failure to state a cause of action and that decision is final and not
subject to appeal.

Former Arcadian Executive Proceedings

     On May 7, 1997, J. Douglas Campbell, Alfred L. Williams and Peter H.
Kesser, former officers of Arcadian, filed lawsuits against the Company in the
United States District Court for the Western District of Tennessee. The
complaints allege that the Company breached employment agreements between
Arcadian and the officers and breached the related assumption agreement among
the Company, PCS Nitrogen, and Arcadian. The complaints of Mr. Campbell, Mr.
Williams and Mr. Kesser seek damages in excess of $22.2 million, $6.2 million
and $3.7 million, respectively. On August 11, 1998, the Court ruled that the
Company had assumed the obligations of the employment agreements and that
equitable claims and defenses asserted against the executives for breaches of
fiduciary duties, corporate waste, and self-dealing should be asserted by PCS
Nitrogen in the state court action described below. On December 1, 1998 the
court entered judgments in the amounts of $12.7 million, $3.2 million, and $2.6
million in favor of Mr. Campbell, Mr. Williams and Mr. Kesser, plus additional
amounts sufficient to offset the impact of certain excise taxes, if applicable.
On February 2, 2001, the Appellate Court substantially affirmed the judgment and
remanded the case for further proceedings, which are expected to result in a
reduction of the judgments by approximately $1 million.



     Still pending is an action which the Company and PCS Nitrogen filed in the
Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis
against Messrs. Campbell, Williams and Kesser for declaratory relief and
damages. The Company and PCS Nitrogen alleged that the defendants committed
breaches of their fiduciary duties in the negotiation of, obtaining approval
for, and execution of the employment agreements each of them had with Arcadian.
The Company and PCS Nitrogen also seek a declaratory judgment that the
employment agreements are unenforceable. The defendants counterclaims appear to
seek damages substantially equivalent to the damages sought in their
individually filed suits as plaintiffs.

     Management of the Company believes that the lawsuits will not have a
material adverse effect on the Company's financial condition or results of
operations.

Geismar Facility Investigation

     On May 11 and May 12, 1999, representatives of the EPA, Federal Bureau of
Investigation, and other state and local agencies ("governmental agencies")
executed a search warrant issued by the United States District Court for the
Middle District of Louisiana on the Geismar Facility in connection with a grand
jury investigation. In executing the search warrant, the governmental agencies
seized documents and electronic media, performed environmental sampling, and
interviewed Geismar Facility employees and contract employees. In addition, the
governmental agencies have contacted former Geismar Facility employees in
connection with the investigation. The Company has also been served with grand
jury subpoenas requesting documents and other information from the Geismar
Facility and PCS Nitrogen's headquarters. The grand jury investigation is
continuing. The Company is also conducting its own internal investigation. The
Company cannot predict at this time what may result from the governments'
investigation or whether any such result would have a material adverse effect on
the Company.

Lakeland, Florida Proceeding

     On September 23, 1999, an action was served on PCS Joint Venture and eight
other defendants on behalf of a class of persons living in the vicinity of the
site who claim to have suffered damages as a result of releases from the PCS
Joint Venture facility in Lakeland, Florida and other area properties. PCS Joint
Venture has reached an agreement in principle to settle the matter, which
settlement is not expected to have a material adverse effect on the Company.
Before the settlement can be finalized, class members will receive notice of the
proposed settlement and be provided an opportunity to opt out prior to a
fairness hearing before the trial court, which hearing is expected to take place
later in 2001.

Environmental Proceedings

     For a description of certain environmental proceedings involving the
Company, see "Environmental Matters".





ENVIRONMENTAL MATTERS

     The Company's operations are subject to numerous environmental requirements
under Canadian, U.S., Chilean, Brazilian and Trinidad and Tobago federal,
provincial, state and local laws and regulations. Such laws and regulations
govern, among other matters, air emissions, waste water discharges, land use and
reclamation and solid and hazardous waste management. Many of these laws and
regulations are becoming increasingly stringent, and the cost of compliance with
these requirements can be expected to increase over time. An on-going U.S.
federal grand jury investigation regarding environmental matters at the Geismar
Facility and certain other environmental matters that are the subject of
investigation or litigation are discussed under the heading "Legal Proceedings".

     The Company believes that it is currently in material compliance with
applicable environmental laws and regulations. The Company believes that it is
well positioned to meet anticipated requirements under the applicable
environmental laws and regulations. Although significant capital expenditures
and operating costs have been incurred and will continue to be incurred on
account of environmental laws and regulations, the Company does not believe,
except as otherwise set out herein, that such environmental laws and regulations
have had, or will have, a material adverse effect on its business. However, the
Company cannot predict the impact of new or changed laws or regulations or
permit requirements, including the matters discussed below, or changes in the
ways that such laws and regulations are administered, interpreted, or enforced.
The Company anticipates that its routine expenditures related to environmental
regulatory matters in 2001 will not differ materially from the previous year.

     The Company and its facilities are also subject to various environmental
statutes and programs focused on site reclamation and restoration and on
investigation and, where necessary, remediation of contaminated properties. The
Company's obligations and potential liabilities under these programs have been
and can be expected to continue to be significant. The Company does not believe,
except as set out herein, that such obligations and potential liabilities have
had, or will have, a material adverse effect on its business. However, it is
often difficult to estimate and predict the potential costs and liabilities
associated with these programs and there is no guarantee that the Company will
not in the future be identified as potentially responsible for additional costs
under these programs, either as a result of changes in existing laws and
regulations or as a result of the identification of additional matters or
properties covered by these programs.

Environmental Expenditures

Reclamation and Restoration Costs

     Site restoration and reclamation costs have been accrued for various sites.
At December 31, 2000, the Company had accrued the following amounts for site
reclamation and restoration: $27.3 million for the Aurora Facility, $54.9
million for the White Springs Facility, $0.3 million for various idle sulfur
facilities, $18.6 million for certain Florida Favorite Fertilizer facilities,
and $4.2 million for the Cassidy Lake Facility. The idle sulfur facilities were
part of the acquisition of Texasgulf and are undergoing dismantlement and
environmental restoration efforts. The current portion of restoration and
reclamation costs accrued in 2000 totalled $22.3 million. These amounts
represent the Company's current estimate of potential site restoration and
reclamation costs as last assessed in December 2000. The expenditures are
generally incurred over an extended period of time.



     Annual environmental expenditures for reclamation and restoration during
the year ended December 31, 2000 were $59.9 million. Of this amount, $55.2
million was charged to operations, $2.7 million was capitalized and $2.0 million
was charged against accrued reclamation costs.

Capping of Byproduct Gypsum Stacks

     Production of phosphoric acid also produces gypsum, which is normally
placed in above-ground storage areas called gypsum stacks. Various jurisdictions
have established programs that require companies to reduce the potential
environmental impacts associated with gypsum stacks. In Florida, these
regulations require companies to "cap" the gypsum stacks in order to reduce
seepage into groundwater when such stacks reach their design capacity (for the
Company, in approximately 35 years), or after March 25, 2001 if groundwater
standards are not being met. The Company has submitted documentation to the
Florida Department of Environmental Protection ("FDEP") to demonstrate its
compliance with this rule. The Company expects to be allowed to continue using
the three gypsum stacks at the White Springs Facility for their remaining useful
lives of approximately 35 years. At December 31, 2000, a balance of $35.4
million was included in accrued reclamation costs for this gypsum stack capping
requirement. The obligations of White Springs regarding the gypsum stacks are
guaranteed by PCS. In the event continued use of the stacks at White Springs
were to be prohibited in the near term under these regulations, the prohibition
would result in a closure/new stack cost currently estimated in excess of $100
million.

     The Company also has gypsum stacks at the Aurora Facility in North Carolina
and the Geismar Facility in Louisiana. In North Carolina, on exhaustion of the
mine's phosphate reserves, disposition of the remaining gypsum must comply with
the laws in effect at that time. The inactive portions of the gypsum stacks at
the Geismar Facility must be capped and have stormwater runoff collected. Under
the current laws in North Carolina and Louisiana, the closure or decommissioning
of the gypsum stacks at these two facilities is not expected to have a material
adverse effect on the Company's business.

Other Environmental Costs

     The Company's operating expenses, other than reclamation and restoration
and gypsum stack capping, relating to compliance with environmental laws and
regulations governing ongoing operations were approximately $23.0 million for
the year ended December 31, 2000 as compared to $20.2 million for the year ended
December 31, 1999.

Capital Expenditures

     The Company routinely undertakes capital projects to improve pollution
control facilities. In 2000, a total of approximately $11.7 million in capital
expenditures (exclusive of capitalized reclamation expenditures) was spent to
meet the Company's environmental control objectives as compared to $5.1 million
in 1999. The Company expects that its capital requirements for environmental
projects may increase in the future due to increasingly stringent environmental
regulations arising from current and future requirements of law.



     With respect to air emissions, the Company anticipates that additional
expenditures may be required to meet increasingly stringent U.S. federal and
state regulatory and permit requirements, including existing and anticipated
regulations under the U.S. federal Clean Air Act as amended in 1990. Both
federal and state regulation of hazardous air pollutants are expected to require
additional air emission control equipment and increased operating expenditures
at some U.S. facilities. In particular, recent rules require specific new
controls for hydrogen fluoride emissions in phosphoric acid production. Some
states, including Louisiana, also regulate ammonia and nitric acid as hazardous
air pollutants. Further, the U.S. Environmental Protection Agency ("EPA") has
published new National Ambient Air Quality Standards for both ozone and
particulate matter which are more stringent than existing standards and has
issued a number of regulations establishing requirements to reduce nitrogen
oxide (NOx) emissions. The Company continues to monitor developments in these
various programs and to assess their potential impact on the Company's
operations.

     The federal Clean Air Act operating permit program requires the addition of
enhanced emissions monitoring equipment at some facilities, as well as the
imposition of permit fees based upon facility air pollutant emissions. If the
Company undertakes facility expansion at its U.S. plants, preconstruction air
permits (under either the federal Prevention of Significant Deterioration or New
Source Review programs) may need to be obtained for any such expansion of these
facilities. Such permits would impose certain restrictions on air pollutant
emissions from the expanded plants and compliance with those restrictions could
require installation and use of additional pollution control devices.

Site Assessment and Remediation

     In addition to environmental regulation of its current operations, the
Company also may incur costs and liabilities in connection with its and its
predecessors' past and current waste disposal practices and ownership and
operation of real property and facilities, as well as its mining activities. The
U.S. federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") and other U.S. federal and state laws impose liability
on, among others, past and present owners and operators of properties or
facilities at which hazardous substances have been released into the environment
and persons who arrange for disposal of hazardous substances that are released
into the environment. Liability under these laws may be imposed jointly and
severally and without regard to fault or the legality of the original actions,
although such liability may be divided or allocated according to various
equitable and other factors. In the course of its current and former operations,
including those of divested and acquired businesses, the Company has generated,
and with respect to its current operations, continues to generate wastes that
could result in liability for the Company under these laws.

     The EPA is conducting an investigation into soil and groundwater
contamination of a PCS Joint Venture blending facility located in Lakeland,
Florida and certain adjoining property. In 1998, EPA notified the Company of
potential liability under Section 107(a) of CERCLA. On October 21, 1999, PCS
Joint Venture signed an Administrative Order on Consent with the EPA in which
PCS Joint Venture agreed to conduct a Remedial Investigation and Feasibility
Study ("RI/FS") for the Lakeland Facility and other area properties (the "Landia
Site"). On October 13, 1999, PCS Joint Venture had submitted to the EPA Phase I
of a work plan to conduct the RI/FS. Starting in September 1999, the EPA
conducted additional investigations of environmental




conditions at focused areas of the Landia Site. In February 2000, the EPA
notified PCS Joint Venture and two other entities of the Agency's intent to
undertake interim site response activities at specific areas of the Landia Site
in the event the responsible parties were unable to make a timely commitment to
conduct these site response activities pursuant to a proposed Administrative
Order on Consent. On June 5, 2000, PCS Joint Venture and another entity entered
into an Administrative Order on Consent pursuant to which they undertook certain
of the interim response activities at the Landia Site. The interim response
activities have been completed. No final determination has yet been made of the
nature, timing, or cost of further remedial action that may be needed.

     FDEP is also conducting an investigation into soil and ground water
contamination at the Landia Site. On April 8, 1997, FDEP filed a Complaint and
Petition for Enforcement against PCS Joint Venture and others. The Company filed
an Answer, Affirmative Defenses and Cross Claims on May 12, 1997. The matter has
remained relatively inactive since the involvement of EPA in the site.

     In 1994, EPA and the Georgia Department of Natural Resources, Environmental
Protection Division ("GEPD") separately wrote to PCS Joint Venture seeking
certain environmental information regarding its Moultrie, Georgia location.
Responses to both requests have been provided by PCS Joint Venture. Preliminary
investigations have confirmed the presence of lead-contaminated soil at the
site. The initial assessment is that this lead contamination is attributable to
former operations at the site, the facilities of which were dismantled some time
ago. However, a complete assessment of the site has not yet been completed, and
the full nature and extent of the contamination cannot be quantified at this
time. A proposed corrective action plan was filed in 1999 but no recommended
course of action has yet been approved by GEPD.

     PCS Joint Venture is co-operating with regulatory authorities in their
investigations of the Lakeland and Moultrie sites. It is also attempting to
determine the number and location of other parties who may be liable for
remediation of these sites. However, because site assessments are ongoing and
because other parties may be liable for some or all costs of remediation, the
ultimate liability of PCS Joint Venture has not yet been determined.

     The Company is also engaged in ongoing site assessment and/or remediation
activities at a number of other facilities currently or previously owned or
operated by the Company. In each instance, the Company is working with the
appropriate regulatory authorities to address these sites. In addition, the
Company has in the past received notices identifying it as a potentially
responsible party with respect to certain sites that were never owned or
operated by the Company. The Company has reviewed information pertinent to these
sites and has responded to each of these notices. Based on current information
about these various facilities and sites and other potentially responsible
parties, the Company believes that the Company's future obligation with respect
to these facilities and sites will not have a material adverse effect on the
Company's financial condition or results of operation.

Permits and Regulatory Approvals

     Many of the Company's operations and facilities are required by federal,
provincial, state and local environmental laws to obtain and operate in
compliance with a range of permits and regulatory approvals. Such permits and
approvals typically have to be renewed or reissued periodically. The Company may
also become subject to new laws or regulations that require it to



obtain new or additional permits or approvals. The Company believes that it is
currently in material compliance with its existing permits and regulatory
approvals. However, there can be no assurance that such permits or approvals
will issue in the ordinary course. Further, the terms and conditions of future
permits and approvals may be more stringent and may require increased
expenditures on the part of the Company.

     A significant portion of the Company's phosphate reserves in Aurora, North
Carolina is located in wetlands and, under the U.S. federal Clean Water Act, a
permit must be obtained from the U.S. Army Corps of Engineers (the "Corps")
before mining activity that will disturb the wetlands may occur. As part of the
permit process for PCS Phosphate, the Corps issued a draft Environmental Impact
Statement in January 1994 which was supplemented in May 1995. In 1997, PCS
Phosphate received its required authorizations from the State of North Carolina
and on August 14, 1997, the Corps issued a permit granting approval to mine
certain areas described in the Environmental Impact Statement through 2017. The
permit contains a section on wetlands mitigation approach and methods regarding
wetland impacts associated with mining covered by the permit. The Company has
acquired additional land adjacent to the Aurora Facility for mitigation
purposes. In order to demonstrate the feasibility of such activities, as of
December 31, 2000, the Company had created or restored 2,904 acres of wetlands.

     On May 6, 1999, the Southern Environmental Law Center ("SELC") and the
Pamlico-Tar River Foundation ("PTRF") gave notice to the EPA and the Department
of the Army of their intent to file a civil action under the citizens suit
provisions of the Clean Water Act. To date, no such action has been filed. The
notice letter asserts that the Corps failed to comply with certain provisions of
the Clean Water Act when it issued a permit to PCS Phosphate in August 1997. The
notice letter also requests revocation of the permit. PCS Phosphate believes
that the permit was properly issued. PCS Phosphate intends to monitor the status
of this matter and take any steps needed to protect its ability to continue the
operations authorized by the permit.

     In addition to the wetlands permit from the Corps, the Company also needs
additional authorizations from agencies of the State of North Carolina to
continue its mining activities in North Carolina. The Company is required to
have State mining permits that contain bonding and reclamation requirements. The
Company has a State mining permit for the areas presently being mined by the
Company that is effective through 2003, but this permit must be amended
periodically to add additional acreage during this period. The Company also
holds another mining permit from the State for the area of the property that
contains the wetlands covered by the permit issued by the Corps. This State
permit has been renewed until 2005.

     The gypsum stacks at the White Springs Facility will continue to be used
and when closed will be covered or capped to the extent required under
applicable regulations. The Florida Phosphogypsum Rule permits the use of
existing gypsum stacks until they reach capacity, if groundwater standards are
met as of and after March 25, 2001. Due to the curtailment of phosphoric acid
production at the White Springs Facility, the Company will submit a request for
the temporary deactivation of two of the three gypsum stacks. This request must
be renewed annually as long as the gypsum stacks are temporarily inactive. If
this request were not granted and the stacks remained inactive, then the closure
and capping requirements for gypsum stacks would become applicable to these two
stacks. See "Environmental Expenditures -- Capping of Byproduct Gypsum Stacks".



     Lands mined by White Springs after July 1, 1975 and unmined lands used in
certain mining operations after July 1, 1984 are subject to mandatory
reclamation requirements of the State of Florida. Wetlands must be reclaimed on
an acre-for-acre basis under the rules of the FDEP unless otherwise provided in,
or pursuant to, a Memorandum of Agreement ("MOA"), dated February 1, 1995,
between OxyChem and FDEP (which agreement was later assigned to the Company).
The MOA established alternate procedures for the Company to follow. The current
practice of White Springs is to return most upland areas to commercial pine
plantation, which is the predominant pre-operation land use. Reclaimed lands
include uplands, wetlands and lakes.

     Land reclamation at White Springs is currently performed pursuant to
federal, state, and local regulatory approvals granted in 1996 and 1997 to
implement the 1995 MOA between OxyChem and FDEP. The MOA provides for mitigation
of mining impacts in a portion of the mining area, particularly impacts to
wetlands, to be done through funding of public acquisition of environmentally
sensitive lands in the region. Land reclamation continues to be done on-site but
is undertaken using the alternate standards of the MOA which do not require the
on-site reclamation of wetlands and which allow for the construction of lands
that are expected to be of greater future utility. The Company's contributions
for the land acquisition program through 2000 totalled $5.2 million.

     White Springs has initiated a process for securing an additional federal
permit and ancillary modifications of state and local regulatory approvals
needed for continuation of mining operations beyond the expiration of its
current federal permit in 2002. The process involves environmental studies of
potential mining areas and evaluation of mine plan and reclamation alternatives.
All affected regulatory authorities, various commenting agencies, and interested
outside parties are participating in the process. Selection of mine plan and
reclamation alternatives and the results of the environmental studies could
result in changes to reclamation and mitigation practices with higher costs and
changes to mining areas with reserve impacts. The magnitude of such cost impacts
cannot be estimated until the studies and evaluations are completed. Failure to
secure the required approvals for continuation of the mining operations under
any reclamation or mitigation alternative would negatively affect reserves and
costs.

Potash Decommissioning Regulations

     The environmental regulations of the Province of Saskatchewan require each
potash mine to have decommissioning and reclamation (D&R) plans. Financial
assurances for these plans must be established within one year following
approval of these plans by the responsible provincial minister. Pursuant to the
regulations, the Company filed D&R plans with the Minister of the Environment
for Saskatchewan, in the spring of 1997. In February 1998, the Company was
advised that, although the D&R plans were technically acceptable, the regulatory
agency did not accept the schedule proposed to decommission the waste salt
piles. Following further discussions between the provincial potash industry and
the regulatory agency, the Company was advised in July 2000 that the D&R plans
submitted in 1997 were accepted, provided that the plans are revised by 2005. A
government-industry task force was established to produce mutually acceptable
revisions of the plans which would incorporate a cost benefit analysis of the
decommissioning options. The process of revising the D&R plans is continuing.
Concurrently, a committee of industry and government financial experts is
examining the financial instruments that could be used to provide financial
assurance for the D&R plans in the interim period before 2005. A recommendation
from this committee is expected in 2001. Because of the uncertainty



regarding the final nature of the D&R plans, the timing of implementation and
the structure of the financial assurance, the Company is unable, at this time,
to accurately estimate the financial implications of the plans.

GOVERNMENT REGULATIONS

     In September 1987, legislation was adopted in Saskatchewan that authorized
the government to control production at potash mines located in the Province of
Saskatchewan. The legislation, which has not taken effect but which can be
brought into effect by proclamation of the Cabinet of Saskatchewan, permits the
Cabinet, and the Potash Resources Board which would be created under such
legislation, to prescribe rates of potash production in Saskatchewan and to
allocate production among individual mines. The Company cannot predict at this
time if or when the legislation will be proclaimed or its impact on the
Company's financial condition or results of operations.





                                  APPENDIX III

PART II.  Other Information

ITEM 1.  Legal Proceedings

Geismar Facility Investigation

     On May 11 and May 12, 1999, representatives of the EPA, Federal Bureau of
Investigation, and other state and local agencies ("governmental agencies")
executed a search warrant issued by the United States District Court for the
Middle District of Louisiana on the Geismar Facility in connection with a grand
jury investigation. In executing the search warrant, the governmental agencies
seized documents and electronic media, performed environmental sampling, and
interviewed Geismar Facility employees and contract employees. In addition, the
governmental agencies have contacted current and former Geismar Facility and
Company employees in connection with the investigation. The Company has also
been served with grand jury subpoenas requesting documents and other information
from the Geismar Facility and PCS Nitrogen's headquarters. In May 2001, the
Company learned that the investigation is expected to continue and that targets
of the investigation include the Company and certain current and former
employees, including individuals with current and/or previous management
responsibility for the Company's nitrogen operations. The Company is also
conducting its own internal investigation. The Company cannot predict at this
time what may result from the governments' investigation or whether any such
result would have a material adverse effect on the Company.

EX-4.B

Exhibit 4(b)

AMENDING AGREEMENT

(Syndicated Term Credit Facility)

THIS AGREEMENT is made as of September 23, 2003

BETWEEN:

POTASH CORPORATION OF SASKATCHEWAN INC.,

a corporation subsisting under the laws of Canada

(hereinafter referred to as the “Borrower”),

OF THE FIRST PART,

-and -

THE FINANCIAL INSTITUTIONS SET FORTH ON SCHEDULE A

HERETO AND ON THE SIGNATURE PAGES

HEREOF UNDER THE HEADING “LENDERS:”

(hereinafter referred to collectively as the “Lenders” and

individually as a “Lender”),

OF THE SECOND PART,

-and -

THE BANK OF NOVA SCOTIA,

a Canadian chartered bank, as agent of the Lenders

(hereinafter referred to as the “Agent”),

OF THE THIRD PART.

      WHEREAS the parties hereto have agreed to amend and supplement certain provisions of the Credit Agreement as hereinafter set forth;

      NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby conclusively acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:

1.   Interpretation

1.1. In this Agreement and the recitals hereto, unless something in the subject matter or context is inconsistent therewith:

“Agreement” means this agreement, as amended, modified, supplemented or restated from time to time.

“Credit Agreement” means the term credit agreement made as of September 25, 2001 between Borrower, the Lenders listed in Schedule A thereto and such other financial institutions as become party thereto as lenders, and the Agent.

1.2. Capitalized terms used herein without express definition shall have the same meanings herein as are ascribed thereto in the Credit Agreement.

1.3. The division of this Agreement into Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms “this Agreement”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Section or other portion hereof and include any agreements supplemental hereto.

1.4. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

2.   Amendments and Supplements

2.1. Amendments to Applicable Margin. Section 1.01 of the Credit Agreement is hereby amended by deleting the existing definition of “Applicable Margin” in its entirety and substituting the following therefor:

“Applicable Margin” means, at any time, the applicable rate per annum set forth in the table below for the applicable S & P rating and the applicable Utilization Rate:

S & P’s Corporate
Credit or Unsecured	Utilization Rate
Debt Rating of
Borrower	< 1/3	³ 1/3 and<  2/3	³ 2/3
A- or above	0.50% per annum	0.575% per annum	0.65% per annum
BBB+	0.65% per annum	0.725% per annum	0.80% per annum
BBB	0.85% per annum	0.925% per annum	1.00% per annum
BBB-	1.10% per annum	1.175% per annum	1.25% per annum
BB+ or below or unrated	1.60% per annum	1.675% per annum	1.75% per annum

2.2. Amendments to Standby Fee Rate. Section 1.01 of the Credit Agreement is hereby amended by deleting the existing definition of “Standby Fee Rate” in its entirety and substituting the following therefor:

“Standby Fee Rate” means, at any time, the applicable rate per annum set forth in the table below opposite the applicable S & P rating:

S & P’s Corporate Credit or
Unsecured Debt Rating of
Borrower	Standby Fee Rate
A- or above	0.10% per annum
BBB+	0.125% per annum
BBB	0.15% per annum
BBB-	0.20% per annum
BB+ or below or unrated	0.30% per annum

2.3. Increase of Credit Facility. Section 2.01 of the Credit Agreement is hereby amended to delete the amount “U.S.$650,000,000” on third line thereof and to substitute therefor “U.S.$750,000,000”; for certainty, the parties hereto confirm and agree that the amount of the Credit Facility shall be and is hereby increased from U.S.$650,000,000 to U.S.$750,000,000.

2.4. Addition of New Lenders.

(a)   Addition of New Lenders. The parties hereto confirm and agree that, from and after the date hereof, each of BNP Paribas (Canada), HSBC Bank Canada, Rabobank Nederland, Canadian Branch and Société Générale (Canada) (collectively, the “New Lenders” and, individually, a “New Lender”) shall be a Lender for all purposes of the Credit Agreement and other Loan Documents having the Individual Commitment set forth opposite its name on Schedule A hereto and all references herein or therein to “Lenders” or “a Lender” shall be deemed to include each of the New Lenders.

2

(b)	Novation of New Lenders. Each of the New Lenders hereby agrees that it will be bound by the Credit Agreement and the other Loan Documents as a Lender to the extent of its Individual Commitment as fully as if it had been an original party to the Credit Agreement.
(c)	Notices. The parties hereto hereby confirm and agree that, from and after the date hereof, any demand, notice or communication to be given to a New Lender, as a Lender, in accordance with the provisions of the Credit Agreement shall be made or given to such New Lender at the address set out in Schedule A to the Credit Agreement, as amended hereby.
(d)	The Agent. Without in any way limiting the other provisions hereof, each New Lender irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with the provisions of the Credit Agreement.
(e)	Independent Credit Decision. Each New Lender acknowledges to the Agent that such New Lender has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of the Borrower and its Subsidiaries, all of the matters and transactions contemplated herein and in the Credit Agreement and other Loan Documents and all other matters incidental to the Credit Agreement and the other Loan Documents. Each New Lender confirms with the Agent that it does not rely, and it will not hereafter rely, on the Agent:

(i)	to check or inquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower, its Subsidiaries or any other person under or in connection with the Credit Agreement and other Loan Documents or the transactions therein contemplated (whether or not such information has been or is hereafter distributed to it by the Agent); or
(ii)	to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower and its Subsidiaries.

Each New Lender acknowledges to the Agent that a copy of the Credit Agreement (including a copy of the Schedules annexed thereto) has been made available to it for review and further acknowledges and agrees that it has received copies of such other Loan Documents and such other information that it has requested for the purposes of its investigation and analysis of all matters related to this Agreement, the Credit Agreement, the other Loan Documents and the transactions contemplated hereby and thereby. Each New Lender acknowledges to the Agent that it is satisfied with the form and substance of the Credit Agreement (as amended and supplemented hereby) and the other Loan Documents.

2.5. New Schedule A; Revised Commitments. Schedule A to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule A attached hereto, inter alia, to reflect changes in the Individual Commitments of Lenders and the addition of the New Lenders.

2.6. Extension of Conversion Date. The Conversion Date is hereby extended to September 21, 2004 pursuant to Section 1.13 of the Credit Agreement with respect to each Lender.

2.7. Addition of Affirmative Covenant. Section 11.01 of the Credit Agreement is hereby amended to add the following new covenant as Section 11.01(n):

“(n)  Ranking of Obligations. The Borrower shall at all times ensure that the Obligations and the obligations of the Guarantor under the Guarantee rank at least pari passu in right of payment with the most senior unsecured, unsubordinated Debt thereof.”

3

3.   Representations and Warranties

      The Borrower hereby represents and warrants as follows to each Lender and the Agent and acknowledges and confirms that each Lender and the Agent is relying upon such representations and warranties:

(a)   Capacity, Power and Authority

(i)	It is duly incorporated and is validly subsisting under the laws of its jurisdiction of incorporation and has all the requisite corporate capacity, power and authority to carry on its business as presently conducted and to own its property; and
(ii)	It has the requisite corporate capacity, power and authority to execute and deliver this Agreement.

(b)   Authorization; Enforceability

It has taken or caused to be taken all necessary action to authorize, and has duly executed and delivered, this Agreement, and this Agreement is a legal, valid and binding obligation of it enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, winding up, insolvency, moratorium or other laws of general application affecting the enforcement of creditors’ rights generally and to the equitable and statutory powers of the courts having jurisdiction with respect thereto.

(c)   Compliance with Other Instruments

The execution, delivery and performance by the Borrower of this Agreement and the consummation of the transactions contemplated herein do not conflict with, result in any breach or violation of, or constitute a default under the terms, conditions or provisions of its articles, by-laws or other constating documents or any unanimous shareholder agreement relating to, the Borrower or of any law, regulation, judgment, decree or order binding on or applicable to the Borrower or to which its property is subject or of any material agreement, lease, licence, permit or other instrument to which the Borrower or any of its Subsidiaries is a party or is otherwise bound or by which any of them benefits or to which any of their property is subject and do not require the consent or approval of any Official Body or any other party.

      The representations and warranties set out in this Agreement shall survive the execution and delivery of this Agreement and the making of each Accommodation, notwithstanding any investigations or examinations which may be made by or on behalf of the Agent, the Lenders or Lenders’ counsel. Such representations and warranties shall survive until the Credit Agreement has been terminated.

4.   Conditions Precedent

      The amendments and supplements to the Credit Agreement contained herein shall be effective upon, and shall be subject to, the satisfaction of the following conditions precedent:

(a)	the Borrower shall have paid to the Agent, for each Lender, a fee in United States dollars equal to 0.05% of the Individual Commitment of each Lender;
(b)	the Guarantor shall have executed and delivered to the Agent on behalf of the Lenders a confirmation with respect to its Guarantee in the form attached hereto;
(c)	the Borrower and the Guarantor shall have each delivered to the Agent (i) a current certificate of status or good standing, as the case may be, in respect of its respective jurisdiction of incorporation, (ii) certified copies (dated on or after the date hereof) of its articles, by-laws and other constating documents and of its resolutions authorizing the execution and delivery of the Loan Documents to which it is a party, including, without limitation, this Agreement or the aforementioned confirmation, as the case may be, and (iii) a certificate of incumbency of the officers of the Borrower and the Guarantor executing the same; and

4

(d) the Agent and the Lenders shall have received legal opinions from internal or external counsel to each of the Borrower and the Guarantor respecting this Agreement, the confirmation of the Guarantee and the transactions contemplated hereby, each such opinion to be in form and substance satisfactory to the Agent and Lenders’ counsel (acting reasonably).

The foregoing conditions precedent are inserted for the sole benefit of the Lenders and the Agent and may be waived in writing by the Lenders, in whole or in part (with or without terms and conditions).

5.   Confirmation of Credit Agreement and other Loan Documents

      The Credit Agreement and the other Loan Documents to which the Borrower is a party and all covenants, terms and provisions thereof, except as expressly amended and supplemented by this Agreement, shall be and continue to be in full force and effect and the Credit Agreement as amended and supplemented by this Agreement and each of the other Loan Documents to which the Borrower is a party is hereby ratified and confirmed and shall from and after the date hereof continue in full force and effect as herein amended and supplemented, with such amendments and supplements being effective from and as of the date hereof upon satisfaction of the conditions precedent set forth in Section 4 hereof.

6.   Further Assurances

      The parties hereto shall from time to time do all such further acts and things and execute and deliver all such documents as are required in order to effect the full intent of and fully perform and carry out the terms of this Agreement.

7.   Enurement

      This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and permitted assigns.

8.   Counterparts

      This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Such executed counterparts may be delivered by facsimile transmission and, when so delivered, shall constitute a binding agreement of the parties hereto.

      IN WITNESS WHEREOF the parties hereto have executed this Agreement.

POTASH CORPORATION OF

SASKATCHEWAN INC.

By:  /s/ WAYNE BROWNLEE

Name:        Wayne Brownlee

Title: Sr. V.P., Treasurer & CFO

By:  /s/ BETTY-ANN HEGGIE

Name:        Betty-Ann Heggie

Title: Sr. V.P., Corporate Relations

5

LENDERS:

THE BANK OF NOVA SCOTIA

By:  /s/ JEFF CEBRYK

Name:        Jeff Cebryk

Title: Director

By  /s/ ROBERT WASYLYNIUK

Name:        Robert Wasylyniuk

Title: Associate

ROYAL BANK OF CANADA

By:  /s/ PASCAL MUZARD

Name:        Pascal Muzard

Title: Attorney-in-fact

By: 

Name:

Title:

CREDIT SUISSE FIRST BOSTON,

TORONTO BRANCH

By:  /s/ ALAIN DAOUST

Name:        Alain Daoust

Title: Director

By:  /s/ PETER CHAUVIN

Name:        Peter Chauvin

Title: Vice President

6

BANK OF AMERICA, N.A., CANADA BRANCH

By:  /s/ NELSON LAM

Name:        Nelson Lam

Title: Vice President

By: 

Name:

Title:

COMERICA BANK, CANADA BRANCH

By:  /s/ MARC J. DROUIN

Name:        Marc J. Drouin

Title: Assistant Vice President

By: 

Name:

Title:

EXPORT DEVELOPMENT CANADA

By:  /s/ DAN O’BLENIS

Name:        Dan O’Blenis

Title: Loan Asset Manager

By:  /s/ VITO DI TURI

Name:        Vito Di Turi

Title: Loan Portfolio Manager

7

BANK OF MONTREAL

By:  /s/ R. WRIGHT

Name:        R. Wright

Title: Vice President

By: 

Name:

Title:

BANK OF TOKYO-MITSUBISHI (CANADA)

By:  /s/ DAVIS J. STEWART

Name:        Davis J. Stewart

Title: Vice President

By: 

Name:

Title:

BNP PARIBAS (CANADA)

By:  /s/ CHARLES RITCHIE

Name:        Charles Ritchie

Title: Vice President
Energy & Project Finance

By:  /s/ ANDREW SCLATER

Name:        Andrew Sclater

Title: Assistant Vice President,
Corporate Banking

8

HSBC BANK CANADA

By:  /s/ NIGEL RICHARDSON

Name:        Nigel Richardson

Title: Head of Corporate & Institutional
Banking Western Region

By:  /s/ DAVE EYOLFSON

Name:        Dave Eyolfson

Title: Manager Commercial Banking

RABOBANK NEDERLAND,

CANADIAN BRANCH

By:  /s/ GOVERT VERSTRALEN

Name:        Govert Verstralen

Title: General Manager Principal Officer

By:  /s/ ANDREW CHEWPA

Name:        Andrew Chewpa

Title: VP — Relationship Manager

SOCIÉTÉ GÉNÉRALE (CANADA)

By:  /s/ M. SCHACTER

Name:        M. Schacter

Title: Managing Director

By:  /s/ G. BENAY

Name:        G. Benay

Title: Director

9

AGENT:

THE BANK OF NOVA SCOTIA,
in its capacity as Agent

By:  /s/ JEFF CEBRYK

Name:        Jeff Cebryk

Title: Director

10

Schedule A

Individual Commitments

Name and Address of Lender		Individual Commitment
The Bank of Nova Scotia		U.S.$130,000,000
Corporate Banking Suite 2000, 700 – 2nd Street S.W. Calgary, Alberta T2P 2N7
Attention:	Director
Facsimile:	(403) 221-6497
Royal Bank of Canada		U.S.$125,000,000
5th Floor, South Tower Royal Bank Plaza Toronto, Ontario M5J 2W7
Attention:	Allan Fordyce
Facsimile:	(416) 842-5320
Credit Suisse First Boston, Toronto Branch		U.S.$100,000,000
1 First Canadian Place, Suite 3000 P.O. Box 301 Toronto, Ontario M5X 1C9
Attention:	Alain Daoust
Facsimile:	(416) 352-4576
Bank of America, N.A., Canada Branch		U.S.$60,000,000
Consumer Products Group — Portfolio Management 231 S. La Salle Street IL 231-10-06 Chicago, Illinois 60697
Attention:	Monique Ruiz
Facsimile:	(312) 987-5614
Comerica Bank, Canada Branch		U.S.$35,000,000
Suite 2210, Royal Bank Plaza, South Tower 200 Bay Street P.O. Box 61 Toronto, Ontario M5J 2J2
Attention:	Marc J. Drouin
Facsimile:	(416) 367-2460

i

Name and Address of Lender		Individual Commitment
Export Development Canada		U.S.$50,000,000
151 O’Connor Street Ottawa, Ontario K1A 1K3
Attention:	Paul Hemsing
Facsimile:	(613) 598-3167
Bank of Montreal		U.S.$50,000,000
4th Floor 1 First Canadian Place P.O. Box 150 Toronto, Ontario M5X 1H3
Attention:	Robert Wright
Facsimile:	(416) 359-7796
Bank of Tokyo-Mitsubishi (Canada)		U.S.$25,000,000
Vancouver Office 950 – 666 Burrard Street Vancouver, British Columbia V6C 3L1
Attention:	Davis J. Stewart, Vice President Corporate Banking Group
Facsimile:	(604) 691-7311
BNP Paribas (Canada)		U.S.$25,000,000
77 King Street West Suite 4100, Royal Trust Tower Toronto, Ontario M5K 1N8
Attention:	Charles Ritchie, Vice President
Facsimile:	(416) 947-3538
HSBC Bank Canada		U.S.$50,000,000
2210, 777 – 8th Avenue S.W. Calgary, Alberta T2P 3R5
Attention:	Nigel Richardson Head of Corporate & Institutional Banking, Western Region
Facsimile:	(403) 215-4433

ii

Name and Address of Lender		Individual Commitment
Rabobank Nederland, Canadian Branch		U.S.$50,000,000
77 King Street West, Suite 4520 Royal Trust Tower, TD Centre P.O. Box 57 Toronto, Ontario M5K 1E7
Attention:	Andrew Chewpa, Vice President and Relationship Manager
Facsimile:	(416) 941-9750
Société Générale (Canada)		U.S.$50,000,000
100 Yonge Street Scotia Plaza, Suite 1002 Toronto, Ontario M5C 2W1
Attention:	Marla Schacter, Managing Director
Facsimile:	(416) 364-1879

iii

CONFIRMATION OF GUARANTEE

TO: The Lenders

AND TO: The Bank of Nova Scotia, as agent of the Lenders (the “Agent”)

     WHEREAS Potash Corporation of Saskatchewan Inc. (“PCS”) entered into the term credit agreement (the “Credit Agreement”) made as of September 25, 2001 between PCS, the financial institutions party thereto, as Lenders, and the Agent;

     AND WHEREAS the undersigned guaranteed all of the Obligations of PCS to the Agent and the Lenders pursuant to the guarantee agreement made as of September 25, 2001 by the undersigned in favour of the Agent and the Lenders (the “Guarantee”);

     AND WHEREAS, pursuant to an Amending Agreement (the “Amending Agreement”) made as of even date herewith, PCS, the Lenders and the Agent have agreed to amend and supplement the Credit Agreement as set out therein;

     AND WHEREAS the undersigned has been provided with a true, correct and complete copy of the Amending Agreement;

     AND WHEREAS the undersigned wishes to confirm to the Agent and the Lenders that the Guarantee continues to apply to the Obligations of PCS.

     IN CONSIDERATION of the sum of U.S. $10.00 now paid by the Agent and the Lenders to the undersigned and other good and valuable consideration (the receipt and sufficiency of which are hereby conclusively acknowledged), the undersigned hereby confirms and agrees that the Guarantee is and shall remain in full force and effect in all respects notwithstanding the Amending Agreement and the amendments and supplements therein contained and shall continue to exist and apply to all of the Obligations. This Confirmation is in addition to and shall not limit, derogate from or otherwise affect the provisions of the Guarantee including, without limitation, Article 2 of the Guarantee.

     Capitalized terms used herein without express definition shall have the same meanings herein as are ascribed thereto in the Guarantee.

     DATED as of September 23, 2003.

PCS NITROGEN, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

EX-4.C

                                                                      Exhibit 4c

                            SECOND AMENDING AGREEMENT
                        (Syndicated Term Credit Facility)

THIS AGREEMENT is made as of September 21, 2004

BETWEEN:

                    POTASH CORPORATION OF SASKATCHEWAN INC., a corporation
                    subsisting under the laws of Canada (hereinafter referred to
                    as the "Borrower"),

                                                              OF THE FIRST PART,

                                     - and -

                    THE FINANCIAL INSTITUTIONS SET FORTH ON SCHEDULE A HERETO
                    AND ON THE SIGNATURE PAGES HEREOF UNDER THE HEADING
                    "LENDERS:" (hereinafter referred to collectively as the
                    "Lenders" and individually as a "Lender"),

                                                             OF THE SECOND PART,

                                     - and -

                  THE BANK OF NOVA SCOTIA,  a Canadian  chartered bank, as agent
                  of the Lenders (hereinafter referred to as the "Agent"),

                                                              OF THE THIRD PART.

                  WHEREAS the parties hereto have agreed to amend and supplement
certain provisions of the Credit Agreement as hereinafter set forth;

                  NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby conclusively
acknowledged by each of the parties hereto, the parties hereto covenant and
agree as follows:

1.       Interpretation

1.1. In this Agreement and the recitals hereto, unless something in the subject
matter or context is inconsistent therewith:

"Agreement" means this agreement, as amended, modified, supplemented or restated
from time to time.





"Credit Agreement" means the term credit agreement made as of September 25, 2001
between the Borrower, the Lenders listed in Schedule A thereto and such other
financial institutions as become party thereto, as lenders, and the Agent, as
amended by an amending agreement made as of September 23, 2003.

1.2. Capitalized terms used herein without express definition shall have the
same meanings herein as are ascribed thereto in the Credit Agreement.

1.3. The division of this Agreement into Sections and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The terms "this Agreement", "hereof",
"hereunder" and similar expressions refer to this Agreement and not to any
particular Section or other portion hereof and include any agreements
supplemental hereto.

1.4. This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.

2. Amendments and Supplements

2.1. Extension of Conversion Date. The Conversion Date is hereby extended to
September 20, 2005 pursuant to Section 1.13 of the Credit Agreement with respect
to each Lender.

2.2. Extension Fee Payable in Respect Extension of Conversion Date. The Borrower
hereby agrees to pay to the Agent, for each Lender, an extension fee in United
States dollars in an amount equal to 0.05% of the Individual Commitment of each
Lender.

2.3. Amendments to Applicable Margin. Section 1.01 of the Credit Agreement is
hereby amended by deleting the existing definition of "Applicable Margin" in its
entirety and substituting the following therefor:

         "Applicable Margin" means, at any time, the applicable rate per annum
         set forth in the table below for the applicable S & P rating and the
         applicable Utilization Rate:

         -------------------------------- --------------------------------------
           S & P's Corporate Credit or                 Utilization Rate
            Unsecured Debt Rating of
                    Borrower
         -------------------------------- -------------------- -----------------
                                                 < 1/2              >  1/2
                                                                    -
         -------------------------------- -------------------- -----------------
         A- or above                      0.375% per annum     0.50% annum
         -------------------------------- -------------------- -----------------
         BBB+                             0.475% per annum     0.60% per annum
         -------------------------------- -------------------- -----------------
         BBB                              0.625% per annum     0.75% per annum
         -------------------------------- -------------------- -----------------
         BBB-                             0.875% per annum     1.00% per annum
         -------------------------------- -------------------- -----------------
         BB+ or below or unrated          1.25% per annum      1.50% per annum
         -------------------------------- -------------------- -----------------




2.4. Definition of Cash Equivalents. Section 1.01 of the Credit Agreement is
hereby amended by adding the following new definition immediately after the
definition of "Capital":

          "Cash Equivalents" means (a) securities issued, guaranteed or insured
          by the government of any country or any political subdivision thereof;
          (b) deposits or certificates of deposit issued or guaranteed by a bank
          or trust company; or (c) debt securities or commercial paper issued or
          guaranteed by a body corporate.

2.5. Definition of Defeased Loan Transaction. Section 1.01 of the Credit
Agreement is hereby amended by adding the following new definition immediately
after the definition of "Default":

          "Defeased Loan Transaction" means a transaction where loans are made
          to a given Company ("X") and X or another Company either:

          (a)  pledges to the holder of such loans cash or Cash Equivalents in
               an amount not less than 90% of the aggregate principal amount of
               such loans, as collateral security for the repayment thereof; or

          (b)  deposits with the holder of such loans cash or Cash Equivalents
               in an amount not less than 90% of the aggregate principal amount
               of such loans, which deposits are required to be maintained with
               such holder while such loans remain outstanding.

2.6. Definition of Permitted Liens. The existing definition of "Permitted Liens"
contained in Section 1.01 of the Credit Agreement is hereby amended by deleting
the word "and" at the end of paragraph (t) thereof, deleting the period at the
end of paragraph (u) thereof and replacing same with a semi-colon followed by
the word "and" and by adding thereto the following as a new paragraph (v):

          "(v) Liens against cash or Cash Equivalents, provided that such cash
          or Cash Equivalents have been provided as collateral security for the
          obligations of one or more of the Companies under a Defeased Loan
          Transaction (including, for certainty, the obligations of a Company
          under a guarantee provided in connection therewith).".

3.        Representations and Warranties

          The Borrower hereby represents and warrants as follows to each Lender
and the Agent and acknowledges and confirms that each Lender and the Agent is
relying upon such representations and warranties:

          (a)  Capacity, Power and Authority

               (i)  It is duly incorporated and is validly subsisting under the
                    laws of its jurisdiction of incorporation and has all the
                    requisite corporate capacity, power and authority to carry
                    on its business as presently conducted and to own its
                    property; and

               (ii) It has the requisite corporate capacity, power and authority
                    to execute and deliver this Agreement.

          (b)  Authorization; Enforceability

               It has taken or caused to be taken all necessary action to
               authorize, and has duly executed and delivered, this Agreement,
               and this Agreement is a legal, valid and binding obligation of it
               enforceable against it in accordance with its terms, subject to
               applicable bankruptcy, reorganization, winding up, insolvency,
               moratorium or other laws of general application affecting the
               enforcement of creditors' rights generally and to the equitable
               and statutory powers of the courts having jurisdiction with
               respect thereto.




          (c)  Compliance with Other Instruments

               The execution, delivery and performance by the Borrower of this
               Agreement and the consummation of the transactions contemplated
               herein do not conflict with, result in any breach or violation
               of, or constitute a default under the terms, conditions or
               provisions of its articles, by-laws or other constating documents
               or any unanimous shareholder agreement relating to, the Borrower
               or of any law, regulation, judgment, decree or order binding on
               or applicable to the Borrower or to which its property is subject
               or of any material agreement, lease, licence, permit or other
               instrument to which the Borrower or any of its Subsidiaries is a
               party or is otherwise bound or by which any of them benefits or
               to which any of their property is subject and do not require the
               consent or approval of any Official Body or any other party.

          The representations and warranties set out in this Agreement shall
survive the execution and delivery of this Agreement and the making of each
Accommodation, notwithstanding any investigations or examinations which may be
made by or on behalf of the Agent, the Lenders or Lenders' counsel. Such
representations and warranties shall survive until the Credit Agreement has been
terminated.

4.        Conditions Precedent

          The amendments and supplements to the Credit Agreement contained
herein shall be effective upon, and shall be subject to, the satisfaction of the
following conditions precedent:

          (a)  the Borrower shall have paid to the Agent, for each Lender, the
               extension fees required to be paid pursuant to Section 2.2
               hereof; and

          (b)  the Guarantor shall have executed and delivered to the Agent on
               behalf of the Lenders a confirmation with respect to its
               Guarantee in the form attached hereto.

The foregoing conditions precedent are inserted for the sole benefit of the
Lenders and the Agent and may be waived in writing by the Lenders, in whole or
in part (with or without terms and conditions).

5.       Confirmation of Credit Agreement and other Loan Documents

         The Credit Agreement and the other Loan Documents to which the Borrower
is a party and all covenants, terms and provisions thereof, except as expressly
amended and supplemented by this Agreement, shall be and continue to be in full
force and effect and the Credit Agreement as amended and supplemented by this
Agreement and each of the other Loan Documents to which the Borrower is a party
is hereby ratified and confirmed and shall from and after the date hereof
continue in full force and effect as herein amended and supplemented, with such
amendments and supplements being effective from and as of the date hereof upon
satisfaction of the conditions precedent set forth in Section 4 hereof.

6.       Further Assurances

         The parties hereto shall from time to time do all such further acts and
things and execute and deliver all such documents as are required in order to
effect the full intent of and fully perform and carry out the terms of this
Agreement.



7.       Enurement

         This Agreement shall enure to the benefit of and shall be binding upon
the parties hereto and their respective successors and permitted assigns.

8.       Counterparts

         This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart. Such executed counterparts may be delivered by facsimile
transmission and, when so delivered, shall constitute a binding agreement of the
parties hereto.

         IN WITNESS WHEREOF the parties hereto have executed this Agreement.

                                   POTASH CORPORATION OF SASKATCHEWAN INC.


                                   By:        /s/ Wayne R. Brownlee
                                              ----------------------------------
                                              Name: Wayne R. Brownlee
                                              Title: Senior VP, Treasurer & CFO


                                   By:        /s/ Denis Sirois
                                              ----------------------------------
                                              Name: Denis Sirois
                                              Title: VP & Corporate Controller

                                   LENDERS:

                                   THE BANK OF NOVA SCOTIA

                                   By:        /s/ Jeff Cebryk
                                              ----------------------------------
                                              Name: Jeff Cebryk
                                              Title: Director


                                   By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                   ROYAL BANK OF CANADA

                                   By:        /s/ Allan Fordyce
                                              ----------------------------------
                                              Name: Allan Fordyce
                                              Title: Authorized Signatory


                                   By:
                                              ----------------------------------
                                              Name:
                                              Title:



                                   CREDIT SUISSE FIRST BOSTON, TORONTO BRANCH

                                   By:        /s/ Alain Daoust
                                              ----------------------------------
                                              Name: Alain Daoust
                                              Title: Director


                                   By:        /s/ Bruce F. Wetherly
                                              ----------------------------------
                                              Name: Bruce F. Wetherly
                                              Title: Controllers Department

                                   BANK OF AMERICA, N.A., CANADA BRANCH

                                   By:        /s/ Nelson Lam
                                              ----------------------------------
                                              Name: Nelson Lam
                                              Title: Vice President


                                   By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                   COMERICA BANK, CANADA BRANCH

                                   By:        /s/ David Wright
                                              ----------------------------------
                                              Name: David Wright
                                              Title: Vice President


                                   By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                   EXPORT DEVELOPMENT CANADA

                                   By:        /s/ Paul Hemsing
                                              ----------------------------------
                                              Name: Paul Hemsing
                                              Title: Financial Services Manager


                                   By:        /s/ James McIntyre
                                              ----------------------------------
                                              Name: James McIntyre
                                              Title: Sr. Financial Services
                                                     Manager

                                   BANK OF MONTREAL

                                   By:        /s/ R Wright
                                              ----------------------------------
                                              Name:
                                              Title: Vice-President


                                   By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                   BANK OF TOKYO-MITSUBISHI (CANADA)

                                   By:        /s/ Davis J. Stewart
                                              ----------------------------------
                                              Name: Davis J. Stewart
                                              Title: Vice President


                                   By:
                                              ----------------------------------
                                              Name:
                                              Title:




                                   BNP PARIBAS (CANADA)

                                   By:        /s/ Michael Gosselin
                                              ----------------------------------
                                              Name: Michael Gosselin
                                              Title: Managing Director


                                   By:        /s/ Jean-Philippe Cadot
                                              ----------------------------------
                                              Name: Jean-Philippe Cadot
                                              Title: Vice President

                                   HSBC BANK CANADA

                                   By:        /s/ Dave Eyolfson
                                              ----------------------------------
                                              Name: Dave Eyolfson
                                              Title: Manager Commercial Banking


                                   By:        /s/ Nigel Richardson
                                              ----------------------------------
                                              Name:  Nigel Richardson
                                              Title: Head of Corporate &
                                                     Institutional Banking
                                                     Western Region

                                   RABOBANK NEDERLAND, CANADIAN BRANCH

                                   By:        /s/ Andrew (Illegible)
                                              ----------------------------------
                                              Name: Andrew (Illegible)
                                              Title: Executive Director


                                  By:        /s/ David L. Streeter
                                              ----------------------------------
                                              Name: David L. Streeter
                                              Title: Vice President

                                   SOCIETE GENERALE (CANADA)

                                   By:        /s/ C. Hansen
                                              ----------------------------------
                                              Name: C. Hansen
                                              Title: Director


                                   By:        /s/ D. Baldoni
                                              ----------------------------------
                                              Name: D. Baldoni
                                              Title: Director

                                   AGENT:

                                   THE BANK OF NOVA SCOTIA, in its capacity
                                   as Agent

                                   By:        /s/ Jeff Cebryk
                                              ----------------------------------
                                              Name: Jeff Cebryk
                                              Title: Director









                            CONFIRMATION OF GUARANTEE
                            -------------------------

TO:      The Lenders

AND TO:  The Bank of Nova Scotia, as agent of the Lenders (the "Agent")


         WHEREAS Potash Corporation of Saskatchewan Inc. ("PCS") entered into
the term credit agreement made as of September 25, 2001 between PCS, the
financial institutions party thereto, as Lenders, and the Agent (as amended by
an amending agreement made as of September 23, 2003, the "Credit Agreement");

         AND WHEREAS the undersigned guaranteed all of the Obligations of PCS
to the Agent and the Lenders pursuant to the guarantee agreement made as of
September 25, 2001 by the undersigned in favour of the Agent and the Lenders
(the "Guarantee");

         AND WHEREAS, pursuant to a Second Amending Agreement (the "Second
Amending Agreement") made as of even date herewith, PCS, the Lenders and the
Agent have agreed to amend and supplement the Credit Agreement as set out
therein;

         AND WHEREAS the undersigned has been provided with a true, correct and
complete copy of the Second Amending Agreement;

         AND WHEREAS the undersigned wishes to confirm to the Agent and the
Lenders that the Guarantee continues to apply to the Obligations of PCS.

         IN CONSIDERATION of the sum of U.S. $10.00 now paid by the Agent and
the Lenders to the undersigned and other good and valuable consideration (the
receipt and sufficiency of which are hereby conclusively acknowledged), the
undersigned hereby confirms and agrees that the Guarantee is and shall remain in
full force and effect in all respects notwithstanding the Second Amending
Agreement and the amendments and supplements therein contained and shall
continue to exist and apply to all of the Obligations. This Confirmation is in
addition to and shall not limit, derogate from or otherwise affect the
provisions of the Guarantee including, without limitation, Article 2 of the
Guarantee.

         Capitalized terms used herein without express definition shall have
the same meanings herein as are ascribed thereto in the Guarantee.


         DATED as of September 21, 2004.


                                   PCS NITROGEN, INC.


                                   By:
                                       ---------------------------------------
                                       Name:
                                       Title:


                                   By:
                                       ---------------------------------------
                                       Name:
                                       Title:

EX-4.N

Exhibit 4(n)

U.S. $1,500,000,000 REVOLVING TERM CREDIT FACILITY

AMENDED AND RESTATED CREDIT AGREEMENT

BETWEEN

POTASH CORPORATION OF SASKATCHEWAN INC.
as Borrower

AND

THE BANK OF NOVA SCOTIA,
ROYAL BANK OF CANADA,
BANK OF MONTREAL,
HSBC BANK CANADA,
BANK OF AMERICA, N.A., CANADA BRANCH,
CANADIAN IMPERIAL BANK OF COMMERCE,
EXPORT DEVELOPMENT CANADA
and such other persons as become parties hereto
as Lenders

AND

THE BANK OF NOVA SCOTIA
as Agent of the Lenders

MADE AS OF MAY 29, 2008
AND AMENDED AND RESTATED AS OF JANUARY 21, 2009

TABLE OF CONTENTS

ARTICLE 1 INTERPRETATION		2
1.1	Definitions	2
1.2	Headings; Articles and Sections	19
1.3	Number; persons; including; successors	19
1.4	Accounting Principles	20
1.5	References to Agreements and Enactments	20
1.6	Per Annum Calculations	20
1.7	Schedules	20
1.8	Amendment and Restatement	20
ARTICLE 2 THE CREDIT FACILITY		21
2.1	The Credit Facility	21
2.2	Types of Availments	21
2.3	Purpose	21
2.4	Availability and Nature of the Credit Facility	21
2.5	Minimum Drawdowns	22
2.6	Libor Loan Availability	22
2.7	Notice Periods for Drawdowns, Conversions and Rollovers	22
2.8	Conversion Option	22
2.9	Libor Loan Rollovers; Selection of Libor Interest Periods	23
2.10	Rollovers and Conversions not Repayments	23
2.11	Agent’s Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and Libor Loans	23
2.12	Lenders’ and Agent’s Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and Libor Loans	23
2.13	Irrevocability	23
2.14	Optional Cancellation or Reduction of the Credit Facility	24
2.15	Optional Repayment; Additional Repayment Terms	24
2.16	Mandatory Repayment of Credit Facility	25
2.17	Currency Excess	25
2.18	Permitted Increase in Credit Facility	26
2.19	Hostile Acquisitions	27
ARTICLE 3 CONDITIONS PRECEDENT TO DRAWDOWNS		28
3.1	Conditions for Drawdowns	28
3.2	Additional Conditions for Amendment and Restatement	28
3.3	Waiver	28
ARTICLE 4 EVIDENCE OF DRAWDOWNS		29
4.1	Account of Record	29
ARTICLE 5 PAYMENTS OF INTEREST AND FEES		29
5.1	Interest on Canadian Prime Rate Loans	29
5.2	Interest on U.S. Base Rate Loans	29
5.3	Interest on Libor Loans	29
5.4	Interest Act (Canada)	30
5.5	Nominal Rates; No Deemed Reinvestment	30
5.6	Standby Fees	30
5.7	Agent’s Fees	30

-ii-

5.8	Interest on Overdue Amounts	30
5.9	Waiver	31
5.10	Maximum Rate Permitted by Law	31
ARTICLE 6 BANKERS’ ACCEPTANCES		31
6.1	Bankers’ Acceptances	31
6.2	Acceptance Fees	31
6.3	Form and Execution of Bankers’ Acceptances	31
6.4	Power of Attorney; Provision of Bankers’ Acceptances to Lenders	32
6.5	Mechanics of Issuance	34
6.6	Rollover, Conversion or Payment on Maturity	34
6.7	Restriction on Rollovers and Conversions	35
6.8	Rollovers	35
6.9	Conversion into Bankers’ Acceptances	35
6.10	Conversion from Bankers’ Acceptances	35
6.11	BA Equivalent Advances	35
6.12	Termination of Bankers’ Acceptances	36
ARTICLE 7 PLACE AND APPLICATION OF PAYMENTS		36
7.1	Place of Payment of Principal, Interest and Fees; Payments to Agent	36
7.2	Designated Accounts of the Lenders	36
7.3	Funds	36
7.4	Application of Payments	37
7.5	Payments Clear of Taxes	37
7.6	Set Off	38
7.7	Margin Changes; Adjustments for Margin Changes; Notice of Rating Changes	38
ARTICLE 8 REPRESENTATIONS AND WARRANTIES		39
8.1	Representations and Warranties	39
8.2	Deemed Repetition	41
8.3	Effective Time of Repetition	42
8.4	Nature of Representations and Warranties	42
ARTICLE 9 GENERAL COVENANTS		42
9.1	Affirmative Covenants of the Borrower	42
9.2	Negative Covenants of the Borrower	45
9.3	Agent May Perform Covenants	46
ARTICLE 10 EVENTS OF DEFAULT AND ACCELERATION		46
10.1	Events of Default	46
10.2	Acceleration	48
10.3	Conversion on Default	49
10.4	Remedies Cumulative and Waivers	49
10.5	Termination of Lenders’ Obligations	49
ARTICLE 11 CHANGE OF CIRCUMSTANCES		50
11.1	Market Disruption Respecting Libor Loans	50
11.2	Market Disruption Respecting Bankers’ Acceptances	50
11.3	Change in Law	51
11.4	Prepayment of Portion	52
11.5	Illegality	53
ARTICLE 12 COSTS, EXPENSES AND INDEMNIFICATION		53
12.1	Costs and Expenses	53

-iii-

12.2	General Indemnity	54
12.3	Judgment Currency	55
12.4	Limits on Liability of Indemnified Parties	55
ARTICLE 13 THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITY		56
13.1	Authorization and Action	56
13.2	Procedure for Making Loans	56
13.3	Remittance of Payments	57
13.4	Redistribution of Payment	57
13.5	Duties and Obligations	58
13.6	Prompt Notice to the Lenders	59
13.7	Agent’s and Lenders’ Authorities	59
13.8	Lender Credit Decision	60
13.9	Indemnification of Agent	60
13.10	Successor Agent	60
13.11	Taking and Enforcement of Remedies	61
13.12	Reliance Upon Agent	61
13.13	No Liability of Agent	62
13.14	The Agent and Defaulting Lenders	62
13.15	Article for Benefit of Agent and Lenders	63
ARTICLE 14 GENERAL		63
14.1	Exchange and Confidentiality of Information	63
14.2	Nature of Obligation under this Agreement; Defaulting Lenders	64
14.3	Notices	65
14.4	Governing Law	65
14.5	Benefit of the Agreement	66
14.6	Assignment	66
14.7	Participations	66
14.8	Severability	66
14.9	Whole Agreement	66
14.10	Amendments and Waivers	66
14.11	Further Assurances	67
14.12	Attornment	67
14.13	Time of the Essence	67
14.14	Credit Agreement Governs	67
14.15	Counterparts	68

AMENDED AND RESTATED CREDIT AGREEMENT

     THIS AGREEMENT is made as of May 29, 2008 and amended and restated as of January 21, 2009

BETWEEN:

POTASH CORPORATION OF SASKATCHEWAN INC., a corporation subsisting under the laws of Canada, (hereinafter referred to as the “Borrower”),

OF THE FIRST PART,

- and -

THE BANK OF NOVA SCOTIA, ROYAL BANK OF CANADA, BANK OF MONTREAL, HSBC BANK CANADA, BANK OF AMERICA, N.A., CANADA BRANCH, CANADIAN IMPERIAL BANK OF COMMERCE and EXPORT DEVELOPMENT CANADA, together with such other persons as become parties hereto, as lenders (hereinafter sometimes collectively referred to as the “Lenders” and sometimes individually referred to as a “Lender”),

OF THE SECOND PART,

- and -

THE BANK OF NOVA SCOTIA, a Canadian chartered bank, as agent of the Lenders hereunder (hereinafter referred to as the “Agent”),

OF THE THIRD PART.

          WHEREAS the Borrower, the Agent and certain of the Lenders are parties to the credit agreement made as of May 29, 2008 between the Borrower, certain of the Lenders and the Agent (as amended and supplemented to the date hereof, the “Existing Credit Agreement”);

          AND WHEREAS the Borrower has requested the Lenders to provide the Credit Facility to the Borrower on the terms and conditions herein set forth;

          AND WHEREAS the Lenders have agreed to provide the Credit Facility to the Borrower on the terms and conditions herein set forth;

          AND WHEREAS the parties hereto have agreed to amend and restate the Existing Credit Agreement on the terms and conditions hereinafter set forth;

          AND WHEREAS the Lenders wish the Agent to act on their behalf with regard to certain matters associated with the Credit Facility;

          NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby conclusively acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:

-2-

ARTICLE 1
INTERPRETATION

1.1 Definitions

          In this Agreement, unless something in the subject matter or context is inconsistent therewith:

“Additional Compensation” has the meaning set out in Section 11.3(1).

“Advance” means an advance of funds made by the Lenders or by any one or more of them to the Borrower, but does not include any Conversion or Rollover.

“Affected Loan” has the meaning set out in Section 11.4.

“Affiliate” means any person which, directly or indirectly, controls, is controlled by or is under common control with another person; and, for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” or “under common control with”) means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of shares or other economic interests, the holding of voting rights or contractual rights or otherwise.

“Agency Fee Agreement” means the Agency Fee Agreement dated as of May 29, 2008 between the Borrower and the Agent respecting the payment of certain fees and other amounts to the Agent for its own account.

“Agent’s Accounts” means the following accounts maintained by the Agent to which payments and transfers under this Agreement are to be effected:

(a)	for Canadian Dollars:
	The Bank of Nova Scotia Wholesale Banking Operations 720 King Street West, 3rd Floor Toronto, ON M5V 2T3 SWIFT: NOSCCATT Cdn. $ Account No.: 52712-23902-64 ATTN: WBO, Loan Administration and Agency Services REF: Potash Corporation of Saskatchewan Inc.; and
(b)	for United States Dollars:
	The Bank of Nova Scotia New York Agency 1 Liberty Plaza, Floors 22-26 New York, N.Y. 10006 FED FUNDS ABA #02600253-2 SWIFT: NOSCUS33 FOR CREDIT: BNS Wholesale Banking Operations, Toronto, Ontario U.S. $ Account No.: 6027-36 ATTN: WBO, Loan Administration and Agency Services REF: Potash Corporation of Saskatchewan Inc.,

or such other account or accounts as the Agent may from time to time designate by notice to the Borrower and the Lenders.

-3-

“Agreement” means this amended and restated credit agreement, as the same may be amended, modified, supplemented or restated from time to time in accordance with the provisions hereof.

“Applicable Laws” or “applicable laws” means, in relation to any person, transaction or event:

(a)	all applicable provisions of laws, statutes, rules and regulations from time to time in effect of any Governmental Authority; and
(b)	all Governmental Authorizations to which the person is a party or by which it or its property is bound or having application to the transaction or event.

“Applicable Pricing Rate”, as regards any Loan or the standby fees payable in accordance with Section 5.6, means, when and for so long as the Debt Rating of the Borrower is one of the following or no Debt Rating has been assigned to the Borrower by S&P (as the case may be), the percentage rate per annum set forth opposite such rating or indication in the column applicable to the type of Loan in question or such standby fee:

		Margin on Libor
	Margin on Canadian	Loans and
	Prime Rate Loans	Acceptance Fees for
	and U.S. Base Rate	Bankers’	Standby Fee on
S&P Rating	Loans	Acceptances	Credit Facility
A- or above	2.00% per annum	3.00% per annum	0.65% per annum
BBB+	2.25% per annum	3.25% per annum	0.70% per annum
BBB	2.50% per annum	3.50% per annum	0.80% per annum
BBB-	3.00% per annum	4.00% per annum	0.90% per annum
BB+ or below or if not rated by S&P	3.50% per annum	4.50% per annum	1.00% per annum

provided that:

(a)	the above ratings refer to the rating classifications of S&P on the date hereof and shall be deemed to refer to the then equivalent rating classifications of such rating agency in the event of any subsequent changes to such classifications;
(b)	the above rates per annum applicable to Libor Loans are expressed on the basis of a year of 360 days and the above rates per annum applicable to other Loans are expressed on the basis of a year of 365 days;
(c)	changes in Applicable Pricing Rate shall be effective in accordance with Section 7.7; and
(d)	the above changes in Applicable Pricing Rate shall apply, as at the effective dates of such changes, to Libor Loans outstanding on such dates, but only for those portions of applicable Interest Periods falling within those times during which the changes in Applicable Pricing Rate are effective, as provided above.

“Assignment Agreement” means an assignment agreement substantially in the form of Schedule B annexed hereto, with such modifications thereto as may be required from time to time by the Agent, acting reasonably.

“BA Discount Rate” means:

-4-

(a)	in relation to a Bankers’ Acceptance accepted by a Schedule I Lender, the CDOR Rate;
(b)	in relation to a Bankers’ Acceptance accepted by a Schedule II Lender or Schedule III Lender, the lesser of:

(i)	the Discount Rate then applicable to bankers’ acceptances having identical issue and comparable maturity dates as such Bankers’ Acceptances, accepted by such Schedule II Lender or Schedule III Lender; and
(ii)	the CDOR Rate plus 0.20% per annum,

provided that if both such rates are equal, then the “BA Discount Rate” applicable thereto shall be the rate specified in (i) above; and

(c) in relation to a BA Equivalent Advance:

(i)	made by a Schedule I Lender, the CDOR Rate;
(ii)	made by a Schedule II Lender or Schedule III Lender, the rate determined in accordance with subparagraph (b) of this definition; and
(iii)	made by any other Lender, the CDOR Rate plus 0.20% per annum.

“BA Equivalent Advance” means, in relation to a Drawdown of, Conversion into or Rollover of Bankers’ Acceptances, an Advance in Canadian Dollars made by a Non-Acceptance Lender as part of such Loan.

“Bankers’ Acceptance” means a draft in Canadian Dollars drawn by the Borrower, accepted by a Lender and issued for value pursuant to this Agreement.

“Banking Day” means, in respect of a Libor Loan, a day on which banks are open for business in Calgary, Alberta, Toronto, Ontario, New York, New York and London, England and, for all other purposes, means a day on which banks are open for business in Calgary, Alberta, Toronto, Ontario and New York, New York, but does not in any event include a Saturday or a Sunday.

“Canadian Dollars” and “Cdn. $” mean the lawful money of Canada.

“Canadian Prime Rate” means, for any day, the greater of:

(a)

the rate of interest per annum established from time to time by the Agent as the reference rate of interest for the determination of interest rates that the Agent will charge to customers of varying degrees of creditworthiness in Canada for Canadian Dollar demand loans in Canada; and

(b)

the rate of interest per annum equal to the average annual yield rate for one month Canadian Dollar bankers’ acceptances (expressed for such purpose as a yearly rate per annum in accordance with Section 5.4) which rate is shown on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuters Limited (or any successor thereto or Affiliate thereof) at 10:00 a.m. (Toronto time) on such day or, if such day is not a Banking Day, on the immediately preceding Banking Day, plus 1.00% per annum,

provided that if both such rates are equal or if such one month bankers’ acceptance rate is unavailable for any reason on any day of determination, then the “Canadian Prime Rate” shall be the rate specified in (a) above.

-5-

“Canadian Prime Rate Loan” means an Advance in, or Conversion into, Canadian Dollars made by the Lenders to the Borrower with respect to which the Borrower has specified or a provision hereof requires that interest is to be calculated by reference to the Canadian Prime Rate.

“Capital” means, at any particular time, the aggregate of:

(a)	Debt at such time; and
(b)	Equity at such time.

“Cash Equivalents” means (a) securities issued, guaranteed or insured by the government of any country or any political subdivision thereof; (b) deposits or certificates of deposit issued or guaranteed by a bank or trust company; or (c) debt securities or commercial paper issued or guaranteed by a body corporate.

“CDOR Rate” means, on any day on which Bankers’ Acceptances are to be issued pursuant hereto, the per annum rate of interest which is the rate determined as being the arithmetic average of the annual yield rates applicable to Canadian Dollar bankers’ acceptances having identical issue and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuters Limited (or any successor thereto or Affiliate thereof) as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Banking Day, then on the immediately preceding Banking Day (as adjusted by the Agent in good faith after 10:00 a.m. (Toronto time) to reflect any error in a posted rate or in the posted average annual rate); provided, however, if such a rate does not appear on such CDOR Page, then the CDOR Rate, on any day, shall be the Discount Rate quoted by the Agent (determined as of 10:00 a.m. (Toronto time) on such day) which would be applicable in respect of an issue of bankers’ acceptances in a comparable amount and with comparable maturity dates to the Bankers’ Acceptances proposed to be issued by the Borrower on such day, or if such day is not a Banking Day, then on the immediately preceding Banking Day.

“clearing house” has the meaning set out in Section 6.4.

“Code” means the Internal Revenue Code of the United States, as amended from time to time, and any successor statute.

“Commitment” means the commitment by each Lender under the Credit Facility to provide the amount of United States Dollars (or the Equivalent Amount thereof) set forth opposite its name in Schedule A annexed hereto, subject to any increase in accordance with Section 2.18 and to any reduction in accordance with the provisions hereof.

“Companies” means the Borrower and the Subsidiaries.

“Compliance Certificate” means a certificate of the Borrower signed on its behalf by a director, the president, chief executive officer, chief financial officer, vice president-finance or treasurer of the Borrower, substantially in the form annexed hereto as Schedule C, to be given to the Agent and the Lenders by the Borrower pursuant hereto.

“Conflicted Lender” has the meaning set out in Section 2.19.

“Conversion” means a conversion or deemed conversion of a Loan into another type of Loan pursuant to the provisions hereof; provided that, subject to Section 2.8 and to Article 6 with respect to Bankers’ Acceptances, the conversion of a Loan denominated in one currency to a Loan denominated in another currency shall be effected by repayment of the Loan or portion thereof being converted in the currency in which it was denominated and readvance to the Borrower of the Loan into which such conversion was made.

-6-

“Conversion Date” means the date specified by the Borrower as being the date on which the Borrower has elected to convert, or this Agreement requires the Conversion of, one type of Loan into another type of Loan and which shall be a Banking Day.

“Conversion Notice” means a notice substantially in the form annexed hereto as Schedule D to be given to the Agent by the Borrower pursuant hereto.

“Credit Facility” means the credit facility in the maximum principal amount of U.S. $1,500,000,000 or the Equivalent Amount in Canadian Dollars to be made available to the Borrower by the Lenders in accordance with the provisions hereof, subject to any increase in accordance with Section 2.18 and to any reduction in accordance with the provisions hereof.

“Currency Excess” has the meaning set out in Section 2.17.

“Currency Excess Deficiency” has the meaning set out in Section 2.17.

“DBNA” has the meaning set out in Section 6.4.

“Debt” means, at any particular time, the aggregate of (without duplication):

(a)	the aggregate of the amounts which would, in accordance with GAAP, be classified on the consolidated balance sheet of the Borrower at such time as indebtedness for borrowed money of the Borrower and as capital leases of the Borrower (but specifically excluding Subordinated Debt); and
(b)	the aggregate indebtedness for borrowed money of entities other than the Companies to the extent guaranteed by any of the Companies at such time.

“Debt Rating” means the debt rating that has been most recently announced by S&P for the Credit Facility or, if the Credit Facility is not rated, the corporate credit rating or issuer rating by S&P of the Borrower or the successor thereto, as the case may be.

“Default” means any event or condition which, with the giving of notice, lapse of time or upon a declaration or determination being made (or any combination thereof), would constitute an Event of Default.

“Defaulting Lender” means any Lender:

(a)	that has failed to fund any payment or its portion of any Loans required to be made by it hereunder or to purchase any participation required to be purchased by it hereunder and under the other Documents;
(b)	that has notified the Borrower, the Agent or any Lender (verbally or in writing) that it does not intend to or is unable to comply with any of its funding obligations under this Agreement or has made a public statement to that effect or to the effect that it does not intend to or is unable to fund advances generally under credit arrangements to which it is a party;
(c)	that has failed, within 3 Banking Days after request by the Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans;
(d)	that has otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid by it hereunder within 3 Banking Days of the date when due, unless the subject of a good faith dispute;

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(e)	in respect of which a Lender Insolvency Event or a Lender Distress Event has occurred in respect of such Lender or its Lender Parent; or
(f)	with respect to which the Agent has concluded, acting reasonably, and has advised the Lenders in writing, that it is of the view that there is a reasonable chance that such Lender shall become a Defaulting Lender pursuant to subparagraphs (a) to (e), inclusive, of this definition.

“Defeased Loan Transaction” means a transaction where loans are made to a given Company (“X”) and X or another Company either:

(a)	pledges to the holder of such loans, cash or Cash Equivalents in an amount not less than 90% of the aggregate principal amount of such loans, as collateral security for the repayment thereof; or
(b)	deposits with the holder of such loans, cash or Cash Equivalents in an amount not less than 90% of the aggregate principal amount of such loans, which deposits are required to be maintained with such holder while such loans remain outstanding.

“Discount Proceeds” means the net cash proceeds to the Borrower from the sale of a Bankers’ Acceptance pursuant hereto or, in the case of BA Equivalent Advances, the amount of a BA Equivalent Advance at the applicable BA Discount Rate, in any case, before deduction or payment of the fees to be paid to the Lenders under Section 6.2.

“Discount Rate” means, with respect to the issuance of a bankers’ acceptance, the discount rate per annum, calculated on the basis of a year of 365 days, (rounded upwards, if necessary, to the nearest whole multiple of 1/100^th of one percent) which is equal to the discount exacted by a purchaser taking initial delivery of such bankers’ acceptance, calculated as a rate per annum and as if the issuer thereof received the discount proceeds in respect of such bankers’ acceptance on its date of issuance and had repaid the respective face amount of such bankers’ acceptance on the maturity date thereof.

“Documents” means this Agreement, the Agency Fee Agreement and all certificates, notices, instruments and other documents delivered or to be delivered to the Agent or the Lenders, or both, in relation to the Credit Facility pursuant hereto or thereto and, when used in relation to any person, the term “Documents” shall mean and refer to the Documents executed and delivered by such person.

“Drawdown” means:

(a)	an Advance of a Canadian Prime Rate Loan, U.S. Base Rate Loan or Libor Loan; or
(b)	the issue of Bankers’ Acceptances (or the making of a BA Equivalent Advance in lieu thereof) other than as a result of Conversions or Rollovers.

“Drawdown Date” means the date on which a Drawdown is made by the Borrower pursuant to the provisions hereof and which shall be a Banking Day.

“Drawdown Notice” means a notice substantially in the form annexed hereto as Schedule E to be given to the Agent by the Borrower pursuant hereto.

“EBITDA” means, for any particular period, Net Income of the Borrower for such period plus, to the extent deducted in the determination of Net Income of the Borrower for such period, the aggregate of (without duplication):

(a) Interest Expense of the Borrower for such period;

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(b)	consolidated income tax expense (both current and deferred) of the Borrower (including, without limitation, those reported on the consolidated income statement of the Borrower as “provincial mining and other taxes”) for such period;
(c)	consolidated depreciation, amortization and other non-cash expenses of the Borrower for such period; and
(d)	unrealized losses in respect of Hedging Instruments of the Borrower and its Subsidiaries for such period,

less, to the extent included in Net Income for such period, unrealized gains in respect of Hedging Instruments of the Borrower and its Subsidiaries for such period.

“EDGAR Database” means the Electronic Data Gathering, Analysis, and Retrieval system database of the U.S. Securities and Exchange Commission.

“Environmental Laws” means all applicable federal, state, provincial or local statutes, laws, ordinances, codes, rules, regulations, consent decrees and administrative orders having the force of law and relating to public health or the protection of the environment.

“Equity” means, at any particular time, the aggregate of (a) the amount which would, in accordance with GAAP, be classified upon the consolidated balance sheet of the Borrower at such time as shareholder’s equity and (b) the amount of Subordinated Debt at such time.

“Equivalent Amount” means, on any day, the equivalent amount in Canadian Dollars or United States Dollars, as the case may be, after giving effect to a conversion of a specified amount of United States Dollars to Canadian Dollars or of Canadian Dollars to United States Dollars, as the case may be, at the noon rate of exchange for Canadian interbank transactions established by the Bank of Canada for the day in question, or, if such rate is for any reason unavailable, at the spot rate quoted for wholesale transactions involving the applicable currency by the Agent at approximately noon (Toronto time) on that day in accordance with its normal practice.

“ERISA” means the Employee Retirement Income Security Act of 1974 of the United States, as amended from time to time, and any successor statute.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 4 14(m) and (o) of the Code for purposes of provisions relating to Section 4l2 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal (as defined in Section 4203 and 4205 of ERISA) by the Borrower or any ERISA Affiliate from a Multiemployer Plan or the receipt by the Borrower or any ERISA Affiliate of notification that a Multiemployer Plan is in reorganization pursuant to Section 4241 of ERISA or that a Multiemployer Plan intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

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“Existing Credit Agreement” has the meaning set out in the recitals hereto.

“Event of Default” has the meaning set out in Section 10.1.

“Federal Funds Rate” means, for any day, the rate of interest per annum equal to (a) the weighted average (rounded upwards, if necessary, to the next 1/100^th of one percent per annum) of the annual rates of interest on overnight Federal funds transactions with members of the Federal Reserve Board of the United States of America (or any successor thereof) arranged by Federal funds brokers on such day, as published on the next succeeding Banking Day by the Federal Reserve Bank of New York (or any successor thereto) or, (b) if such day is not a Banking Day, such weighted average for the immediately preceding Banking Day for which the same is published or, (c) if such rate is not so published for any day that is a Banking Day, the average (rounded upwards, if necessary, to the next 1/100^th of one percent per annum) of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent.

“Federal Reserve Board” or “Federal” means the Board of Governors of the Federal Reserve System of the United States of America or any successor thereof.

“Financial Statements” means the audited consolidated financial statements of the Borrower for the fiscal year ended on December 31, 2007.

“Fiscal Quarter” means any of the three-month periods ending on the last day of March, June, September and December in each year.

“Fiscal Year” means any of the twelve-month periods ending on the last day of December in each year.

“GAAP” means generally accepted accounting principles in effect in Canada from time to time consistently applied.

“Governmental Authority” means any federal, provincial, state, regional, municipal or local government or any department, agency, board, tribunal or authority thereof or other political subdivision thereof, any entity or person exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government or the operation thereof and any non-governmental regulating authority to the extent that the rules, regulations and orders of such body have the force of law.

“Governmental Authorization” means an authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand or the like issued or granted by law or by rule or regulation of any Governmental Authority.

“Hazardous Materials” means any pollutant or contaminant or hazardous or toxic chemical, material or substance within the meaning of any applicable federal, state, provincial or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous or toxic waste, substance or material or concerning the environment or public health, all as in effect on the applicable date.

“Hedging Instrument” means:

(a) any agreement for the making or taking of delivery of any commodity, any commodity swap agreement, floor, cap or collar agreement or commodity future or option or other similar agreements or arrangements, or any combination thereof, entered into by the Borrower or a Subsidiary where the subject matter of the same is any commodity or the price, value or amount payable thereunder is dependent or based upon the price of any commodity or fluctuations in the price of any commodity, but shall not include any agreement for the physical purchase or sale of

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commodities by the Borrower or a Subsidiary entered into in the ordinary course of business unless either (i) such agreement is with a bank, investment bank, securities dealer, insurance company, trust company, pension fund, institutional investor or any other financial institution or any Affiliate of any of the foregoing, or (ii) such agreement is entered into for hedging purposes or otherwise for the purpose of eliminating or reducing the financial risk or exposure of the Borrower or a Subsidiary to fluctuations in the prices of a commodity (and, for certainty, any such agreement referred to in (a)(i) or (a)(ii) of this definition shall constitute a “Hedging Instrument” for all purposes hereof);

(b)

any currency swap agreement, cross currency agreement, forward agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the Borrower or a Subsidiary where the subject matter of the same is currency exchange rates or the price, value or amount payable thereunder is dependent or based upon currency exchange rates or fluctuations in currency exchange rates as in effect from time to time; or

(c)

any interest swap agreement, forward rate agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the Borrower or a Subsidiary where the subject matter of the same is interest rates or the price, value or amount payable thereunder is dependent or based upon the interest rates or fluctuations in interest rates in effect from time to time (but, for certainty, shall exclude conventional floating rate debt).

“Hostile Acquisition” means an acquisition of securities of a person (the “Target”) pursuant to a take-over bid, as defined in the Securities Act (Ontario), or in any other applicable securities or corporate legislation, where the board of directors, trustees or similar body of the Target whose securities are the subject matter of the take-over bid has neither approved such take-over bid nor recommended to the security holders of the Target that they tender or sell their securities pursuant to such take-over bid.

“Indemnified Parties” means, collectively, the Agent and the Lenders, including a receiver, receiver manager or similar person appointed under applicable law, and their respective shareholders, Affiliates, officers, directors, employees and agents, and “Indemnified Party” means any one of the foregoing.

“Information” has the meaning set out in Section 14.1.

“Interest Expense” of any particular person means, for any particular period, the amount which would, in accordance with GAAP, be classified on the consolidated income statement of such person for such period as gross interest expenses.

“Interest Payment Date” means:

(a)	with respect to each Canadian Prime Rate Loan and U.S. Base Rate Loan, the last Banking Day of each calendar month; and
(b)	with respect to each Libor Loan, the last day of each applicable Interest Period and, if any Interest Period is longer than 3 months, the last Banking Day of each 3 month period during such Interest Period,

provided that, in any case, the Maturity Date or, if applicable, any earlier date on which the Credit Facility is fully cancelled or permanently reduced in full, shall be an Interest Payment Date with respect to all Loans then outstanding under the Credit Facility.

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“Interest Period” means:

(a)	with respect to each Canadian Prime Rate Loan and U.S. Base Rate Loan, the period commencing on the applicable Drawdown Date or Conversion Date, as the case may be, and terminating on the date selected by the Borrower hereunder for the Conversion of such Loan into another type of Loan or for the repayment of such Loan;
(b)	with respect to each Bankers’ Acceptance, the period selected by the Borrower hereunder and being of 1, 2, 3 or 6 months’ duration, subject to market availability, (or, subject to the agreement of the Lenders, a longer or shorter period) commencing on the Drawdown Date, Rollover Date or Conversion Date of such Loan; and
(c)	with respect to each Libor Loan, the period selected by the Borrower and being of 1, 2, 3 or 6 months’ duration (or, subject to the agreement of the Lenders, a longer or shorter period) commencing on the applicable Drawdown Date, Rollover Date or Conversion Date, as the case may be,

provided that in any case: (i) the last day of each Interest Period shall be also the first day of the next Interest Period whether with respect to the same or another Loan; (ii) the last day of each Interest Period shall be a Banking Day and if the last day of an Interest Period selected by the Borrower is not a Banking Day the Borrower shall be deemed to have selected an Interest Period the last day of which is the Banking Day next following the last day of the Interest Period selected unless such next following Banking Day falls in the next calendar month in which event the Borrower shall be deemed to have selected an Interest Period the last day of which is the Banking Day next preceding the last day of the Interest Period selected by the Borrower; and (iii) the last day of all Interest Periods for Loans outstanding under the Credit Facility shall expire on or prior to the Maturity Date.

“IRS” means the Internal Revenue Service, a bureau of the United States Department of the Treasury.

“Judgment Conversion Date” has the meaning set out in Section 12.3.

“Judgment Currency” has the meaning set out in Section 12.3.

“Lender BA Suspension Notice” has the meaning set out in Section 11.2.

“Lender Distress Event” means, in respect of a given Lender, such Lender or its Lender Parent is subject to a forced liquidation, merger, sale or other change of control supported in whole or in part by guarantees or other support (including, without limitation, the nationalization or assumption of ownership or operating control by the Government of the United States, Canada or any other Governmental Authority) or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Lender or Lender Parent or their respective assets to be, insolvent, bankrupt or deficient in meeting any capital adequacy or liquidity standard of any such Governmental Authority.

“Lender Insolvency Event” means, in respect of a given Lender, such Lender or its Lender Parent:

(a)	is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b)	becomes insolvent, is deemed insolvent by applicable law or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;
(c)	makes a general assignment, arrangement or composition with or for the benefit of its creditors;

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(d)	(i) institutes, or has instituted against it by a regulator, supervisor or any similar Governmental Authority with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organization or the jurisdiction of its head or home office, (A) a proceeding pursuant to which such Governmental Authority takes control of such Lender’s or Lender Parent’s assets, (B) a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency or winding-up law or other similar law affecting creditors’ rights, or (C) a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar Governmental Authority; or (ii) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency or winding-up law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (i) above and either (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof;
(e)	has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);
(f)	seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or a substantial portion of all of its assets;
(g)	has a secured party take possession of all or a substantial portion of all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case, within 15 days thereafter;
(h)	causes or is subject to any event with respect to it which, under the applicable law of any jurisdiction, has an analogous effect to any of the events specified in subparagraphs (a) to (g) above, inclusive; or
(i)	takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing.

“Lender Parent” means any person that directly or indirectly controls a Lender and, for the purposes of this definition, “control” shall have the same meaning as set forth in the definition of “Affiliate” contained herein.

“Lenders’ Counsel” means the firm of McCarthy Tétrault LLP or such other firm of legal counsel as the Agent may from time to time designate.

“Libor Loan” means an Advance in, or Conversion into, United States Dollars made by the Lenders to the Borrower with respect to which the Borrower has specified that interest is to be calculated by reference to the Libor Rate, and each Rollover in respect thereof.

“Libor Rate” means, for each Interest Period applicable to a Libor Loan, the rate of interest per annum, expressed on the basis of a year of 360 days (as determined by the Agent):

(a) applicable to United States Dollars and appearing on the display referred to as “LIBOR01 Page” (or any display substituted therefor) of Reuters Limited (or any successor thereto or Affiliate

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thereof) as of 11:00 a.m. (London, England time) on the second Banking Day prior to the first day of such Interest Period; or

(b)

if such rate does not appear on such Reuters display, or if such display or rate is not available for any reason, the rate per annum at which United States Dollars are offered by the principal lending office in London, England of the Agent (or of its Affiliates if it does not maintain such an office) in the London interbank market at approximately 11:00 a.m. (London, England time) on the second Banking Day prior to the first day of such Interest Period,

in each case in an amount similar to such Libor Loan and for a period comparable to such Interest Period.

“Lien” means any deed of trust, mortgage, charge, hypothec, assignment, pledge, lien, vendor’s privilege or other security interest or encumbrance of whatever kind or nature, regardless of form and whether consensual or arising by law (statutory or otherwise), that secures the payment of any indebtedness or liability or the observance or performance of any obligation.

“Loan” means a Canadian Prime Rate Loan, U.S. Base Rate Loan, Libor Loan, Bankers’ Acceptance or BA Equivalent Advance outstanding hereunder.

“Long Term Debt” means, at any particular time, that portion of Debt at such time which would not, in accordance with GAAP, be considered to be current liabilities at such time.

“Majority of the Lenders” means:

(a)	where there are one or two Lenders, all of the Lenders; and
(b)	at any other time, those Lenders the Commitments of which are, in the aggregate, at least 662/3% of the Commitments of all Lenders hereunder.

“Material Adverse Change” means any change of circumstances or any event which would have a Material Adverse Effect.

“Material Adverse Effect” means an adverse effect on the financial condition, business, assets, properties or prospects of the Borrower on a consolidated basis which, individually or as part of a series of adverse effects, would have a material adverse effect on the ability of the Borrower to perform any of its payment obligations hereunder.

“Material Subsidiary” means any Subsidiary whose book value of assets (exclusive of (a) equity interests of any Subsidiary of such Subsidiary and (b) intercompany receivables owed to such Subsidiary by an Affiliate of such Subsidiary) is greater than 20% of the book value of the assets of the Borrower on a consolidated basis or whose gross sales are greater than 20% of the gross sales of the Borrower on a consolidated basis; on the date hereof, PCS Sales (USA), Inc. is a Material Subsidiary.

“Maturity Date” means May 28, 2010.

“Multiemployer Plan” means a multiemployer plan, within the meaning of Section 4001 (a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions.

“Net Income” of a particular person means, for any particular period, the amount which would, in accordance with GAAP, be classified on the consolidated income statement of such person for such period as the net income after all

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unusual and extraordinary items other than any gains or losses on the disposition of property, plant and equipment and any non-cash write-downs of assets.

“Non-Acceptance Lender” means a Lender who, by notice in writing to the Agent and the Borrower, elects thereafter to make BA Equivalent Advances in lieu of accepting Bankers’ Acceptances.

“Non-Conflicted Lender” has the meaning set out in Section 2.19.

“Obligations” means, at any time and from time to time, all of the obligations, indebtedness and liabilities (present or future, absolute or contingent, matured or not) of the Borrower to the Lenders or the Agent under, pursuant or relating to the Documents or the Credit Facility and whether the same are from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and including all principal, interest, fees, legal and other costs, charges, expenses and other amounts payable by the Borrower under this Agreement.

“Officer’s Certificate” means a certificate or notice (other than a Compliance Certificate) signed by any one of the directors, the president, chief executive officer, chief financial officer, a vice-president, treasurer, assistant treasurer, controller, secretary or assistant secretary of the Borrower; provided, however, that Drawdown Notices, Conversion Notices, Rollover Notices and Repayment Notices shall be executed on behalf of the Borrower by any one of the foregoing persons and such other persons as may from time to time be designated by written notice from the Borrower to the Agent.

“Outstanding BAs” has the meaning set out in Section 1.8(3).

“Outstanding BAs Collateral” has the meaning set out in Section 2.15(3).

“Outstanding Libor Loans” has the meaning set out in Section 1.8(2)

“Outstanding Principal” means, at any time, the aggregate of (a) the Equivalent Amount in United States Dollars of the principal of all outstanding Canadian Prime Rate Loans (b) the principal amount of all outstanding U.S. Base Rate Loans and Libor Loans, and (c) the Equivalent Amount in United States Dollars of the amounts payable at maturity of all outstanding Bankers’ Acceptances and BA Equivalent Advances.

“PBGC” means Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to any of its principal functions under ERISA.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan, which the Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years.

“Permitted Liens” means any one or more of the following with respect to the assets of the Companies:

(a)

inchoate or statutory Liens for taxes, assessments and other governmental charges or levies which are not delinquent (taking into account any relevant grace periods) or the validity of which are currently being contested in good faith by appropriate proceedings and in respect of which there shall have been set aside a reserve (segregated to the extent required by GAAP) in an amount which is adequate therefor;

(b)

inchoate or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, materialmen, carriers and others in respect of construction, maintenance, repair or operation of assets of the Companies, provided that such Liens are related to obligations not due or delinquent (taking into account any applicable grace or cure periods), are not registered as encumbrances

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	against title to any assets of the Companies and adequate holdbacks are being maintained as required by applicable legislation or such Liens are being contested in good faith by appropriate proceedings and in respect of which there shall have been set aside a reserve (segregated to the extent required by GAAP) in an amount which is adequate with respect thereto and provided further that such Liens do not in the aggregate materially detract from the value of the assets of the Companies encumbered thereby or materially interfere with the use thereof in the operation of the business of the Companies;
(c)	easements, rights-of-way, servitudes, restrictions and similar rights in real property comprised in the assets of the companies or interests therein granted or reserved to other persons, provided that such rights do not in the aggregate materially detract from the value of the assets of the Companies subject thereto or materially interfere with the use thereof in the operation of the business of the Companies;
(d)	title defects or irregularities which are of a minor nature and which do not in the aggregate materially detract from the value of the assets of the Companies encumbered thereby or materially interfere with the use thereof in the operation of the business of the Companies;
(e)	Liens incidental to the conduct of the business or the ownership of the assets of the Companies (other than those described in clauses (f) and (g) of this definition) which were not incurred in connection with the borrowing of money or the obtaining of advances or credit (including, without limitation, unpaid purchase price), and which do not in the aggregate materially detract from the value of the assets of the Companies encumbered thereby or materially interfere with the use thereof in the operation of the business of the Companies;
(f)	Liens securing appeal bonds and other similar Liens arising in connection with court proceedings (including, without limitation, surety bonds, security for costs of litigation where required by law and letters of credit) or any other instruments serving a similar purpose;
(g)	attachments, judgments and other similar Liens arising in connection with court proceedings; provided, however, that such Liens are in existence for less than 30 days after the entry therefor or the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;
(h)	the reservations, limitations, provisos and conditions, if any (i) expressed in any original grant from the Crown of any real property or any interest therein or in any comparable grant in jurisdictions other than Canada or (ii) expressed pursuant to the Land Titles Act (Saskatchewan);
(i)	Liens, charges or other security interests given to a public utility or any municipality or governmental or other public authority when required by such utility or other authority in connection with the operation of the business or the ownership of the assets of the Companies, provided that such Liens do not in the aggregate reduce the value of the assets of the Companies or materially interfere with the use thereof in the operation of the business of the Companies;
(j)	servicing agreements, development agreements, site plan agreements, and other agreements with governmental or public authorities pertaining to the use or development of any of the assets of the Companies, provided same are complied with including, without limitation, any obligations to deliver letters of credit and other security as required;

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(k)	applicable municipal and other governmental restrictions, including municipal by-laws and regulations, affecting the use of land or the nature of any structures which may be erected thereon, provided such restrictions have been complied with;
(l)	Purchase Money Obligations arising in the ordinary course of business, provided that such Lien is limited to the property so acquired and is created, issued or assumed substantially concurrently with the acquisition of such property;
(m)	Liens securing industrial revenue bonds issued by the Companies;
(n)	the right reserved to or vested in any Governmental Authority by any statutory provision, or by the terms of any lease, licence, franchise, grant or permit of any of the Companies, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof;
(o)	any amounts payable and obligations owing to any person in respect of royalty interests held by such person on the production of minerals by the Companies;
(p)	the interests of lessors pursuant to all leases, including the capital leases under which a Company is the lessee;
(q)	Liens securing the indebtedness of companies which become Subsidiaries after the date hereof, which Liens and indebtedness are outstanding on the date the relevant company became a Subsidiary, provided that such indebtedness does not at any time exceed U.S. $75,000,000 (or the Equivalent Amount thereof in Canadian Dollars or the equivalent thereof in any other currency) in the aggregate;
(r)	any deemed security interest in accounts arising as a result of the securitization thereof by the transfer thereof to a securitized asset pool;
(s)	the extension, renewal or refinancing of any Permitted Lien, provided that the amount so secured does not exceed the original amount secured immediately prior to such extension, renewal or refinancing;
(t)	Liens granted to the Agent and the Lenders to secure the indebtedness hereunder; and
(u)	Liens against cash or Cash Equivalents, provided that such cash or Cash Equivalents have been provided as collateral security for the obligations of one or more of the Companies under a Defeased Loan Transaction (including, for certainty, the obligations of a Company under a guarantee provided in connection therewith).

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) covered by ERISA, other than a Multiemployer Plan, which the Borrower or any of its subsidiaries sponsors or maintains or to which the Borrower or any of its subsidiaries makes, is making or is obligated to make contributions and includes any Pension Plan.

“Property” means all of the property owned, operated or used by the Companies.

“Purchase Money Obligations” means any Lien created, issued or assumed by the Companies to secure indebtedness assumed as part of, or issued or incurred to pay or provide funds to pay, all or a part of the purchase price of any property (other than the securities of any Subsidiary or of any person which becomes a Subsidiary upon such purchase).

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“Power of Attorney” means a power of attorney provided by the Borrower to a Lender with respect to Bankers’ Acceptances in accordance with and pursuant to Section 6.4 hereof.

“Rateable Portion”, as regards any Lender, with regard to any amount of money, means (subject to Section 6.5 in respect of the rounding of allocations of Bankers’ Acceptances) in respect of the Credit Facility and Drawdowns, Conversion, Rollovers and Loans and other amounts payable thereunder, the product obtained by multiplying that amount by the quotient obtained by dividing (a) that Lender’s Commitment by (b) the aggregate of all of the Lenders’ Commitments.

“Repayment Notice” means a notice substantially in the form annexed hereto as Schedule F to be given to the Agent by the Borrower pursuant hereto.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the thirty (30) day notice requirement under ERISA has been waived in regulations issued by the PBGC.

“Rollover” means:

(a)	with respect to any Libor Loan, the continuation of all or a portion of such Loan (subject to the provisions hereof) for an additional Interest Period subsequent to the initial or any subsequent Interest Period applicable thereto; and
(b)	with respect to Bankers’ Acceptances, the issuance of new Bankers’ Acceptances or the making of new BA Equivalent Advances (subject to the provisions hereof) in respect of all or any portion of Bankers’ Acceptances (or BA Equivalent Advances made in lieu thereof) maturing at the end of the Interest Period applicable thereto, all in accordance with Article 6 hereof.

“Rollover Date” means the date of commencement of a new Interest Period applicable to a Loan and which date shall be a Banking Day.

“Rollover Notice” means a notice substantially in the form annexed hereto as Schedule G to be given to the Agent by the Borrower pursuant hereto.

“S&P” means the Standard & Poor’s Ratings Group (a division of The McGraw — Hill Companies, Inc.) and any successors thereto.

“Schedule I Lender” means a Lender which is a Canadian chartered bank listed on Schedule I to the Bank Act (Canada).

“Schedule II Lender” means a Lender which is a Canadian chartered bank listed on Schedule II to the Bank Act (Canada).

“Schedule III Lender” means a Lender which is an authorized foreign bank listed on Schedule III to the Bank Act (Canada).

“Subordinated Debt” means, at any particular time, unsecured indebtedness of the Borrower (for greater certainty, excluding the Subsidiaries) which would otherwise be Debt but which is subordinated in writing, on terms satisfactory to the Majority of the Lenders acting reasonably (including, without limitation, subordination and postponement of principal repayments and restrictions on rights to accelerate and commence proceedings), to the indebtedness of the Borrower to the Agent and the Lenders hereunder.

“Subsidiary” means with respect to any person (“X”):

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(a)	any corporation of which at least a majority of the outstanding shares having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time shares of any other class or classes of such corporation might have voting power by reason of the happening of any contingency, unless the contingency has occurred and then only for as long as it continues) is at the time directly, indirectly or beneficially owned or controlled by X or one or more of its Subsidiaries, or X and one or more of its Subsidiaries;
(b)	any partnership of which, at the time, X, or one or more of its Subsidiaries, or X and one or more of its Subsidiaries: (i) directly, indirectly or beneficially own or control more than 50% of the income, capital, beneficial or ownership interests (however designated) thereof; and (ii) is a general partner, in the case of limited partnerships, or is a partner or has authority to bind the partnership, in all other cases; or
(c)	any other person of which at least a majority of the income, capital, beneficial or ownership interests (however designated) are at the time directly, indirectly or beneficially owned or controlled by X, or one or more of its Subsidiaries, or X and one or more of its Subsidiaries;

provided that, unless otherwise expressly provided or the context otherwise requires, references herein to “Subsidiary” or “Subsidiaries” shall be and shall be deemed to be references to Subsidiaries of the Borrower.

“Successor” has the meaning set out in Section 9.2(b).

“Successor Agent” has the meaning set out in Section 13.10.

“Tangible Net Worth” means, at any particular time, Equity at such time less the aggregate of the amounts which would, in accordance with GAAP, be classified on the consolidated balance sheet of the Borrower at such time as intangible assets, including, without limitation, goodwill and deferred expenses.

“Taxes” means all taxes, levies, imposts, stamp taxes, duties, fees, deductions, withholdings, charges, compulsory loans or restrictions or conditions resulting in a charge which are imposed, levied, collected, withheld or assessed by any country or political subdivision or taxing authority thereof now or at any time in the future, together with interest thereon and penalties, charges or other amounts with respect thereto, if any “Tax” and “Taxation” shall be construed accordingly.

“Total Assets” means, at any particular time, the amount which would, in accordance with GAAP, be classified on the consolidated balance sheet of the Borrower at such time as total assets.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA over the current value of that Pension Plan’s assets, determined, as of the beginning of the most recent plan year for which such liabilities have been determined, in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code as specified in the applicable actuarial valuation.

“United States Dollars” and “U.S. $” mean the lawful money of the United States of America.

“U.S. Base Rate” means, for any day, the greatest of:

(a) the rate of interest per annum established from time to time by the Agent as the reference rate of interest for the determination of interest rates that the Agent will charge to customers of varying degrees of creditworthiness in Canada for United States Dollar demand loans in Canada;

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(b)	the rate of interest per annum for such day or, if such day is not a Banking Day, on the immediately preceding Banking Day, equal to the sum of the Federal Funds Rate (expressed for such purpose as a yearly rate per annum in accordance with Section 5.4), plus 1.00% per annum; and
(c)	the Libor Rate for a period of 1 month on such day (or in respect of any day that is not a Banking Day, such Libor Rate in effect on the immediately preceding Banking Day) plus 1.00% per annum,

provided that if all such rates are equal or if such Federal Funds Rate and such Libor Rate are unavailable for any reason on the date of determination, then the “U.S. Base Rate” shall be the rate specified in (a) above.

“U.S. Base Rate Loan” means an Advance in, or Conversion into, United States Dollars made by the Lenders to the Borrower with respect to which the Borrower has specified or a provision hereof requires that interest is to be calculated by reference to the U.S. Base Rate.

“Wholly-Owned Subsidiary” means, with respect to any person (“X”):

(a) a corporation, all of the issued and outstanding shares in the capital of which are held by:

(i)	X;
(ii)	X and/or one or more corporations, all of the issued and outstanding shares in the capital of which are held by X; or
(iii)	two or more corporations, all of the issued and outstanding shares in the capital of which are held by X;

(b)	a corporation which is a Wholly-Owned Subsidiary of a corporation that is a Wholly-Owned Subsidiary of X;
(c)	a partnership, all of the partners of which are X and/or Wholly-Owned Subsidiaries of X; or
(d)	any person of which all of the income, capital, beneficial and ownership interests (however designated) are held and controlled by X and/or Wholly-Owned Subsidiaries of X,

provided that, unless otherwise expressly provided or the context otherwise requires, references herein to “Wholly-Owned Subsidiary” or “Wholly-Owned Subsidiaries” shall be and shall be deemed to be references to Wholly-Owned Subsidiaries of the Borrower.

1.2 Headings; Articles and Sections

          The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms “this Agreement”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.

1.3 Number; persons; including; successors

          Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine and neuter genders and vice versa, words importing persons shall include individuals, partnerships, associations, trusts, unincorporated organizations and corporations and vice versa

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and words and terms denoting inclusiveness (such as “include” or “includes” or “including”), whether or not so stated, are not limited by their context or by the words or phrases which precede or succeed them. References herein to any person shall, unless the context otherwise requires, include such person’s successors and permitted assigns.

1.4 Accounting Principles

          Where the character or amount of any asset or liability or item of revenue or expense or amount of equity is required to be determined, or any consolidation or other accounting computation is required to be made for the purpose of this Agreement or any other Document, such determination or calculation shall, to the extent applicable and except as otherwise specified herein or as otherwise agreed in writing by the parties hereto, be made in accordance with GAAP applied on a consistent basis.

1.5 References to Agreements and Enactments

          Reference herein to any agreement, instrument, licence or other document shall be deemed to include reference to such agreement, instrument, licence or other document as the same may from time to time be amended, modified, supplemented or restated in accordance with the provisions of this Agreement if and to the extent such provisions are applicable; and reference herein to any enactment shall be deemed to include reference to such enactment as re-enacted, amended or extended from time to time and to any successor enactment.

1.6 Per Annum Calculations

          Unless otherwise stated, wherever in this Agreement reference is made to a rate “per annum” or a similar expression is used, such rate shall be calculated on the basis of calendar year of 365 days.

1.7 Schedules

          The following are the Schedules annexed hereto and incorporated by reference and deemed to be part hereof:

Schedule A	—	Lenders and Commitments
Schedule B	—	Assignment Agreement
Schedule C	—	Compliance Certificate
Schedule D	—	Conversion Notice
Schedule E	—	Drawdown Notice
Schedule F	—	Repayment Notice
Schedule G	—	Rollover Notice
Schedule H	—	Opinion of Stikeman Elliott LLP
Schedule I	—	Subsidiaries
Schedule J	—	Partnerships, Joint Ventures and Syndicates

1.8 Amendment and Restatement

     (1) On the date on which all of the conditions set forth in Section 3.2 have been satisfied (or waived in writing by all of the Lenders in accordance with Section 3.3):

(a)	the Existing Credit Agreement shall be and is hereby amended and restated in the form of this Agreement;
(b)	all Loans (as that term is defined in the Existing Credit Agreement) and other amounts outstanding under the Existing Credit Agreement prior to the date hereof shall continue to be outstanding under

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this Agreement and shall be deemed to be Loans and other Obligations owing by the Borrower to the Lenders under this Agreement; and

(c)

the Lenders hereby agree to take all steps and actions and execute and deliver all agreements, instruments and other documents as may be required by the Agent or any of the Lenders (including the assignment of interests in, or the purchase of participations in, such outstanding Loans) to give effect to the foregoing and to ensure that the aggregate Obligations owing to each Lender under the Credit Facility are outstanding in proportion to each Lender’s Rateable Portion of all outstanding Obligations under the Credit Facility after giving effect to the foregoing.

     (2) Notwithstanding the foregoing or any other term hereof, all of the covenants, representations and warranties on the part of the Borrower under the Existing Credit Agreement and all of the claims and causes of action arising against the Borrower in connection therewith, in respect of all matters, events, circumstances and obligations arising or existing prior to the date hereof shall continue, survive and shall not be merged in the execution of this Agreement or any other Documents or any advance or provision of any Loan hereunder.

     (3) References herein to the “date hereof” or similar expressions shall be and shall be deemed to be to the date of the execution and delivery hereof, being January 21, 2009.

ARTICLE 2
THE CREDIT FACILITY

2.1 The Credit Facility

          Subject to the terms and conditions hereof, each of the Lenders shall make available to the Borrower such Lender’s Rateable Portion of the Credit Facility. Subject to Section 2.17, the Outstanding Principal under the Credit Facility shall not exceed the maximum principal amount of the Credit Facility.

2.2 Types of Availments

          The Borrower may, in Canadian Dollars, make Drawdowns, Conversions and Rollovers under the Credit Facility of Canadian Prime Rate Loans and Bankers’ Acceptances and may, in United States Dollars, make Drawdowns, Conversions and Rollovers under the Credit Facility of U.S. Base Rate Loans and Libor Loans. The Borrower shall have the option, subject to the terms and conditions hereof, to determine which types of Loans shall be drawn down and in which combinations or proportions.

2.3 Purpose

          The Credit Facility is being made available for the general corporate purposes of the Borrower.

2.4 Availability and Nature of the Credit Facility

     (1) Subject to the terms and conditions hereof, the Borrower may make Drawdowns under the Credit Facility prior to the Maturity Date.

     (2) The Credit Facility shall be a revolving credit facility: that is, prior to the Maturity Date, the Borrower may increase or decrease Loans under the Credit Facility by making Drawdowns, repayments and further Drawdowns.

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2.5 Minimum Drawdowns

          Each Drawdown under the Credit Facility of the following types of Loans shall be in the following amounts indicated:

(a)	Canadian Prime Rate Loans in minimum principal amounts of Cdn. $1,000,000;
(b)	Bankers’ Acceptances in minimum aggregate amounts of Cdn. $10,000,000 at maturity and Drawdowns in excess thereof in integral multiples of Cdn. $1,000,000;
(c)	U.S. Base Rate Loans in minimum principal amounts of U.S. $1,000,000; and
(d)	Libor Loans in minimum principal amounts of U.S. $10,000,000 and Drawdowns in excess thereof in integral multiples of U.S. $1,000,000.

2.6 Libor Loan Availability

          Drawdowns of, Conversions into and Rollovers of requested Libor Loans may only be made upon the Agent’s prior favourable determination with respect to the matters referred to in Section 11.1.

2.7 Notice Periods for Drawdowns, Conversions and Rollovers

          Subject to the provisions hereof, the Borrower may make a Drawdown, Conversion or Rollover under the Credit Facility by delivering a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be (executed in accordance with the definition of Officer’s Certificate), with respect to a specified type of Loan to the Agent not later than:

(a)	11:00 a.m. (Toronto time) three Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into or the Rollover of Libor Loans;
(b)	11:00 a.m. (Toronto time) two Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into or Rollover of Bankers’ Acceptances; and
(c)	for Drawdowns of or Conversions into Canadian Prime Rate Loans and/or U.S. Base Rate Loans 11:00 a.m. (Toronto time) one Banking Day prior to the proposed Drawdown Date or Conversion Date, as the case may be.

2.8 Conversion Option

          Subject to the provisions of this Agreement, the Borrower may convert the whole or any part of any type of Loan under the Credit Facility into any other type of Loan under the Credit Facility by giving the Agent a Conversion Notice in accordance herewith; provided that:

(a)	Conversions of Libor Loans and Bankers’ Acceptances may only be made on the last day of the Interest Period applicable thereto;
(b)	the Borrower may not convert a portion only or the whole of an outstanding Loan unless both the unconverted portion and converted portion of such Loan are equal to or exceed, in the relevant currency of each such portion, the minimum amounts required for Drawdowns of Loans of the same type as that portion (as set forth in Section 2.5);

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(c)	in respect of Conversions of a Loan denominated in one currency to a Loan denominated in another currency, the Borrower shall at the time of the Conversion repay the Loan or portion thereof being converted in the currency in which it was denominated; and
(d)	a Conversion shall not result in an increase in Outstanding Principal; increases in Outstanding Principal may only be effected by Drawdowns made in accordance herewith.

2.9 Libor Loan Rollovers; Selection of Libor Interest Periods

          At or before 11:00 a.m. (Toronto time) three Banking Days prior to the expiration of each Interest Period of each Libor Loan, the Borrower shall, unless it has delivered a Conversion Notice pursuant to Section 2.8 and/or a Repayment Notice pursuant to Section 2.15 (together with a Rollover Notice if a portion only is to be converted or repaid; provided that a portion of a Libor Loan may be continued only if the portion which is to remain outstanding is equal to or exceeds the minimum amount required hereunder for Drawdowns of Libor Loans) with respect to the aggregate amount of such Loan, deliver a Rollover Notice to the Agent selecting the next Interest Period applicable to the Libor Loan, which new Interest Period shall commence on and include the last day of such prior Interest Period. If the Borrower fails to deliver a Rollover Notice to the Agent as provided in this Section, the Borrower shall be deemed to have given a Conversion Notice to the Agent electing to convert the entire amount of the maturing Libor Loan into a U.S. Base Rate Loan.

2.10 Rollovers and Conversions not Repayments

          Any amount converted shall be a Loan of the type converted to upon such Conversion taking place, and any amount rolled over shall continue to be the same type of Loan under the Credit Facility as before the Rollover, but such Conversion or Rollover (to the extent of the amount converted or rolled over) shall not of itself (notwithstanding the repayment referred to in the definition of Conversion) constitute a repayment or a fresh utilization of any part of the amount available under the Credit Facility.

2.11 Agent’s Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and Libor Loans

          Upon receipt of a Drawdown Notice, Rollover Notice or Conversion Notice with respect to a Canadian Prime Rate Loan, U.S. Base Rate Loan or Libor Loan, the Agent shall forthwith notify the Lenders of the requested type of Loan, the proposed Drawdown Date, Rollover Date or Conversion Date, each Lender’s Rateable Portion of such Loan and, if applicable, the account of the Agent to which each Lender’s Rateable Portion is to be credited.

2.12 Lenders’ and Agent’s Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and Libor Loans

          Each Lender shall, for same day value on the Drawdown Date specified by the Borrower in a Drawdown Notice with respect to a Canadian Prime Rate Loan, a U.S. Base Rate Loan or a Libor Loan, credit the Agent’s Account with such Lender’s Rateable Portion of each such requested Loan and for same day value on the same date the Agent shall pay to the Borrower the full amount of the amounts so credited in accordance with any payment instructions set forth in the applicable Drawdown Notice.

2.13 Irrevocability

          A Drawdown Notice, Rollover Notice, Conversion Notice or Repayment Notice given by the Borrower hereunder shall be irrevocable and, subject to any options the Lenders may have hereunder in regard thereto and the Borrower’s rights hereunder in regard thereto, shall oblige the Borrower to take the action contemplated on the date specified therein.

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2.14 Optional Cancellation or Reduction of the Credit Facility

          The Borrower may, at any time, upon giving at least 3 Banking Days prior written notice to the Agent, cancel in full or, from time to time, permanently reduce in part the unutilized portion of the Credit Facility; provided, however, that any such reduction shall be in a minimum amount of U.S. $10,000,000 and reductions in excess thereof shall be in integral multiples of U.S. $1,000,000. If the Credit Facility is so reduced, the Commitment of each of the Lenders thereunder shall be reduced pro rata in the same proportion that the amount of the reduction in the Credit Facility bears to the amount of the Credit Facility in effect immediately prior to such reduction.

2.15 Optional Repayment; Additional Repayment Terms

     (1) The Borrower may at any time and from time to time repay, without penalty, to the Agent for the account of the Lenders the whole or any part of any Loan owing by it together with accrued interest thereon to the date of such repayment provided that:

(a) the Borrower shall give a Repayment Notice (executed in accordance with the definition of Officer’s Certificate) to the Agent not later than:

(i)	11:00 a.m. (Toronto time) three Banking Days prior to the date of the proposed repayment, for Libor Loans;
(ii)	11:00 a.m. (Toronto time) two Banking Days prior to the date of the proposed repayment, for Bankers’ Acceptances; and
(iii)	11:00 a.m. (Toronto time) one Banking Day prior to the date of the proposed repayment, for Canadian Prime Rate Loans and U.S. Base Rate Loans;

(b)	repayments pursuant to this Section 2.15 may only be made on a Banking Day;
(c)	subject to the following provisions of this Section 2.15, each such repayment may only be made on the last day of the applicable Interest Period with regard to a Libor Loan that is being repaid;
(d)	a Bankers’ Acceptance may only be repaid on its maturity unless collateralized in accordance with Section 2.15(3);
(e)	each such repayment shall be in a minimum amount of the lesser of: (i) the minimum amount required pursuant to Section 2.5 for Drawdowns of the type of Loan proposed to be repaid and (ii) the Outstanding Principal of all Loans outstanding under the Credit Facility immediately prior to such repayment; any repayment in excess of such amount shall be in integral multiples of the amounts required pursuant to Section 2.5 for multiples in excess of the minimum amounts of Drawdowns; and
(f)	the Borrower may not repay a portion only of an outstanding Loan unless the unpaid portion is equal to or exceeds, in the relevant currency, the minimum amount required pursuant to Section 2.5 for Drawdowns of the type of Loan proposed to be repaid.

     (2) If any Libor Loan is repaid on other than the last day of the applicable Interest Period, the Borrower shall, within three Banking Days after notice is given by the Agent, pay to the Agent for the account of the Lenders all costs, losses, premiums and expenses incurred by the Lenders by reason of the liquidation or re-deployment of deposits or other funds or for any other reason whatsoever resulting from the repayment of such Loan or any part thereof on other than the last day of the applicable Interest Period. Any Lender, upon becoming

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entitled to be paid such costs, losses, premiums and expenses, shall deliver to the Borrower and the Agent a certificate of the Lender certifying as to such amounts and, in the absence of manifest error, such certificate shall be conclusive and binding for all purposes.

     (3) With respect to any repayment of unmatured Bankers’ Acceptances pursuant to Section 2.15 (1)(d) or otherwise hereunder, the Borrower shall provide for the funding in full of the unmatured Bankers’ Acceptances to be repaid by paying to and depositing with the Agent cash collateral for each such unmatured Bankers’ Acceptances equal to the face amount payable at maturity thereof. The Agent shall hold such cash collateral in an interest bearing cash collateral account at rates prevailing at the time of deposit for similar accounts with the Agent; such cash collateral, such cash collateral account, any accounts receivable, claims, instruments or securities evidencing or relating to the foregoing, and any proceeds of any of the foregoing (collectively, the “Outstanding BAs Collateral”) shall be assigned to the Agent as security for the obligations of the Borrower in relation to such Bankers’ Acceptances and the Lien of the Agent created in such Outstanding BAs Collateral shall rank in priority to all other Liens and adverse claims against such Outstanding BAs Collateral. Such Outstanding BAs Collateral shall be applied to satisfy the obligations of the Borrower for such Bankers’ Acceptances as they mature and the Agent is hereby irrevocably directed by the Borrower to apply any such Outstanding BAs Collateral to such maturing Bankers’ Acceptances. The Outstanding BAs Collateral created herein shall not be released to the Borrower without the consent of the Lenders; however, interest on such deposited amounts shall be for the account of the Borrower and may be withdrawn by the Borrower so long as no Default or Event of Default is then continuing. If, after maturity of the Bankers’ Acceptances for which such Outstanding BAs Collateral is held and application by the Agent of the Outstanding BAs Collateral to satisfy the obligations of the Borrower hereunder with respect to the Bankers’ Acceptances being repaid, any interest or other proceeds of the Outstanding BAs Collateral remains, such interest or other proceeds shall be promptly paid and transferred by the Agent to the Borrower so long as no Default or Event of Default is then continuing.

2.16 Mandatory Repayment of Credit Facility

          Subject to Section 10.2, the Borrower shall repay or pay, as the case may be, to the Agent, on behalf of the Lenders, all Loans and other Obligations outstanding under the Credit Facility on or before the Maturity Date.

2.17 Currency Excess

     (1) If the Agent shall determine that the aggregate Outstanding Principal of the outstanding Loans under the Credit Facility exceeds the maximum principal amount of the Credit Facility in United States Dollars (the amount of such excess is herein called the “Currency Excess”), then, upon written request by the Agent (which request shall detail the applicable Currency Excess), the Borrower shall repay an amount of Canadian Prime Rate Loans or U.S. Base Rate Loans under the Credit Facility within (a) if the Currency Excess exceeds 3.0% of the amount of the Credit Facility, 5 Banking Days, and (b) in all other cases, 20 Banking Days after receipt of such request, such that, except as otherwise contemplated in Section 2.17(2), the amount or the Equivalent Amount in United States Dollars of such repayments is, in the aggregate, at least equal to the Currency Excess.

     (2) If, in respect of any Currency Excess, the repayments made by the Borrower have not completely removed such Currency Excess (the remainder thereof being herein called the “Currency Excess Deficiency”), the Borrower shall within the aforementioned 5 or 20 Banking Days, as the case may be, after receipt of the aforementioned request of the Agent, place an amount equal to the Currency Excess Deficiency on deposit with the Agent in an interest-bearing account with interest at rates prevailing at the time of deposit for the account of the Borrower, to be assigned to the Agent on behalf of the Lenders by instrument satisfactory to the Agent and to be applied to maturing Bankers’ Acceptances or Libor Loans (converted if necessary at the exchange rate for determining the Equivalent Amount on the date of such application). The Agent is hereby irrevocably directed by the Borrower to apply any such sums on deposit to maturing Loans as provided in the preceding sentence. In lieu

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of providing funds for the Currency Excess Deficiency, as provided in the preceding provisions of this Section, the Borrower may within the said period of 5 or 20 Banking Days, as the case may be, provide to the Agent an irrevocable standby letter of credit in an amount equal to the Currency Excess Deficiency and for a term which expires not sooner than 10 Banking Days after the date of maturity of the relevant Bankers’ Acceptances or Libor Loans, as the case may be; such letter of credit shall be issued by a financial institution, and shall be on terms and conditions, acceptable to the Agent in its sole discretion. The Agent is hereby authorized and directed to draw upon such letter of credit and apply the proceeds of the same to Bankers’ Acceptances or Libor Loans as they mature. Upon the Currency Excess being eliminated as aforesaid or by virtue of subsequent changes in the exchange rate for determining the Equivalent Amount, then, provided no Default or Event of Default is then continuing, such funds on deposit, together with interest thereon, or such letters of credit shall be returned to the Borrower, in the case of funds on deposit, or shall be cancelled or reduced in amount, in the case of letters of credit.

2.18 Permitted Increase in Credit Facility

          The Borrower may, at any time and from time to time, increase the maximum principal amount of the Credit Facility by adding additional financial institutions as Lenders hereunder or by increasing the Commitments of existing Lenders with (in the latter case) the consent of such increasing Lenders, or any combination thereof. The right to increase the maximum principal amount of the Credit Facility as aforesaid shall be subject to the following (for each such increase):

(a)	no Default or Event of Default shall have occurred and be continuing and the Borrower shall have delivered to the Agent a certificate of an officer of the Borrower confirming the same and confirming (i) its corporate authorization to make such increase, (ii) the truth and accuracy in all material respects of its representations and warranties contained in Section 8.1 hereof as of such date, other than any such representations and warranties which expressly speak as of an earlier date and (iii) that no consents, approvals or authorizations are required for such increase (except as have been unconditionally obtained and are in full force and effect, unamended), each as at the effective date of such increase;
(b)	the Borrower shall have delivered to the Agent an opinion of its legal counsel in form and substance as may be required by the Agent, acting reasonably (and such opinion shall, inter alia, opine as to the corporate authorization of the Borrower to effect such increase);
(c)	after giving effect to any such increase, the maximum principal amount of the Credit Facility shall not exceed U.S. $2,000,000,000;
(d)	the Agent shall have consented to any additional financial institution becoming a Lender, such consent not to be unreasonably withheld, conditioned or delayed; and
(e)	the Borrower and the increasing existing Lender or the financial institution being added, as the case may be, shall execute and deliver such documentation as is required by the Agent, acting reasonably, to effect the increase in question (including the partial assignment of Loans or purchase of participations from Lenders to the extent necessary to ensure that, after giving effect to such increase, each Lender holds its Rateable Portion of each outstanding Loan under the Credit Facility) and, if applicable, to add any such new financial institution as a Lender under the Documents.

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2.19 Hostile Acquisitions

     (1) In the event the Borrower wishes to utilize the proceeds of one or more Loans under the Credit Facility to, or to provide funds to any Subsidiary to, finance a Hostile Acquisition, then the following steps shall be followed:

(a)	at least five (5) Banking Days prior to the delivery to the Agent of any Drawdown Notice pursuant to Section 2.7 requesting one or more Loans under the Credit Facility intended to be used to finance such Hostile Acquisition, the Borrower shall notify the Agent and shall provide the Agent with particulars of such Hostile Acquisition, including particulars in sufficient detail to enable each Lender to determine whether it has a conflict of interest if the proceeds of Loans from such Lender are used by the Borrower to finance such Hostile Acquisition;
(b)	promptly after receipt of such notice and particulars from the Borrower, the Agent shall (i) notify an appropriate officer of each Lender and provide such particulars to such officer and (ii) confirm receipt (other than by way of an automated response) of such notice and particulars by each such officer;
(c)	within three (3) Banking Days of such confirmation by the Agent of each such appropriate officer being so advised, each Lender shall notify the Agent of such Lender’s determination as to whether (i) such a conflict of interest exists or (ii) the funding of such Hostile Acquisition would contravene an internal policy of general application of such Lender (each such determination to be made by each such Lender in the exercise of its sole discretion, having regard to such considerations as it deems appropriate); provided that in the event such Lender does not so notify the Agent within such three (3) Banking Day period, such Lender shall be deemed to have notified the Agent that it has no such conflict of interest or contravention; and
(d)	the Agent shall promptly notify the Borrower of each such Lender’s determination,

and, in the event that any Lender has such a conflict of interest or the funding would contravene such a policy (each, a “Conflicted Lender”), then upon such Conflicted Lender so notifying the Agent, the Conflicted Lender shall have no obligation to provide Loans to finance such Hostile Acquisition, notwithstanding any other provision of this Agreement to the contrary; provided, however, that each other Lender (each, a “Non-Conflicted Lender”) which has, or is deemed to have, no such conflict of interest or contravention shall have an obligation, up to the amount of its Commitment, to provide Loans to finance such Hostile Acquisition, and the Loans to finance such Hostile Acquisition shall be provided by each Non-Conflicted Lender in accordance with the ratio, determined prior to the provision of any Loans to finance such Hostile Acquisition, that the Commitment of such Non-Conflicted Lender under the Credit Facility bears to the aggregate Commitments of all Non-Conflicted Lenders under the Credit Facility.

     (2) If Loans are used to finance a Hostile Acquisition and there are Conflicted Lenders, subsequent Loans under the Credit Facility shall be funded firstly by Conflicted Lenders, up to the amount of their Commitments, and subsequent repayments under the Credit Facility shall be applied firstly to Non-Conflicted Lenders, in each case, until such time as the proportion that the amount of each Lender’s Outstanding Principal under the Credit Facility bears to the amount of the total Outstanding Principal of all Lenders is equal to such proportion which would have been in effect but for the application of this Section 2.19.

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ARTICLE 3
CONDITIONS PRECEDENT TO DRAWDOWNS

3.1 Conditions for Drawdowns

          For each Drawdown hereunder the following conditions shall be satisfied as conditions precedent to the making of such Drawdown:

(a)	the Agent shall have received a proper and timely Drawdown Notice from the Borrower requesting the Drawdown;
(b)	the representations and warranties set forth in Section 8.1 shall be true and accurate in all material respects on and as of the date of the requested Drawdown other than any such representations and warranties which expressly speak as of an earlier date;
(c)	no Default or Event of Default shall have occurred and be continuing nor shall any Default or Event of Default result from or exist immediately after the requested Drawdown; and
(d)	after giving effect to the proposed Drawdown, the Outstanding Principal of all Loans outstanding under the Credit Facility shall not exceed the maximum principal amount of the Credit Facility.

3.2 Additional Conditions for Amendment and Restatement

          This Agreement shall be effective upon, and the Existing Credit Agreement shall be amended and restated as herein provided upon, the following conditions being satisfied:

(a)	all fees and expenses previously agreed in writing between the Borrower and each of the Lenders shall be paid by the Borrower to the Lenders;
(b)	the Borrower shall have delivered to the Agent a current certificate of compliance in respect of its jurisdiction of incorporation and certified copies of its articles, by-laws and the resolutions authorizing the Documents and transactions hereunder and an Officer’s Certificate as to the incumbency of the officers of the Borrower signing the Documents;
(c)	the Documents shall have been fully executed and delivered, each in form and substance satisfactory to the Lenders and Lenders’ Counsel (each acting reasonably); and
(d)	the Agent and the Lenders shall have received (i) a legal opinion from Stikeman Elliott LLP in the form attached hereto as Schedule H and (ii) a legal opinion from Lenders’ Counsel in form and substance satisfactory to the Lenders.

3.3 Waiver

          The conditions set forth in Sections 3.1 and 3.2 are inserted for the sole benefit of the Lenders and the Agent and may be waived by all of the Lenders, in whole or in part (with or without terms or conditions) without prejudicing the right of the Lenders or Agent at any time to assert such waived conditions in respect of any subsequent Drawdown.

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ARTICLE 4
EVIDENCE OF DRAWDOWNS

4.1 Account of Record

          The Agent shall open and maintain books of account evidencing all Loans and all other amounts owing by the Borrower to the Lenders hereunder. The Agent shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Borrower hereunder. The information entered in the foregoing accounts shall constitute prima facie evidence of the obligations of the Borrower to the Lenders hereunder with respect to all Loans and all other amounts owing by the Borrower to the Lenders hereunder. After a request by the Borrower, the Agent shall promptly advise the Borrower of such entries made in the Agent’s books of account.

ARTICLE 5
PAYMENTS OF INTEREST AND FEES

5.1 Interest on Canadian Prime Rate Loans

          The Borrower shall pay interest on each Canadian Prime Rate Loan owing by it during each Interest Period applicable thereto in Canadian Dollars at a rate per annum equal to the Canadian Prime Rate in effect from time to time during such Interest Period plus the Applicable Pricing Rate. Each determination by the Agent of the Canadian Prime Rate applicable from time to time during an Interest Period shall be prima facie evidence thereof. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the Canadian Prime Rate Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the Canadian Prime Rate shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Borrower.

5.2 Interest on U.S. Base Rate Loans

          The Borrower shall pay interest on each U.S. Base Rate Loan owing by it during each Interest Period applicable thereto in United States Dollars at a rate per annum equal to the U.S. Base Rate in effect from time to time during such Interest Period plus the Applicable Pricing Rate. Each determination by the Agent of the U.S. Base Rate applicable from time to time during an Interest Period shall be prima facie evidence thereof. Such interest, shall accrue daily and be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the U.S. Base Rate Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the U.S. Base Rate shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Borrower.

5.3 Interest on Libor Loans

          The Borrower shall pay interest on each Libor Loan owing by it during each Interest Period applicable thereto in United States Dollars at a rate per annum, calculated on the basis of a 360 day year, equal to the Libor Rate with respect to such Interest Period plus the Applicable Pricing Rate. Each determination by the Agent of the Libor Rate applicable to an Interest Period shall be prima facie evidence thereof. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Rollover Date, Conversion Date or Interest Payment Date, as the

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case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the Libor Loan outstanding during such period and on the basis of the actual number of days elapsed divided by 360.

5.4 Interest Act (Canada)

     (1) Whenever a rate of interest hereunder is calculated on the basis of a year (the “deemed year”) which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year.

     (2) Whenever a rate of interest or other rate per annum hereunder is expressed or calculated on the basis of a year of 360 days, such rate of interest or other rate shall be expressed as a rate per annum, calculated on the basis of a 365-day year, by multiplying such rate of interest or other rate by 365 and dividing it by 360.

5.5 Nominal Rates; No Deemed Reinvestment

          The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; all interest payments to be made hereunder shall be paid without allowance or deduction for deemed reinvestment or otherwise, before and after maturity, default and judgment. The rates of interest specified in this Agreement are intended to be nominal rates and not effective rates. Interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation.

5.6 Standby Fees

     (1) The Borrower shall pay to the Agent for the account of the Lenders a standby fee in United States Dollars in respect of the Credit Facility calculated at a rate per annum equal to the Applicable Pricing Rate on the amount, if any, by which the amount of the Outstanding Principal under the Credit Facility for each day in the period of determination is less than the maximum principal amount of the Credit Facility on such day. Fees determined in accordance with this Section shall accrue daily from and after the date hereof and be payable by the Borrower (a) quarterly in arrears, (b) on cancellation in full of the Credit Facility, and (c) on the Maturity Date.

     (2) As of: (a) January 1, April 1, July 1 and October 1 in each year, (b) the date of any cancellation in full of the Credit Facility, and (c) the Maturity Date, the Agent shall determine the standby fees under this Section in respect of the Credit Facility for the period from and including the date hereof or the date of the immediately preceding determination, as the case may be, to but excluding that date of determination and shall deliver to the Borrower a written request for payment of the standby fees so determined, as detailed therein. The Borrower shall pay to the Agent for the account of the Lenders the standby fees referred to above within 5 Banking Days after receipt of each such written request.

5.7 Agent’s Fees

          The Borrower shall (from time to time) pay to the Agent, for its own account, the annual agency fee and other amounts set forth in the Agency Fee Agreement by the payment dates set forth therein.

5.8 Interest on Overdue Amounts

          Notwithstanding any other provision hereof, in the event that any amount due hereunder (including, without limitation, any interest payment) is not paid when due (whether by acceleration or otherwise), the Borrower shall pay interest on such unpaid amount (including, without limitation, interest on interest), if and to the fullest extent permitted by applicable law, from the date that such amount is due until the date that such amount is paid in

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full (but excluding the date of such payment if the payment is received for value at the required place of payment on the date of such payment), and such interest shall accrue daily, be calculated and compounded monthly and be payable on demand, after as well as before maturity, default and judgment, at a rate per annum that is equal to (a) in respect of amounts due in Canadian Dollars, the rate of interest then payable on Canadian Prime Rate Loans plus 2.0% per annum or (b) in respect of amounts due in United States Dollars, the rate of interest then payable on U.S. Base Rate Loans plus 2.0% per annum.

5.9 Waiver

          To the extent permitted by applicable law, the covenant of the Borrower to pay interest at the rates provided herein shall not merge in any judgment relating to any obligation of the Borrower to the Lenders or the Agent and any provision of the Interest Act (Canada) or Judgment Interest Act (Alberta) which restricts any rate of interest set forth herein shall be inapplicable to this Agreement and is hereby waived by the Borrower.

5.10 Maximum Rate Permitted by Law

          No interest or fee to be paid hereunder shall be paid at a rate exceeding the maximum rate permitted by applicable law. In the event that such interest or fee exceeds such maximum rate, such interest or fees shall be reduced or refunded, as the case may be, so as to be payable at the highest rate recoverable under applicable law.

ARTICLE 6
BANKERS’ ACCEPTANCES

6.1 Bankers’ Acceptances

          The Borrower may give the Agent notice that Bankers’ Acceptances will be required under the Credit Facility pursuant to a Drawdown, Rollover or Conversion.

6.2 Acceptance Fees

          Upon the acceptance by a Lender of a Bankers’ Acceptance, the Borrower shall pay to the Agent for the account of such Lender an acceptance fee in Canadian Dollars equal to the Applicable Pricing Rate calculated on the principal amount at maturity of such Bankers’ Acceptance and for the period of time from and including the date of acceptance to but excluding the maturity date of such Bankers’ Acceptance and calculated on the basis of the number of days elapsed in a year of 365 days.

6.3 Form and Execution of Bankers’ Acceptances

          The following provisions shall apply to each Bankers’ Acceptance hereunder:

(a)

the face amount at maturity of each draft drawn by the Borrower to be accepted as a Bankers’ Acceptance shall be Cdn. $100,000 and integral multiples thereof;

(b)

the term to maturity of each draft drawn by the Borrower to be accepted as a Bankers’ Acceptance shall, subject to market availability as determined by all of the Lenders, be 1, 2, 3 or 6 months (or such other longer or shorter term as agreed by the Lenders), as selected by the Borrower in the relevant Drawdown Notice, Rollover Notice or Conversion Notice, and each Bankers’ Acceptance shall be payable and mature on the last day of the Interest Period selected by the Borrower for such Bankers’ Acceptance (which, for certainty, pursuant to the definition of “Interest Period” shall be on or prior to the Maturity Date);

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(c)	each draft drawn by the Borrower and presented for acceptance by a Lender shall be drawn on the standard form of such Lender in effect at the time; provided, however, that the Agent may require the Lenders to use a generic form of Bankers’ Acceptance, in a form satisfactory to each Lender, acting reasonably, provided by the Agent for such purpose in place of the Lenders’ own forms;
(d)	subject to Section 6.3(e) below, Bankers’ Acceptances shall be signed by duly authorized officers of the Borrower or, in the alternative, the signatures of such officers may be mechanically reproduced in facsimile thereon and Bankers’ Acceptances bearing such facsimile signatures shall be binding on the Borrower as if they had been manually executed and delivered by such officers on behalf of the Borrower; notwithstanding that any person whose manual or facsimile signature appears on any Bankers’ Acceptance may no longer be an authorized signatory for the Borrower on the date of issuance of a Bankers’ Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers’ Acceptance shall be binding on the Borrower; and
(e)	in lieu of signing Bankers’ Acceptances in accordance with Section 6.3(d) above, the Borrower may provide a Power of Attorney to a Lender; for so long as a Power of Attorney is in force with respect to a given Lender, such Lender shall execute and deliver Bankers’ Acceptances on behalf of the Borrower in accordance with the provisions thereof and, for certainty, all references herein to drafts drawn by the Borrower, Bankers’ Acceptances executed by the Borrower or similar expressions shall be deemed to include Bankers’ Acceptances executed in accordance with a Power of Attorney, unless the context otherwise requires.

6.4 Power of Attorney; Provision of Bankers’ Acceptances to Lenders

     (1) Unless revoked with respect to a given Lender in accordance herewith, the Borrower hereby appoints each Lender, acting by any authorized signatory of the Lender in question, the attorney of the Borrower:

(a)	to sign for and on behalf and in the name of the Borrower as drawer, drafts in such Lender’s standard form which are depository bills as defined in the Depository Bills and Notes Act (Canada) (the “DBNA”), payable to a “clearing house” (as defined in the DBNA) including CDS Clearing and Depository Services Inc., or its nominee, CDS & Co. (the “clearing house”);
(b)	for drafts which are not depository bills, to sign for and on behalf and in the name of the Borrower as drawer and to endorse on its behalf, Bankers’ Acceptances drawn on the Lender payable to the order of the undersigned or payable to the order of such Lender;
(c)	to fill in the amount, date and maturity date of such Bankers’ Acceptances; and
(d)	to deposit and/or deliver such Bankers’ Acceptances which have been accepted by such Lender,

provided that such acts in each case are to be undertaken by the Lender in question strictly in accordance with instructions given to such Lender by the Borrower as provided in this Section 6.4. For certainty, signatures of any authorized signatory of a Lender may be mechanically reproduced in facsimile on Bankers’ Acceptances in accordance herewith and such facsimile signatures shall be binding and effective as if they had been manually executed by such authorized signatory of such Lender.

          Instructions from the Borrower to a Lender relating to the execution, completion, endorsement, deposit and/or delivery by that Lender on behalf of the Borrower of Bankers’ Acceptances which the Borrower wishes to submit to the Lender for acceptance by the Lender shall be communicated by the Borrower in writing to the Agent by delivery to the Agent of Drawdown Notices, Conversion Notices and Rollover Notices, as the case

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may be, in accordance with this Agreement which, in turn, shall be communicated by the Agent, on behalf of the Borrower, to the Lender.

          The communication in writing by the Borrower, or on behalf of the Borrower by the Agent, to the Lender of the instructions set out in the Drawdown Notices, Conversion Notices and Rollover Notices referred to above shall constitute (a) the authorization and instruction of the Borrower to the Lender to sign for and on behalf and in the name of the Borrower as drawer the requested Bankers’ Acceptances and to complete and/or endorse Bankers’ Acceptances in accordance with such information as set out above and (b) the request of the Borrower to the Lender to accept such Bankers’ Acceptances and deposit the same with the clearing house or deliver the same, as the case may be, in each case in accordance with this Agreement and such instructions. The Borrower acknowledges that a Lender shall not be obligated to accept any such Bankers’ Acceptances except in accordance with the provisions of this Agreement.

          A Lender shall be and it is hereby authorized to act on behalf of the Borrower upon and in compliance with instructions communicated to that Lender as provided herein if the Lender reasonably believes such instructions to be genuine. If a Lender accepts Bankers’ Acceptances pursuant to any such instructions, that Lender shall confirm particulars of such instructions and advise the Agent that it has complied therewith by notice in writing addressed to the Agent and served personally or sent by facsimile transmission or other electronic transmission in accordance with the provisions hereof. A Lender’s actions in compliance with such instructions, confirmed and advised to the Agent by such notice, shall be conclusively deemed to have been in accordance with the instructions of the Borrower.

          This Power of Attorney may be revoked by the Borrower with respect to any particular Lender at any time upon not less than 5 Banking Days’ prior written notice served upon the Lender in question and the Agent, provided that no such revocation shall reduce, limit or otherwise affect the obligations of the Borrower in respect of any Bankers’ Acceptance executed, completed, endorsed, deposited and/or delivered in accordance herewith prior to the time at which such revocation becomes effective.

     (2) Unless the Borrower has provided Powers of Attorney to the Lenders, to facilitate Drawdowns, Rollovers or Conversions of Bankers’ Acceptances, the Borrower shall, upon execution of this Agreement and thereafter from time to time as required by all Lenders, provide to the Agent for delivery to each Lender drafts drawn in blank by the Borrower (pre-endorsed and otherwise in fully negotiable form, if applicable) in quantities sufficient for each Lender to fulfil its obligations hereunder. Any such pre-signed drafts which are delivered by the Borrower to the Agent or a Lender shall be held in safekeeping by the Agent or such Lender, as the case may be, with the same degree of care as if they were the Agent’s or such Lender’s property, and shall only be dealt with by the Lenders and the Agent in accordance herewith. No Lender shall be responsible or liable for its failure to make its share of any Drawdown, Rollover or Conversion of Bankers’ Acceptances required hereunder if the cause of such failure is, in whole or in part, due to the failure of the Borrower to provide such pre-signed drafts to the Agent (for delivery to such Lender) on a timely basis.

     (3) By 12:00 noon (Toronto time) on the applicable Drawdown Date, Conversion Date or Rollover Date, the Borrower shall (a) either deliver to each Lender in Toronto, or, if previously delivered, be deemed to have authorized each Lender to complete and accept, or (b) where the Borrower has previously executed and delivered a Power of Attorney to the Lender, be deemed to have authorized each such Lender to sign on behalf of the Borrower, complete and accept, drafts drawn by the Borrower on such Lender in a principal amount at maturity equal to such Lender’s share of the Bankers’ Acceptances specified by the Borrower in the relevant Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be, as notified to the Lenders by the Agent.

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6.5 Mechanics of Issuance

     (1) Upon receipt by the Agent of a Drawdown Notice, Conversion Notice or Rollover Notice from the Borrower requesting the issuance of Bankers’ Acceptances, the Agent shall promptly notify the Lenders thereof and advise each Lender of the aggregate face amount of Bankers’ Acceptances to be accepted by such Lenders, the date of issue and the Interest Period for such Loan; the apportionment among the Lenders of the face amounts of Bankers’ Acceptances to be accepted by each Lender shall be determined by the Agent by reference and in proportion to the respective Commitment of each Lender, provided that, when such apportionment cannot be evenly made, the Agent shall round allocations amongst such Lenders consistent with the Agent’s normal money market practices.

     (2) On each Drawdown Date, Rollover Date or Conversion Date involving the issuance of Bankers’ Acceptances:

(a)	before 11:00 a.m. (Toronto time) on such date, the Agent shall determine the CDOR Rate in respect of an issue of bankers’ acceptances in a comparable amount and with comparable maturity to the Bankers’ Acceptances proposed to be issued on such date;
(b)	on or about 11:00 a.m. (Toronto time) on such date, the Agent shall advise each Lender of the applicable BA Discount Rate;
(c)	each Lender shall complete and accept, in accordance with the Drawdown Notice, Conversion Notice or Rollover Notice delivered by the Borrower and advised by the Agent in connection with such issue, its share of the Bankers’ Acceptances to be issued on such date and shall purchase such Bankers’ Acceptances for its own account at a purchase price which reflects the BA Discount Rate applicable to such issue; and
(d)	in the case of a Drawdown, each Lender shall, for same day value on the Drawdown Date, remit the Discount Proceeds or advance the BA Equivalent Advance, as the case may be, payable by such Lender (net of the acceptance fee payable to such Lender pursuant to Section 6.2) to the Agent for the account of the Borrower; the Agent shall make such funds available to the Borrower for same day value on such date.

     (3) Each Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all Bankers’ Acceptances accepted and purchased by it for its own account.

6.6 Rollover, Conversion or Payment on Maturity

          In anticipation of the maturity of Bankers’ Acceptances, the Borrower shall, subject to and in accordance with the requirements hereof, do one or a combination of the following with respect to the aggregate face amount at maturity of all such maturing Bankers’ Acceptances:

(a)

(i) deliver to the Agent a Rollover Notice that the Borrower intends to draw and present for acceptance on the maturity date new Bankers’ Acceptances in an aggregate face amount up to the aggregate amount of the maturing Bankers’ Acceptances and (ii) on the maturity date pay to the Agent for the account of the Lenders an additional amount equal to the difference between the aggregate face amount of the maturing Bankers’ Acceptances and the Discount Proceeds of such new Bankers’ Acceptances;

(b)

(i) deliver to the Agent a Conversion Notice requesting a Conversion of the maturing Bankers’ Acceptances to another type of Loan under the Credit Facility and (ii) on the maturity date pay to the Agent for the account of the Lenders an amount equal to the difference, if any, between the

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aggregate face amount of the maturing Bankers’ Acceptances and the amount of the Loans into which Conversion is requested; or

(c) on the maturity date of the maturing Bankers’ Acceptances, pay to the Agent for the account of the Lenders an amount equal to the aggregate face amount of such Bankers’ Acceptances.

If the Borrower fails to so notify the Agent or make such payments on maturity, the Agent shall effect a Conversion into a Canadian Prime Rate Loan of the entire amount of such maturing Bankers’ Acceptances as if a Conversion Notice had been given by the Borrower to the Agent to that effect.

6.7 Restriction on Rollovers and Conversions

          Subject to the other provisions hereof, Conversions and Rollovers of Bankers’ Acceptances may only occur on the maturity date thereof.

6.8 Rollovers

          In order to satisfy the continuing liability of the Borrower to a Lender for the face amounts of maturing Bankers’ Acceptances accepted by such Lender, the Lender shall receive and retain for its own account the Discount Proceeds of new Bankers’ Acceptances issued on a Rollover, and the Borrower shall on the maturity date of the Bankers’ Acceptances being rolled over pay to the Agent for the account of the Lenders an amount equal to the difference between the face amounts of the maturing Bankers’ Acceptances and the Discount Proceeds from the new Bankers’ Acceptances together with the acceptance fees to which the Lenders are entitled pursuant to Section 6.2.

6.9 Conversion into Bankers’ Acceptances

          In respect of Conversions into Bankers’ Acceptances, in order to satisfy the continuing liability of the Borrower to the Lenders for the amount of the converted Loan, each Lender shall receive and retain for its own account the Discount Proceeds of the Bankers’ Acceptances issued upon such Conversion, and the Borrower shall on the Conversion Date pay to the Agent for the account of the Lenders an amount equal to the difference between the principal amount of the converted Loan and the aggregate Discount Proceeds from the Bankers’ Acceptances issued on such Conversion, together with the acceptance fees to which the Lenders are entitled pursuant to Section 6.2.

6.10 Conversion from Bankers’ Acceptances

          In order to satisfy the continuing liability of the Borrower to the Lenders for an amount equal to the aggregate face amount of the maturing Bankers’ Acceptances converted to another type of Loan, the Agent shall record the obligations of the Borrower to the Lenders in respect of those maturing Bankers’ Acceptances as Loans of the type into which such continuing liability has been converted.

6.11 BA Equivalent Advances

          Notwithstanding the foregoing provisions of this Article, a Non-Acceptance Lender shall, in lieu of accepting Bankers’ Acceptances, make a BA Equivalent Advance. The amount of each BA Equivalent Advance shall be equal to the Discount Proceeds which would be realized from a hypothetical sale of those Bankers’ Acceptances which, but for this Section, such Lender would otherwise be required to accept as part of such a Drawdown of, Conversion into or Rollover of Bankers’ Acceptances. To determine the amount of such Discount Proceeds, the hypothetical sale shall be deemed to take place at the applicable BA Discount Rate for such Loan. Any BA Equivalent Advance shall be made on the relevant Drawdown Date, Rollover Date or Conversion Date as the case may be and shall remain outstanding for the term of the relevant Bankers’ Acceptances. Concurrent with

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the making of a BA Equivalent Advance, a Non-Acceptance Lender shall be entitled to deduct therefrom an amount equal to the acceptance fee which, but for this Section, such Lender would otherwise be entitled to receive as part of such Loan. Subject to Section 6.6, upon the maturity date for such Bankers’ Acceptances, the Borrower shall pay to each Non-Acceptance Lender an amount equal to the face amount at maturity of the Bankers’ Acceptances which, but for this Section, such Lender would otherwise be required to accept as part of such a Drawdown of, Conversion into or Rollover of Bankers’ Acceptances as repayment of the amount of its BA Equivalent Advance plus payment of the interest accrued and payable thereon to such maturity date.

          All references herein to “Loans” and “Bankers’ Acceptances” shall, unless otherwise expressly provided herein or unless the context otherwise requires, be deemed to include BA Equivalent Advances made by a Non-Acceptance Lender as part of a Drawdown of, Conversion into or Rollover of Bankers’ Acceptances.

6.12 Termination of Bankers’ Acceptances

          If at any time a Lender ceases to accept bankers’ acceptances in the ordinary course of its business, such Lender shall be deemed to be a Non-Acceptance Lender and shall make BA Equivalent Advances in lieu of accepting Bankers’ Acceptances under this Agreement.

ARTICLE 7
PLACE AND APPLICATION OF PAYMENTS

7.1 Place of Payment of Principal, Interest and Fees; Payments to Agent

          All payments of principal, interest, fees and other amounts to be made by the Borrower to the Agent and the Lenders pursuant to this Agreement shall be made to the Agent (for, as applicable, the account of the Lenders or its own account) in the currency in which the Loan is outstanding for value on the day such amount is due, and if such day is not a Banking Day on the Banking Day next following, by deposit or transfer thereof to the applicable Agent’s Account or at such other place as the Borrower and the Agent may from time to time agree. Notwithstanding anything to the contrary expressed or implied in this Agreement, the receipt by the Agent in accordance with this Agreement of any payment made by the Borrower for the account of any of the Lenders shall, insofar as the Borrower’s obligations to the relevant Lenders are concerned, be deemed also to be receipt by such Lenders and the Borrower shall have no liability in respect of any failure or delay on the part of the Agent in disbursing and/or accounting to the relevant Lenders in regard thereto.

7.2 Designated Accounts of the Lenders

          All payments of principal, interest, fees or other amounts to be made by the Agent to the Lenders pursuant to this Agreement shall be made for value on the day required hereunder, provided the Agent receives funds from the Borrower for value on such day, and if such funds are not so received from the Borrower or if such day is not a Banking Day, on the Banking Day next following, by deposit or transfer thereof at the time specified herein to the account of each Lender designated by such Lender to the Agent for such purpose or to such other place or account as the Lenders may from time to time notify the Agent.

7.3 Funds

          Each amount advanced, disbursed or paid hereunder shall be advanced, disbursed or paid, as the case may be, in such form of funds as may from time to time be customarily used in Calgary, Alberta, Toronto, Ontario and New York, New York in the settlement of banking transactions similar to the banking transactions required to give effect to the provisions of this Agreement on the day such advance, disbursement or payment is to be made (for certainty, each such amount advanced, disbursed or paid hereunder shall be advanced, disbursed or paid, as the case may be, in immediately available funds to the extent possible in the relevant jurisdiction).

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7.4 Application of Payments

          Except as otherwise agreed in writing by all of the Lenders, if any Event of Default shall occur and be continuing, all payments made by the Borrower to the Agent and the Lenders shall be applied in the following order:

(a)	to amounts due hereunder as fees other than acceptance fees for Bankers’ Acceptances;
(b)	to amounts due hereunder as costs and expenses;
(c)	to amounts due hereunder as default interest;
(d)	to amounts due hereunder as interest or acceptance fees for Bankers’ Acceptances; and
(e)	to amounts due hereunder as principal (including reimbursement obligations in respect of Bankers’ Acceptances).

7.5 Payments Clear of Taxes

     (1) Any and all payments by the Borrower to the Agent or the Lenders hereunder shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future Taxes and all liabilities with respect thereto imposed, levied, collected, withheld or assessed by any Governmental Authority imposed on the Agent or the Lenders, or by or on behalf of the foregoing, excluding Taxes imposed with respect to such payments by such Governmental Authority if such Taxes are imposed on or measured by reference to or in respect of the overall net income or capital of a Lender. In addition, the Borrower agrees to pay any present or future stamp, transfer, registration, excise, issues, documentary or other taxes, charges or similar levies which arise from any payment made under this Agreement or the Loans or in respect of the execution, delivery or registration or the compliance with this Agreement or the other Documents contemplated hereunder. The Borrower shall indemnify and hold harmless the Agent and the Lenders for the full amount of all of the foregoing Taxes or other amounts paid or payable by the Agent or the Lenders and any liability (including penalties, interest, additions to tax and reasonable out-of-pocket expenses) resulting therefrom or with respect thereto which arise from any payment made under or pursuant to this Agreement or the Loans or in respect of the execution, delivery or registration of, or compliance with, this Agreement or the other Documents.

     (2) If the Borrower shall be required by law to deduct or withhold any amount from any payment or other amount required to be paid to the Agent or the Lenders hereunder, or if any liability therefor shall be imposed or shall arise from or in respect of any sum payable hereunder, then the sum payable to the Agent or the Lenders hereunder shall be increased as may be necessary so that after making all required deductions, withholdings, and additional income tax payments attributable thereto (including deductions, withholdings or income tax payable for additional sums payable under this provision) the Agent or the Lenders, as the case may be, receive an amount equal to the amount they would have received had no such deductions or withholdings been made or if such additional taxes had not been imposed; in addition, the Borrower shall pay the full amount deducted or withheld for such liabilities to the relevant taxation authority or other authority in accordance with applicable law, such payment to be made (if the liability is imposed on the Borrower) for its own account or (if the liability is imposed on the Agent or the Lenders) on behalf of and in the name of the Agent or the Lenders, as the case may be. If the liability is imposed on the Agent or the Lenders, the Borrower shall deliver to the Agent or the Lenders evidence satisfactory to the Agent or the Lenders, acting reasonably, of the payment to the relevant taxation authority or other authority of the full amount deducted or withheld.

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7.6 Set Off

     (1) In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of an Event of Default which remains unremedied (whether or not the Loans have been accelerated hereunder), the Agent and each Lender shall have the right (and are hereby authorized by the Borrower) at any time and from time to time to combine all or any of the Borrower’s accounts with the Agent or the Lender, as the case may be, and to set off and to appropriate and to apply any and all deposits (general or special, term or demand) including, but not limited to, indebtedness evidenced by certificates of deposit whether matured or unmatured, and any other indebtedness at any time held by the Borrower or owing by such Lender or the Agent, as the case may be, to or for the credit or account of the Borrower against and towards the satisfaction of any Obligations owing by the Borrower, and may do so notwithstanding that the balances of such accounts and the liabilities are expressed in different currencies, and the Agent and each Lender are hereby authorized to effect any necessary currency conversions at the noon spot rate of exchange announced by the Bank of Canada on the Banking Day before the day of conversion.

     (2) The Agent or the applicable Lender, as the case may be, shall notify the Borrower of any such set-off from the Borrower’s accounts within a reasonable period of time thereafter, although the Agent or the Lender, as the case may be, shall not be liable to the Borrower for its failure to so notify.

7.7 Margin Changes; Adjustments for Margin Changes; Notice of Rating Changes

     (1) Changes in Applicable Pricing Rates shall be effective:

(a)	on the Banking Day immediately following any change in the relevant Debt Rating (or when the Borrower ceases to have a Debt Rating, if applicable) which results in a change in the Applicable Pricing Rate in accordance with the definition thereof; and
(b)	without the necessity of notice to the Borrower.

     (2) For any Loans outstanding as of the effective date of a change in an Applicable Pricing Rate:

(a)	in the case of increases in such rates per annum, the Borrower shall pay to the Agent for the account of the Lenders such additional interest or fees, as the case may be, as may be required to give effect to the relevant increases in the interest or fees payable on or in respect of such Loans from and as of the effective date of the relevant increase in rates; and
(b)	in the case of decreases in such rates per annum, the Borrower shall receive a credit against subsequent interest payable on Loans or fees payable pursuant to Section 6.2, as the case may be, to the extent necessary to give effect to the relevant decreases in the interest or fees payable on or in respect of such Loans from and as of the effective date of the relevant decrease in rates.

     (3) The additional payments required by Section 7.7(2)(a) shall be made on the last Banking Day of the calendar month immediately following the calendar month in which the changes in Applicable Pricing Rates are effective. The adjustments required by Section 7.7(2)(b) shall be accounted for in successive interest and fee payments by the Borrower until the amount of the credit therein contemplated has been fully applied; provided that, upon satisfaction in full of all Obligations and cancellation of the Credit Facility in accordance herewith, the Lenders shall pay to the Borrower an amount equal to any such credit which remains outstanding.

     (4) The Borrower hereby covenants and agrees to give notice to the Agent of any change in the Debt Rating or if the Borrower ceases to have a Debt Rating, promptly upon becoming aware of such change. For certainty, the change in Applicable Pricing Rate shall, subject to Section 7.7(1)(a), be effective from the date of the change in the Debt Rating regardless of the date notice thereof is given by the Borrower to the Agent.

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ARTICLE 8
REPRESENTATIONS AND WARRANTIES

8.1 Representations and Warranties

          The Borrower represents and warrants as follows to the Agent and to each of the Lenders and acknowledges and confirms that the Agent and each of the Lenders is relying upon such representations and warranties:

(a)	Status and Power.
	The Borrower is a corporation duly incorporated and organized and validly subsisting in good standing under the laws of Canada. Each of the Material Subsidiaries which is a corporation is a corporation duly incorporated and organized and validly subsisting in good standing under the laws of its jurisdiction of incorporation, and each other Material Subsidiary is validly existing under the laws of its jurisdiction of organization or formation, in each case, as set forth in Schedule I. The Borrower and each of the Material Subsidiaries is duly qualified, registered or licensed in all jurisdictions where such qualification, registration or licensing is required, except where the failure to be so qualified would not have and would not reasonably be expected to have a Material Adverse Effect. The Borrower and each of the Material Subsidiaries has all requisite capacity, power and authority to own, hold under licence or lease its properties necessary for the conduct of its business and to carry on its business, in each case, as currently conducted. The Borrower has all requisite corporate capacity, power and authority to enter into and carry out the transactions contemplated by this Agreement.
(b)	Authorization and Enforcement.
	All necessary action, corporate or otherwise, has been taken to authorize the execution, delivery and performance by the Borrower of this Agreement. The Borrower has duly executed and delivered this Agreement. This Agreement is a legal, valid and binding obligation of the Borrower enforceable against the Borrower by the Agent and the Lenders in accordance with its terms, subject to the qualifications contained in the opinion of the Borrower’s counsel delivered pursuant to Section 3.2(d)(i).
(c)	Compliance with Other Instruments.
	The execution, delivery and performance by the Borrower of this Agreement and the consummation of the transactions contemplated herein do not conflict with, result in any breach or violation of, or constitute a default under the terms, conditions or provisions of the charter or constating documents or by-laws of, or any unanimous shareholder agreement relating to, the Borrower or of any law, regulation, judgment, decree or order binding on or applicable to the Borrower or to which its property is subject or of any material agreement, lease, licence, permit or other instrument to which the Borrower is a party or is otherwise bound or by which the Borrower benefits or to which its property is subject and do not require the consent or approval of any Governmental Authority or any other party of which the failure to have received or obtained would have or would reasonably be expected to have a Material Adverse Effect.
(d)	Financial Statements.
	The Financial Statements were prepared in accordance with GAAP and no Material Adverse Change has occurred since December 31, 2007 to the date hereof. The balance sheets contained in

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the Financial Statements fairly present the consolidated financial condition of the Borrower as at the respective dates thereof and the statements of income contained in the Financial Statements fairly present the consolidated results of operations of the Borrower during the respective fiscal periods covered thereby.

(e)	Litigation.
	There are no actions, suits, inquiries, claims or proceedings (whether or not purportedly on behalf of any of the Companies) which have been commenced against or affecting any of the Companies before any court or other Governmental Authority except those which have not had or could not reasonably be expected to have a Material Adverse Effect.
(f)	Outstanding Defaults.
	No event has occurred which constitutes or which, with the giving of notice, lapse of time or both, would constitute a default under or in respect of any agreement, undertaking or instrument to which any of the Companies is a party or to which its property or assets may be subject, except where such default has not had or could not reasonably be expected to have a Material Adverse Effect.
(g)	No Default or Event of Default
	No Default or Event of Default has occurred and is continuing or would reasonably be excepted to occur immediately following any Drawdown hereunder.
(h)	ERISA Compliance.

(i)	Except as has not had or could not reasonably be expected to have a Material Adverse Effect, (A) each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law, (B) each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto or an application for such a letter will be made on or before the end of the applicable remedial amendment period and nothing has occurred which would prevent, or cause the loss of, such qualification, (C) the Borrower and each ERISA Affiliate has made by their due date all required contributions to any Plan subject to Section 412 of the Code and to any Multiemployer Plan, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.
(ii)	There are no pending or threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan except those which have not resulted or could not reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan except those which have not resulted or could not reasonably be expected to result in a Material Adverse Effect.
(iii)	Except as has not had or could not reasonably be expected to have a Material Adverse Effect, (A) no ERISA Event has occurred or is reasonably expected to occur; (B) no Pension Plan has any Unfunded Pension Liability; (C) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result

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in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (D) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.

(i) Environmental Compliance.

(i)	The Property (including underlying groundwater) has, since the date of its acquisition by the applicable Company, been owned, operated and used in compliance with all Environmental Laws except where such failure could not reasonably be expected to have a Material Adverse Effect.
(ii)	There are no actions or proceedings which have been commenced in connection with an alleged violation of any Environmental Law by any Company except those which could not reasonably be expected to have a Material Adverse Effect.
(iii)	There have been no releases of Hazardous Materials at, on or under the Property in violation of Environmental Law except where such releases could not reasonably be expected to have a Material Adverse Effect.
(iv)	Each of the Companies has been issued and is in compliance with all permits, certificates, approvals, licences and other authorizations required under any Environmental Laws to own its properties and assets and to carry on its businesses except where such non-issuance or noncompliance could not reasonably be expected to have a Material Adverse Effect.

(j)	Corporate Name.
	As at the date hereof, the corporate name of the Borrower as it appears in its articles of continuation is Potash Corporation of Saskatchewan Inc.
(k)	Inter-Corporate Relationships.
	As at the date hereof, the share ownership of each of the Subsidiaries is as set forth in Schedule I.
(l)	Subsidiaries and Partnerships.
	As at the date hereof, all of the Subsidiaries and the jurisdiction of incorporation of each of the Subsidiaries is as set forth in Schedule I. As at the date hereof, none of the companies is, directly or indirectly, a member of or participant in any partnership, joint venture or syndicate other than as described in Schedule J.
(m)	Regulation U or X.
	No proceeds of any Loan made hereunder shall be used for a purpose which violates, or would be inconsistent with, Regulation U or X of the Board of Governors of the Federal Reserve System.

8.2 Deemed Repetition

          On the date of delivery by the Borrower of a Drawdown Notice to the Agent, and again on the date of any Drawdown made by the Borrower pursuant thereto:

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(a)	the Borrower shall be deemed to represent and warrant that each of the representations and warranties contained in Section 8.1 are true and correct in all material respects on such date, other than any such representations and warranties which expressly speak as of an earlier date; and
(b)	the Borrower shall be deemed to have represented to the Agent and the Lenders that, except as has otherwise been notified to the Agent in writing and has been waived in accordance herewith, no event has occurred and remains outstanding which would constitute a Default or an Event of Default nor will any such event exist immediately after or occur as a result of the aforementioned Drawdown.

8.3 Effective Time of Repetition

          All representations and warranties, when repeated or deemed to be repeated hereunder, shall be construed with reference to the facts and circumstances existing at the time of repetition, unless they are stated herein to be made as at the date hereof.

8.4 Nature of Representations and Warranties

          The representations and warranties set out in this Agreement or deemed to be made pursuant hereto shall survive the execution and delivery of this Agreement and the making of each Drawdown, notwithstanding any investigations or examinations which may be made by the Agent, the Lenders or Lenders’ Counsel. Such representations and warranties shall survive until this Agreement has been terminated, provided that the representations and warranties relating to environmental matters shall survive the termination of this Agreement.

ARTICLE 9
GENERAL COVENANTS

9.1 Affirmative Covenants of the Borrower

          So long as any Obligation is outstanding or the Credit Facility is available hereunder, the Borrower covenants and agrees with each of the Lenders and the Agent that, unless (subject to Section 14.10) the Majority of the Lenders otherwise consent in writing:

(a)	Financial Reporting.
	The Borrower shall furnish the Agent with the following documents, statements and reports:

(i)	within 120 days after the end of each Fiscal Year, a copy of the audited consolidated financial statements of the Borrower with respect thereto and the auditors’ report thereon;
(ii)	within 120 days after the end of each Fiscal Year, if and to the extent any changes have occurred therein, an updated Schedule I, an updated Schedule J and an updated list of the Material Subsidiaries, each certified by a senior officer of the Borrower to be true and correct as of the date thereof;
(iii)	within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, a copy of the unaudited consolidated financial statements of the Borrower with respect thereto;
(iv)	within 120 days after the end of each Fiscal Year and within 60 days after the end of each Fiscal Quarter, a duly executed and completed Compliance Certificate, evidencing compliance with the terms of this Agreement; and

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(v) at the request of the Agent, such additional information, reports, certificates, financial or operating reports or statements or other matters affecting the business, affairs, current or historical financial condition, property or assets of the Borrower or any of its Material Subsidiaries, as the Agent on the instructions of the Majority of the Lenders may, from time to time, reasonably require,

	provided that, with respect to clauses (i) and (iii) above, the requirements thereof shall be deemed satisfied upon the Borrower giving to the Agent notice of the filing with the U.S. Securities and Exchange Commission of its Form 10-K or Form 10-Q, as applicable, which includes such information, within the time period prescribed in such clauses, subject to the Agent having access thereto; provided further that the Agent shall be deemed to have access to such reports if and so long as the same are posted on the EDGAR Database.
(b)	Corporate Existence.
	Except as expressly permitted in Section 9.2(b), the Borrower shall, and shall cause each of the Material Subsidiaries to, maintain its corporate existence in good standing and shall, and shall cause each of the Subsidiaries to, qualify and remain duly qualified to carry on business and own property in each jurisdiction in which such qualification is necessary to the extent that a failure to so qualify could reasonably be expected to have a Material Adverse Effect.
(c)	Conduct of Business.
	The Borrower shall, and shall cause each of the Subsidiaries to, comply with all Applicable Laws and conduct its business in such a manner so as to comply in all respects with Applicable Laws, so as to observe and perform all its obligations under leases, licences and agreements necessary for the proper conduct of its business and so as to preserve and protect its property and assets and the earnings, income and profits therefrom (including, without limitation, Environmental Laws and laws relating to the discharge, spill, disposal or emission of Hazardous Materials), in each case, other than where noncompliance, non-observance or non-performance could not reasonably be expected to have a Material Adverse Effect. The Borrower shall, and shall cause each of the Subsidiaries to, obtain and maintain all material licenses, certificates of approval, consents, registrations, permits, government approvals, franchises, authorizations and other rights necessary for the operation of its business to the extent that a failure to do so could reasonably be expected to have a Material Adverse Effect.
(d)	Use of Proceeds.
	The Borrower shall use all of the proceeds of the Drawdowns for the purposes permitted by Section 2.3.
(e)	Long Term Debt to EBITDA.
	The Borrower shall maintain or cause to be maintained the ratio of Long Term Debt as at the last day of each Fiscal Quarter to EBITDA for the four consecutive Fiscal Quarters ending on such day in a ratio of less than or equal to 3.5 to 1.
(f)	Debt to Capital.
	The Borrower shall at all times maintain or cause to be maintained the ratio of Debt to Capital in a ratio of less than or equal to 0.60 to 1.

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(g)	Tangible Net Worth.
	The Borrower shall at all times maintain or cause to be maintained Tangible Net Worth in an amount greater than or equal to U.S. $1,250,000,000.
(h)	Insurance.
	The Borrower shall, and shall cause each of the Material Subsidiaries to, maintain insurance with respect to its properties and business against loss or damage of the kind customarily insured against by companies engaged in the same or similar business, of such types and in such amounts as are customarily carried under such circumstances by such other companies.
(i)	Taxes.
	The Borrower shall, and shall cause each of the Material Subsidiaries to, file all material tax returns and tax reports required by law to be filed by it and pay all material taxes, rates, government fees and dues levied, assessed or imposed upon it and upon its property or assets or any part thereof, as and when the same become due and payable (save and except when and so long as the validity of any such taxes, rates, fees, dues, levies, assessments or imposts is being contested in good faith by appropriate proceedings and adequate reserves are being maintained in accordance with GAAP), and the Borrower shall deliver to the Agent, when requested, written evidence of such filings and payments.
(j)	Books and Records.
	The Borrower shall, and shall cause each of the Material Subsidiaries to, keep proper books of account and records covering all its business and affairs on a current basis, make full, true and correct entries in all material respects of their transactions in such books, set aside on their books from their earnings all such proper reserves as required by GAAP and permit representatives of the Agent to inspect such books of account, records and documents and to make copies therefrom during reasonable business hours and upon reasonable notice and to discuss the affairs, finances and accounts of the Companies with the officers of the Companies and their auditors during reasonable business hours and upon reasonable notice; provided, however, that absent an Event of Default which is then continuing, all but one such inspection in any 12 month period shall be at the Agent’s expense.
(k)	Environmental Matters.
	The Borrower shall, as soon as practicable and in any event within 30 days, notify the Agent and provide copies upon receipt of all written claims, complaints, notices or inquiries from a Governmental Authority relating to the condition of the facilities and properties of the Companies or compliance with Environmental Laws, which claims, complaints, notices or inquiries relate to matters which would have, or may reasonably be expected to have, a Material Adverse Effect, and shall, and shall cause each of the Subsidiaries to, proceed diligently to resolve any such claims, complaints, notices or inquiries relating to compliance with Environmental Laws and provide such information and certifications which the Agent may reasonably request from time to time to evidence compliance with this provision.

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(l)	Notice of Default or Event of Default.
	Upon the occurrence of a Default or an Event of Default, the Borrower shall promptly deliver to the Agent a notice specifying the nature and date of occurrence of such Default or Event of Default and the action which the Borrower proposes to take with respect thereto.
(m)	Ranking of Obligations.
	The Borrower shall at all times ensure that the Obligations rank at least pari passu with the most senior unsecured, unsubordinated Debt of the Borrower.

9.2 Negative Covenants of the Borrower

          So long as any Obligation is outstanding or the Credit Facility is available hereunder, the Borrower covenants and agrees with each of the Lenders and the Agent that, unless (subject to Section 14.10) the Majority of the Lenders otherwise consent in writing:

(a)	Encumbrances.
	The Borrower shall not, and shall not suffer or permit any of the Subsidiaries to, enter into or grant, create, assume or suffer to exist any Lien affecting any of its property, assets or undertaking, save and except only for the Permitted Liens.
(b)	Corporate Existence.
	The Borrower shall not change its jurisdiction of continuation or incorporation. The Borrower shall not, and shall not suffer or permit any of the Material Subsidiaries to, take part in any amalgamation, merger, winding-up, dissolution, capital or corporate reorganization or similar proceeding or arrangement, except that: (i) any of them may amalgamate or merge with any Subsidiary which is a direct or indirect Wholly-Owned Subsidiary of the Borrower, (ii) any Material Subsidiary may wind up into any other Subsidiary or the Borrower if it is a direct Wholly-Owned Subsidiary of the entity or entities into which it is winding up, (iii) any of them may transfer any or all of its assets to any Subsidiary which is a direct or indirect Wholly-Owned Subsidiary of the Borrower, and (iv) the Borrower or any Material Subsidiary may merge or amalgamate with any other person (other than as contemplated in subclauses (i) through (iii), inclusive, of this Section 9.2(b) above) so long as the Borrower or such Material Subsidiary is the surviving entity of such merger or amalgamation; provided that:

(A)

in each case, no Default and no Event of Default shall have occurred and be continuing, or will occur as a result of such transaction, or shall exist immediately after the consummation of such transaction; and

(B)

in each case, where the transaction involves the Borrower, the Borrower, surviving entity or other successor thereto (each, a “Successor”) shall have executed and delivered or caused to be executed and delivered to the Agent such instruments and shall have done or caused to be done such things as, in the reasonable opinion of Lenders’ Counsel, are necessary or advisable to establish that upon the consummation of such transaction: (I) the Successor will have assumed all the covenants and obligations of the Borrower under this Agreement and the other Documents and (II) this Agreement and the other Documents, as the case may be, will be valid and binding obligations of the Successor, entitling the Lenders and the Agent, as against the Successor, to exercise all their respective rights under this

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Agreement and the other Documents to the same extent that the Lenders and the Agent were entitled to exercise such rights against the Borrower prior to such transaction.

(c)	Change in Operations.
	The Borrower shall not materially change the nature or conduct of its consolidated operations as carried on as at the date hereof.
(d)	Disposition of Assets.
	During any Fiscal Year, the aggregate net book value of the assets disposed of by the Companies (including any disposition by reason of an expropriation of such assets but excluding any disposition of inventory in the ordinary course of business, any disposition of obsolete, unusable or redundant assets or any disposition to the Borrower or any Subsidiary) shall not exceed 25% of Total Assets as at the last day of the immediately preceding Fiscal Year. Notwithstanding the foregoing but for greater certainty, the disposition of assets as a result of the securitization of assets shall only be included in the foregoing calculation if the assets are transferred to create a securitized asset pool or to increase the overall size of a securitized asset pool but not if the assets are transferred to replenish a depleting securitized asset pool.
(e)	Debt of Subsidiaries.
	Debt of Subsidiaries shall not at any time exceed U.S. $650,000,000 in the aggregate.

9.3 Agent May Perform Covenants

          If the Borrower fails to perform any covenants on its part herein contained, subject to any consents or notice or cure periods required by Section 10.1, the Agent may give notice to the Borrower of such failure and if such covenant remains unperformed, the Agent may, in its discretion but need not, perform any such covenant capable of being performed by the Agent and if the covenant requires the payment or expenditure of money, the Agent may, upon having received approval of all Lenders, make such payments or expenditure and all sums so expended shall be forthwith payable by the Borrower to the Agent on behalf of the Lenders and shall bear interest at the applicable interest rate provided in Section 5.8 for amounts due in Canadian Dollars or United States Dollars, as the case may be. No such performance, payment or expenditure by the Agent shall be deemed to relieve the Borrower of any default hereunder or under the other Documents.

ARTICLE 10
EVENTS OF DEFAULT AND ACCELERATION

10.1 Events of Default

          The occurrence of any one or more of the following events (each such event being herein referred to as an “Event of Default”) shall constitute a default under this Agreement:

(a)	a breach of Section 2.16;
(b)	the non-payment of any amount due hereunder (other than the repayment pursuant to Section 2.16) within five Banking Days after notice of non-payment has been given to the Borrower by the Agent;

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(c)	the commencement by the Borrower or a Material Subsidiary of proceedings for its dissolution, liquidation or winding up or for the suspension of its operations except as permitted under Section 9.2(b);
(d)	the commencement by any person (other than the Companies) of proceedings for the dissolution, liquidation or winding-up of, or for the suspension of the operations of, the Borrower or a Material Subsidiary unless such proceedings are dismissed or stayed within 20 Banking Days of the commencement thereof;
(e)	the Borrower or any Material Subsidiary:

(i)	admits its inability to pay its debts generally as they become due or fails to pay its debts generally as they become due;
(ii)	files an assignment or petition in bankruptcy or a petition to take advantage of any insolvency statute;
(iii)	makes an assignment for the benefit of its creditors;
(iv)	consents to the appointment of a receiver, trustee, sequestrator or other custodian of the whole or any part of its assets;
(v)	files a petition, notice or answer seeking a reorganization, proposal, arrangement, adjustment or composition under applicable bankruptcy laws or any other applicable law or statute; or
(vi)	is adjudged by a court having jurisdiction a bankrupt or insolvent, or a decree or order of a court having jurisdiction is entered for the appointment of a receiver, liquidator, trustee or assignee in bankruptcy with such decree or order remaining in force and undischarged or unstayed for a period of 30 days;

(f)	any representation, warranty or written certification made by any of the Companies in any Document or in any other document, agreement or instrument delivered pursuant hereto or referred to herein proves to have been incorrect in any material respect when made or furnished except to the extent that the circumstances giving rise to this Event of Default are cured within 10 Banking Days of the occurrence thereof;
(g)	a writ, execution, attachment or similar process is issued or levied against all or any portion of the property or assets of the Borrower or any Material Subsidiary in connection with any judgment against the Borrower or any Material Subsidiary in an amount exceeding Cdn. $40,000,000 or the Equivalent Amount thereof in United States Dollars or the equivalent thereof in any other currency and such writ, execution, attachment or similar process is not released, bonded, satisfied, discharged, vacated or stayed within thirty days after its entry, commencement or levy;
(h)	the breach or failure of due observance or performance by the Borrower of any of Sections 9.1(e), (f) or (g) or 9.2(d);
(i)	the breach or failure of due observance or performance by the Borrower of any covenant or provision of this Agreement other than those heretofore or hereafter dealt with in this Section 10.1, or the breach or failure of due observance or performance by any of the Companies of any covenant or provision of any other Document (including, without limitation, the Agency Fee

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Agreement), which is not remedied within 10 Banking Days after written notice to do so has been given by the Agent to the Borrower;

(j)	one or more encumbrancers, lienors or landlords take possession of property or assets of the Borrower or any Material Subsidiary in respect of a claim in excess of Cdn. $40,000,000 or the Equivalent Amount thereof in United States Dollars or the equivalent thereof in any other currency or attempt to enforce their security or other remedies against any part of the property or assets of the Borrower or any Material Subsidiary in respect of a claim in excess of Cdn. $40,000,000 or the Equivalent Amount thereof in United States Dollars or the equivalent thereof in any other currency and such possession or enforcement is not released, bonded, satisfied, discharged, vacated or stayed within thirty days after its entry, commencement or levy;
(k)	an event of default (after the expiry of all applicable grace periods) under any one or more agreements, indentures or instruments under which the Borrower or any Material Subsidiary has outstanding Debt in excess of Cdn. $40,000,000 or the Equivalent Amount thereof in United States Dollars or the equivalent thereof in any other currency shall happen and be continuing without being cured or discharged by repayment, or any Debt of the Borrower or any Material Subsidiary in excess of Cdn. $40,000,000 or the Equivalent Amount thereof in United States Dollars or the equivalent thereof in any other currency which is payable on demand is not paid on demand;
(l)	this Agreement is determined by a court of competent jurisdiction not to be valid and enforceable by the Agent and the Lenders against the Borrower, and this Agreement has not been replaced by a valid and enforceable document which is prepared by the Agent and presented to the Borrower and is equivalent in effect and commercial terms (where possible) to this Agreement (other than its; validity and enforceability) and is executed and delivered by the Borrower within thirty days following such presentment;
(m)	any ERISA Affiliate shall fail to pay when due an amount or amounts aggregating in excess of the Equivalent Amount in United States Dollars of Cdn. $40,000,000 (or the equivalent thereof in any other currency) which it shall have become liable to pay under Section 4062, 4063 or 4064 of ERISA; or notice of intent to terminate a Plan shall be filed under Title IV of ERISA by any ERISA Affiliate, any plan administrator or any combination of the foregoing if such termination would result in a Material Adverse Effect; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Plan, if such action by the PBGC would result in a Material Adverse Effect; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of section 42l9(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more ERISA Affiliates to incur a current annual payment obligation in excess of the Equivalent Amount in United States Dollars of Cdn. $40,000,000 (or the equivalent thereof in any other currency); or
(n)	any person alone or acting jointly in concert with any other person shall own more than one-half of the outstanding voting securities of the Borrower.

10.2 Acceleration

          If any Event of Default shall occur and for so long as it is continuing:

(a) the entire principal amount of all Loans then outstanding and all accrued and unpaid interest thereon,

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(b)	an amount equal to the aggregate face amount at maturity of all Bankers’ Acceptances issued by the Borrower which are unmatured, and
(c)	all other Obligations outstanding hereunder,

shall, at the option of the Agent in accordance with Section 13.11 or upon the request of the Majority of the Lenders, become immediately due and payable upon written notice to that effect from the Agent to the Borrower, all without any other notice and without presentment, protest, demand, notice of dishonour or any other demand whatsoever (all of which are hereby expressly waived by the Borrower). In such event and if the Borrower does not immediately pay all such amounts upon receipt of such notice, either the Lenders (in accordance with the proviso in Section 13.11(a)) or the Agent on their behalf may, in their discretion, exercise any right or recourse and/or proceed by any action, suit, remedy or proceeding against the Borrower authorized or permitted by law for the recovery of all the indebtedness and liabilities of the Borrower to the Lenders and proceed to exercise any and all rights hereunder and under the other Documents and no such remedy for the enforcement of the rights of the Lenders shall be exclusive of or dependent on any other remedy but any one or more of such remedies may from time to time be exercised independently or in combination.

10.3 Conversion on Default

          Upon the occurrence of an Event of Default in respect of the Borrower, the Agent on behalf of the Lenders may convert, at the Equivalent Amount, if applicable, a U.S. Base Rate Loan or Libor Loan owing by the Borrower, to a Canadian Prime Rate Loan. Interest shall accrue on each such Canadian Prime Rate Loan at the rate specified in Section 5.1 with interest on all overdue interest at the same rate, such interest to be calculated daily and payable on demand.

10.4 Remedies Cumulative and Waivers

          For greater certainty, it is expressly understood and agreed that the rights and remedies of the Lenders and the Agent hereunder or under any other Document are cumulative and are in addition to and not in substitution for any rights or remedies provided by law or by equity; and any single or partial exercise by the Lenders or by the Agent of any right or remedy for a default or breach of any term, covenant, condition or agreement contained in this Agreement or other Document shall not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy or other rights or remedies to which any one or more of the Lenders and the Agent may be lawfully entitled for such default or breach. Any waiver by, as applicable, the Majority of the Lenders, the Lenders or the Agent of the strict observance, performance or compliance with any term, covenant, condition or other matter contained herein and any indulgence granted, either expressly or by course of conduct, by, as applicable, the Majority of the Lenders, the Lenders or the Agent shall be effective only in the specific instance and for the purpose for which it was given and shall be deemed not to be a waiver of any rights and remedies of the Lenders or the Agent under this Agreement or any other Document as a result of any other default or breach hereunder or thereunder.

10.5 Termination of Lenders’ Obligations

          The occurrence and continuance of a Default or an Event of Default shall relieve the Lenders of all obligations to provide any further Drawdowns, Rollovers or Conversions to the Borrower hereunder; provided that the foregoing shall not prevent the Lenders or the Agent from disbursing money or effecting any Conversion which, by the terms hereof, they are entitled to effect, or any Conversion or Rollover requested by the Borrower and acceptable to all of the Lenders and the Agent.

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ARTICLE 11
CHANGE OF CIRCUMSTANCES

11.1 Market Disruption Respecting Libor Loans

          In the event that at any time subsequent to the giving of a Drawdown Notice, Rollover Notice or Conversion Notice to the Agent by the Borrower with regard to any requested Libor Loan, but before 2:00 p.m. (Toronto time) on the third Banking Day prior to the date of the requested Drawdown, Rollover or Conversion, as the case may be, a Lender (acting reasonably) makes a determination, which shall be conclusive and binding upon the Borrower, that:

(a)	by reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining the rate of interest with respect to, or deposits are not available in sufficient amounts in the ordinary course of business at the rate determined hereunder to fund, a requested Libor Loan during the ensuing Interest Period selected;
(b)	the making or continuing of the requested Libor Loan by such Lender has been made impracticable by the occurrence of an event which materially adversely affects the London interbank market generally; or
(c)	the Libor Rate will not or does not represent the effective cost to such Lender of United States Dollar deposits in such market for the relevant Interest Period,

then such Lender shall give notice thereof to the Agent and the Borrower as soon as possible after such determination, but in any event before the aforementioned time, (and the Agent shall, in turn, give notice thereof to the other Lenders) and the Borrower shall, within one Banking Day after receipt of such notice and in replacement of the Drawdown Notice, Rollover Notice or Conversion Notice, as the case may be, previously given by the Borrower, give the Agent a Drawdown Notice or a Conversion Notice, as the case may be, which specifies the Drawdown of any other Loan or the Conversion of the relevant Libor Loan on the last day of the applicable Interest Period into any other Loan which would not be affected by the notice from such Lender pursuant to this Section 11.1. In the event the Borrower fails to give, if applicable, a valid replacement Conversion Notice with respect to the maturing Libor Loans which were the subject of a Rollover Notice, such maturing Libor Loans shall be converted on the last day of the applicable Interest Period into U.S. Base Rate Loans as if a Conversion Notice had been given to the Agent by the Borrower pursuant to the provisions hereof. In the event the Borrower fails to give, if applicable, a valid replacement Drawdown Notice with respect to a Drawdown originally requested by way of a Libor Loan, then the Borrower shall be deemed to have requested a Drawdown by way of a U.S. Base Rate Loan in the amount specified in the original Drawdown Notice and, on the originally requested Drawdown Date, the Lenders (subject to the other provisions hereof) shall make available the requested amount by way of a U.S. Base Rate Loan.

11.2 Market Disruption Respecting Bankers’ Acceptances

          If:

(a)	the Agent (acting reasonably) makes a determination, which determination shall be conclusive and binding upon the Borrower, and notifies the Borrower, that there no longer exists an active market for bankers’ acceptances accepted by the Lenders; or
(b)	the Agent is advised by Lenders holding at least 20% of the Commitments of all Lenders hereunder by written notice (each, a “Lender BA Suspension Notice”) that such Lenders have determined (acting reasonably) that the BA Discount Rate will not or does not accurately reflect the cost of

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funds of such Lenders or the discount rate which would be applicable to a sale of Bankers’ Acceptances accepted by such Lenders in the market;

then:

(c)	the right of the Borrower to request Bankers’ Acceptances or BA Equivalent Advances from any Lender shall be suspended until the Agent determines that the circumstances causing such suspension no longer exist, and so notifies the Borrower and the Lenders;
(d)	any outstanding Drawdown Notice requesting a Loan by way of Bankers’ Acceptances or BA Equivalent Advances shall be deemed to be a Drawdown Notice requesting a Loan by way of Canadian Prime Rate Loans in the amount specified in the original Drawdown Notice;
(e)	any outstanding Conversion Notice requesting a Conversion of a Loan by way of U.S. Base Rate Loans or Libor Loans into a Loan by way of Bankers’ Acceptances or BA Equivalent Advances shall be deemed to be a Conversion Notice requesting a Conversion of such Loan into a Loan by way of Canadian Prime Rate Loans; and
(f)	any outstanding Rollover Notice requesting a Rollover of a Loan by way of Bankers’ Acceptances or BA Equivalent Advances, shall be deemed to be a Conversion Notice requesting a Conversion of such Loans into a Loan by way of Canadian Prime Rate Loans.

The Agent shall promptly notify the Borrower and the Lenders of any suspension of the Borrower’s right to request the Bankers’ Acceptances or BA Equivalent Advances and of any termination of any such suspension. A Lender BA Suspension Notice shall be effective upon receipt of the same by the Agent if received prior to 2:00 p.m. (Toronto time) on a Banking Day and if not, then on the next following Banking Day, except in connection with a Drawdown Notice, Conversion Notice or Rollover Notice previously received by the Agent, in which case the applicable Lender BA Suspension Notice shall only be effective with respect to such previously received Drawdown Notice, Conversion Notice or Rollover Notice if received by the Agent prior to 2:00 p.m. (Toronto time) two Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date (as applicable) applicable to such previously received Drawdown Notice, Conversion Notice or Rollover Notice, as applicable.

11.3 Change in Law

     (1) If the adoption of any applicable law, regulation, treaty or official directive (whether or not having the force of law) or any change therein or in the interpretation or application thereof by any court or by any Governmental Authority or any other entity charged with the interpretation or administration thereof or compliance by a Lender with any request or direction (whether or not having the force of law) of any such court, Governmental Authority or other entity in each case after the date hereof:

(a)

subjects such Lender to, or causes the withdrawal or termination of a previously granted exemption with respect to, any Taxes (other than Taxes on such Lender’s overall income or capital), or changes the basis of taxation of payments due to such Lender, or increases any existing Taxes (other than Taxes on such Lender’s overall income or capital) on payments of principal, interest or other amounts payable by the Borrower to such Lender under this Agreement;

(b)

imposes, modifies or deems applicable any reserve, liquidity, special deposit, regulatory or similar requirement against assets or liabilities held by, or deposits in or for the account of, or loans by such Lender, or any acquisition of funds for loans or commitments to fund loans or obligations in respect of undrawn, committed lines of credit or in respect of Bankers’ Acceptances accepted by such Lender;

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(c)	imposes on such Lender or requires there to be maintained by such Lender any capital adequacy or additional capital requirements (including, without limitation, a requirement which affects such Lender’s allocation of capital resources to its obligations) in respect of any Loan or obligation of such Lender hereunder, or any other condition with respect to this Agreement; or
(d)	directly or indirectly affects the cost to such Lender of making available, funding or maintaining any Loan (other than changes in Taxes on such Lender’s overall income) or otherwise imposes on such Lender any other condition or requirement affecting this Agreement or any Loan or any obligation of such Lender hereunder;

and the result of (a), (b), (c) or (d) above, in the sole determination of such Lender acting in good faith, is:

(e)	to increase the cost to such Lender of performing its obligations hereunder with respect to any Loan;
(f)	to reduce any amount received or receivable by such Lender hereunder or its effective return hereunder or on its capital in respect of any Loan or the Credit Facility;
(g)	to reduce the standby fees payable to such Lender pursuant to Section 5.6; or
(h)	to cause such Lender to make any payment with respect to or to forego any return on or calculated by reference to, any amount received or receivable by such Lender hereunder with respect to any Loan or the Credit Facility;

such Lender shall determine that amount of money which shall compensate the Lender for such increase in cost, payments to be made or reduction in income or return or interest foregone (herein referred to as “Additional Compensation”). Upon a Lender having determined that it is entitled to Additional Compensation in accordance with the provisions of this Section, such Lender shall promptly so notify the Borrower and the Agent. The relevant Lender shall provide the Borrower and the Agent with a photocopy of the relevant law, rule, guideline, regulation, treaty or official directive (or, if it is impracticable to provide a photocopy, a written summary of the same) and a certificate of a duly authorized officer of such Lender setting forth the Additional Compensation and the basis of calculation therefor, which shall be conclusive evidence of such Additional Compensation in the absence of manifest error. The Borrower shall pay to such Lender within 10 Banking Days of the giving of such notice such Lender’s Additional Compensation. Each of the Lenders shall be entitled to be paid such Additional Compensation from time to time to the extent that the provisions of this Section are then applicable notwithstanding that any Lender has previously been paid any Additional Compensation.

     (2) Each Lender agrees that it will not claim Additional Compensation from the Borrower under Section 11.3(1):

(a)	if it is not generally claiming similar compensation from its other customers in similar circumstances; or
(b)	in respect of any period greater than 9 months prior to the delivery of notice in respect thereof by such Lender, unless the adoption, change or other event or circumstance giving rise to the claim for Additional Compensation is retroactive or is retroactive in effect.

11.4 Prepayment of Portion

          In addition to the other rights and options of the Borrower hereunder and notwithstanding any contrary provisions hereof, if a Lender gives the notice provided for in Section 11.3 with respect to any Loan (an “Affected Loan”), the Borrower may, upon 2 Banking Days notice to that effect given to such Lender and the

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Agent (which notice shall be irrevocable), prepay in full without penalty such Lender’s Rateable Portion of the Affected Loan outstanding together with accrued and unpaid interest on the principal amount so prepaid up to the date of such prepayment, such Additional Compensation as may be applicable to the date of such payment and all costs, losses and expenses incurred by such Lender by reason of the liquidation or re-deployment of deposits or other funds or for any other reason whatsoever resulting from the repayment of such Affected Loan or any part thereof on other than the last day of the applicable Interest Period, and upon such payment being made that Lender’s obligations to make such Affected Loans to the Borrower under this Agreement shall terminate.

11.5 Illegality

          If a Lender determines, in good faith, that the adoption of any applicable law, regulation, treaty or official directive (whether or not having the force of law) or any change therein or in the interpretation or application thereof by any court or by any Governmental Authority or any other entity charged with the interpretation or administration thereof or compliance by a Lender with any request or direction (whether or not having the force of law) of any such court, Governmental Authority or other entity, now or hereafter makes it unlawful or impossible for any Lender to make, fund or maintain a Loan under the Credit Facility or to give effect to its obligations in respect of such a Loan, such Lender may, by written notice thereof to the Borrower and to the Agent declare its obligations under this Agreement in respect of such Loan to be terminated whereupon the same shall forthwith terminate, and the Borrower shall, within the time required by such law (or at the end of such longer period as such Lender at its discretion has agreed), either effect a Conversion of such Loan in accordance with the provisions hereof (if such Conversion would resolve the unlawfulness or impossibility) or prepay the principal of such Loan together with accrued interest, such Additional Compensation as may be applicable with respect to such Loan to the date of such payment and all costs, losses and expenses incurred by the Lender by reason of the liquidation or re-deployment of deposits or other funds or for any other reason whatsoever resulting from the repayment of such Loan or any part thereof on other than the last day of the applicable Interest Period. If any such change shall only affect a portion of such Lender’s obligations under this Agreement which is, in the opinion of such Lender and the Agent, severable from the remainder of this Agreement so that the remainder of this Agreement may be continued in full force and effect without otherwise affecting any of the obligations of the Agent, the other Lenders or the Borrower hereunder, such Lender shall only declare its obligations under that portion so terminated.

ARTICLE 12
COSTS, EXPENSES AND INDEMNIFICATION

12.1 Costs and Expenses

          The Borrower shall pay promptly upon notice from the Agent all reasonable out-of-pocket costs and expenses of the Lenders and the Agent in connection with the Documents and the establishment of the Credit Facility, including, without limitation, in connection with preparation, printing, execution and delivery of this Agreement and the other Documents whether or not any Drawdown has been made hereunder, and also including the reasonable fees and out-of-pocket costs and expenses of Lenders’ Counsel with respect thereto and with respect to advising the Agent and the Lenders as to their rights and responsibilities under this Agreement and the other Documents. Except for ordinary expenses of the Lenders and the Agent relating to the day-to-day administration of this Agreement, the Borrower further agrees to pay within 15 days of demand by the Agent all reasonable out-of-pocket costs and expenses in connection with the preparation or review of waivers, consents and amendments pertaining to this Agreement, and in connection with the establishment of the validity and enforceability of this Agreement and the preservation or enforcement of rights of the Lenders and the Agent under this Agreement and other Documents, including all reasonable out-of-pocket costs and expenses sustained by the Lenders and the Agent as a result of any failure by the Borrower to perform or observe any of its obligations hereunder or in connection with any action, suit or proceeding (whether or not an Indemnified Party (as referred to in Section 12.2 or

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Section 12.3) is a party or subject thereto), together with interest thereon from and after such 15^th day if such payment is not made by such time.

12.2 General Indemnity

          In addition to any liability of the Borrower to any Lender or the Agent under any other provision hereof, the Borrower shall indemnify each Indemnified Party and hold each Indemnified Party harmless against any losses, claims, costs, damages or liabilities (including, without limitation, any loss of profits or fees anticipated hereunder, any expense or cost incurred in the liquidation and re-deployment of funds acquired to fund or maintain any portion of a Loan and reasonable out-of-pocket expenses and reasonable legal fees on a solicitor and his own client basis) incurred by the same as a result of or in connection with the Credit Facility or the Documents, including as a result of or in connection with:

(a)	any cost or expense incurred by reason of the liquidation or re-deployment in whole or in part of deposits or other funds required by any Lender to fund or maintain any Loan as a result of the Borrower’s failure to complete a Drawdown or to make any payment, repayment or prepayment on the date required hereunder or specified by it in any notice given hereunder;
(b)	subject to permitted or deemed Rollovers and Conversions, the Borrower’s failure to provide for the payment to the Agent for the account of the Lenders of the full principal amount of each Bankers’ Acceptance on its maturity date;
(c)	the Borrower’s failure to pay any other amount, including without limitation any interest or fee, due hereunder on its due date after the expiration of any applicable grace or notice periods (subject, however, to the interest obligations of the Borrower hereunder for overdue amounts);
(d)	the Borrower’s repayment or prepayment of a Libor Loan otherwise than on the last day of its Interest Period;
(e)	the prepayment of any outstanding Bankers’ Acceptance before the maturity date of such Bankers’ Acceptance;
(f)	the Borrower’s failure to give any notice required to be given by it to the Agent or the Lenders hereunder;
(g)	the failure of the Borrower to make any other payment due hereunder;
(h)	any inaccuracy or incompleteness of the Borrower’s representations and warranties contained in Article 8;
(i)	any failure of the Borrower to observe or fulfil its obligations under Article 9;
(j)	any failure of the Borrower to observe or fulfil any other Obligation not specifically referred to above; or
(k)	the occurrence of any Default or Event of Default in respect of the Borrower,

provided that this Section 12.2 shall not apply to any losses, claims, costs, damages or liabilities that arise by reason of: (i) the willful misconduct or gross negligence of such Indemnified Party; or (ii) the intentional failure of the Lender which is the Indemnified Party (or with which such Indemnified Party is an Affiliate or otherwise related) to advance funds hereunder when all conditions precedent to a Drawdown hereunder have been satisfied. The provisions of this Section shall survive repayment of the Obligations.

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12.3 Judgment Currency

     (1) If for the purpose of obtaining or enforcing judgment against the Borrower in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section referred to as the “Judgment Currency”) an amount due in Canadian Dollars or United States Dollars under this Agreement, the conversion shall be made at the rate of exchange prevailing on the Banking Day immediately preceding:

(a)	the date of actual payment of the amount due, in the case of any proceeding in the courts of any jurisdiction that will give effect to such conversion being made on such date; or
(b)	the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section being hereinafter in this Section referred to as the “Judgment Conversion Date”).

     (2) If, in the case of any proceeding in the court of any jurisdiction referred to in Section 12.3(1)(b), there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the Borrower shall pay such additional amount (if any) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of Canadian Dollars or United States Dollars, as the case may be, which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date.

     (3) Any amount due from the Borrower under the provisions of Section 12.3(2) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement.

     (4) The term “rate of exchange” in this Section 12.3 means the noon rate of exchange for Canadian interbank transactions in Canadian Dollars or United States Dollars, as the case may be, in the Judgment Currency published by the Bank of Canada for the day in question, or if such rate is not so published by the Bank of Canada, such term shall mean the Equivalent Amount of the Judgment Currency.

12.4 Limits on Liability of Indemnified Parties

          No Indemnified Party shall have any liability to the Borrower, any Subsidiary or any person asserting claims on behalf of, or in right of, the Borrower or any Subsidiary thereof in connection with or as a result of the Credit Facility, this Agreement or any other Documents or any transaction contemplated hereby or thereby, except to the extent (and only to the extent) that any losses, claims, damages, liabilities or expenses incurred by the Borrower, such Subsidiary or other person are determined by a final non-appealable judgment of a court of competent jurisdiction to have (a) resulted solely by reason of the gross negligence or wilful misconduct of such Indemnified Party or (b) in respect only of a Lender, resulted from the intentional failure of such Lender to advance funds under its Commitment when all conditions precedent to a Drawdown have been satisfied. In any event, and notwithstanding the foregoing or any other provision hereof or of the other Documents to the contrary, no Indemnified Party shall be liable for any special, indirect, consequential or punitive damages in connection with or as a result of the Credit Facility, this Agreement or any other Document or any transaction contemplated hereby or thereby.

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ARTICLE 13
THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITY

13.1 Authorization and Action

     (1) Each Lender hereby irrevocably appoints and authorizes the Agent to be its agent in its name and on its behalf to exercise such rights or powers granted to the Agent or the Lenders under this Agreement to the extent specifically provided herein and on the terms hereof, together with such powers as are reasonably incidental thereto and the Agent hereby accepts such appointment and authorization. As to any matters not expressly provided for by this Agreement, the Agent shall not be required to exercise any discretion or take any action, but, subject to Section 14.10, shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority of the Lenders and such instructions shall be binding upon all Lenders; provided, however, that the Agent shall not be required to take any action which exposes the Agent to liability in such capacity or which could result in the Agent’s incurring any costs and expenses, without provision being made for indemnity of the Agent by the Lenders against any loss, liability, cost or expense incurred, or to be incurred or which is contrary to this Agreement or applicable law.

     (2) The Lenders agree that all decisions as to actions to be or not to be taken, as to consents or waivers to be given or not to be given, as to determinations to be made and otherwise in connection with this Agreement and the Documents, shall be made upon the decision of the Majority of the Lenders except in respect of a decision or determination where it is specifically provided in this Agreement that “all of the Lenders” or “the Lenders” or words to similar effect, or the Agent alone, is to be responsible for same. Each of the Lenders shall be bound by and agrees to abide by and adopt all decisions made as aforesaid and covenants in all communications with the Borrower to act in concert and to join in the action, consent, waiver, determination or other matter decided as aforesaid.

13.2 Procedure for Making Loans

     (1) The Agent shall make Loans available to the Borrower as required hereunder by debiting the account of the Agent to which the Lenders’ Rateable Portions of such Loans have been credited in accordance with Section 2.12 (or causing such account to be debited) and, in the absence of other arrangements agreed to by the Agent and the Borrower in writing, by crediting the United States Dollar or Canadian Dollar account of the Borrower, as applicable, at the Agent or, at the expense of the Borrower, transferring (or causing to be transferred) like funds in accordance with the instructions of the Borrower as set forth in the Drawdown Notice, Rollover Notice or Conversion Notice, as the case may be, in respect of each Loan; provided that the obligation of the Agent hereunder to effect such a transfer shall be limited to taking such steps as are commercially reasonable to implement such instructions, which steps once taken shall constitute conclusive and binding evidence that such funds were advanced hereunder in accordance with the provisions relating thereto and the Agent shall not be liable for any damages, claims or costs which may be suffered by the Borrower and occasioned by the failure of such Loan to reach the designated destination.

     (2) Unless the Agent has been notified by a Lender at least one Banking Day prior to the Drawdown Date, Rollover Date or Conversion Date, as the case may be, requested by the Borrower that such Lender will not make available to the Agent its Rateable Portion of such Loan, the Agent may assume that such Lender has made or will make such portion of the Loan available to the Agent on the Drawdown Date, Rollover Date or Conversion Date, as the case may be, in accordance with the provisions hereof and the Agent may, but shall be in no way obligated to, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender shall not have so made its Rateable Portion of a Loan available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such Lender’s Rateable Portion of the Loan and all reasonable costs and expenses incurred by the Agent in connection therewith together with interest thereon (at the rate payable hereunder by the Borrower in respect of such Loan or, in the case of funds made available in

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anticipation of a Lender remitting proceeds of a Bankers’ Acceptance, at the rate of interest per annum applicable to Canadian Prime Rate Loans) for each day from the date such amount is made available to the Borrower until the date such amount is paid to the Agent; provided, however, that notwithstanding such obligation if such Lender fails to so pay, the Borrower covenants and agrees that, without prejudice to any rights the Borrower may have against such Lender, it shall repay such amount to the Agent forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto shall be set forth in a certificate delivered by the Agent to such Lender and the Borrower (which certificate shall contain reasonable details of how the amount payable is calculated) and shall be conclusive and binding evidence thereof in the absence of manifest error. If such Lender makes the payment to the Agent required herein, the amount so paid shall constitute such Lender’s Rateable Portion of the Loan for purposes of this Agreement. The failure of any Lender to make its Rateable Portion of any Loan shall not relieve any other Lender of its obligation, if any, hereunder to make its Rateable Portion of such Loan on the Drawdown Date, Rollover Date or Conversion Date, as the case may be; for certainty, without derogating from the operation of Section 13.14 or Section 14.2, no Lender shall be responsible for the obligations or any other Lender hereunder.

13.3 Remittance of Payments

          Except for amounts payable to the Agent for its own account, forthwith after receipt of any repayment pursuant hereto or payment of interest or fees pursuant to Article 5 or payment pursuant to Article 7, the Agent shall remit to each Lender its Rateable Portion of such payment; provided that, if the Agent, on the assumption that it will receive on any particular date a payment of principal, interest or fees hereunder, remits to a Lender its Rateable Portion of such payment and the Borrower fails to make such payment, each of the Lenders on receipt of such remittance from the Agent agrees to repay to the Agent forthwith on demand an amount equal to the remittance together with all reasonable costs and expenses incurred by the Agent in connection therewith and interest thereon at the rate and calculated in the manner applicable to the Loan in respect of which such payment is made, or, in the case of a remittance in respect of Bankers’ Acceptances, at the rate of interest applicable to Canadian Prime Rate Loans for each day from the date such amount is remitted to the Lenders without prejudice to any right such Lender may have against the Borrower. The exact amount of the repayment required to be made by the Lenders pursuant hereto shall be as set forth in a certificate delivered by the Agent to each Lender, which certificate shall be conclusive and binding for all purposes in the absence of manifest error.

13.4 Redistribution of Payment

          Each Lender agrees that:

(a) if the Lender exercises any security against or right of counter-claim, set off or banker’s lien or similar right with respect to the property of the Borrower or if under any applicable bankruptcy, insolvency or other similar law it receives a secured claim and collateral for which it is, or is entitled to exercise any set-off against, a debt owed by it to the Borrower, the Lender shall apportion the amount thereof proportionately between:

(i)	such Lender’s Rateable Portion of all outstanding Obligations owing by the Borrower (including the face amounts at maturity of Bankers’ Acceptances accepted by the Lenders), which amounts shall be applied in accordance with Section 13.4(b); and
(ii)	amounts otherwise owed to such Lender by the Borrower,

provided that (i) any cash collateral account held by such Lender as collateral for a letter of credit or bankers’ acceptance (other than a Bankers’ Acceptance) issued or accepted by such Lender on behalf of the Borrower may be applied by such Lender to such amounts owed by the Borrower to such Lender pursuant to such letter of credit or in respect of any such bankers’ acceptance without apportionment and (ii) these provisions do not apply to:

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(A)	a right or claim which arises or exists in respect of a loan or other debt in respect of which the relevant Lender holds a Lien which is a Permitted Encumbrance;
(B)	cash collateral provided, or the exercise of rights of counterclaim, set-off or banker’s lien or similar rights, in respect of account positioning arrangements for the Borrower and its Subsidiaries provided by a Lender in the ordinary course of business or in respect of other cash management services provided by a Lender in the ordinary course of business;
(C)	any reduction in amounts owing to the Borrower or a Subsidiary upon the termination of Hedging Instruments entered into with the relevant Lender or its Affiliates; or
(D)	any payment to with a Lender is entitled as a result of any credit derivative or other form of credit protection obtained by such Lender;

(b)

if, in the aforementioned circumstances, the Lender, through the exercise of a right, or the receipt of a secured claim described in Section 13.4(a) above or otherwise, receives payment of a proportion of the aggregate amount of Obligations due to it hereunder which is greater than the proportion received by any other Lender in respect of the aggregate Obligations due to the Lenders (having regard to the respective Rateable Portions of the Lenders), the Lender receiving such proportionately greater payment shall purchase, on a non-recourse basis at par, and make payment for a participation (which shall be deemed to have been done simultaneously with receipt of such payment) in the outstanding Loans of the other Lender or Lenders so that their respective receipts shall be pro rata to their respective Rateable Portions; provided, however, that if all or part of such proportionately greater payment received by such purchasing Lender shall be recovered by or on behalf of the Borrower or any trustee, liquidator, receiver or receiver-manager or person with analogous powers from the purchasing Lender, such purchase shall be rescinded and the purchase price paid for such participation shall be returned to the extent of such recovery, but without interest unless the purchasing Lender is required to pay interest on such amount, in which case each selling Lender shall reimburse the purchasing Lender pro rata in relation to the amounts received by it. Such Lender shall exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claims; and

(c)

if the Lender does, or is required to do, any act or thing permitted by Section 13.4(a) or (b) above, it shall promptly provide full particulars thereof to the Agent.

13.5 Duties and Obligations

          Neither the Agent nor any of its directors, officers, agents or employees (and, for purposes hereof, the Agent shall be deemed to be contracting as agent and trustee for and on behalf of such persons) shall be liable to the Lenders for any action taken or omitted to be taken by it or them under or in connection with this Agreement except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Agent:

(a) may assume that there has been no assignment or transfer by any means by the Lenders of their rights hereunder, unless and until the Agent receives written notice of the assignment thereof from such Lender and the Agent receives from the assignee an executed Assignment Agreement providing, inter alia, that such assignee is bound hereby as it would have been if it had been an original Lender party hereto;

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(b)	may consult with legal counsel (including receiving the opinions of Borrower’s counsel and Lenders’ Counsel required hereunder), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts;
(c)	shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable, facsimile transmission, electronic mail or other electronic means of communication which may generate a written record thereof) believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any representation or warranty of the Borrower made or deemed to be made hereunder;
(d)	may assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary;
(e)	may rely as to any matters of fact which might reasonably be expected to be within the knowledge of any person upon a certificate signed by or on behalf of such person;
(f)	shall not be bound to disclose to any other person any information relating to the Borrower, any of its Subsidiaries or any other person if such disclosure would or might in its opinion constitute a breach of any applicable law, be in default of the provisions hereof or be otherwise actionable at the suit of any other person; and
(g)	may refrain from exercising any right, power or discretion vested in it which would or might in its reasonable opinion be contrary to any applicable law or any directive or otherwise render it liable to any person, and may do anything which is in its reasonable opinion necessary to comply with such applicable law.

Further, the Agent (i) does not make any warranty or representation to any Lender nor shall it be responsible to any Lender for the accuracy or completeness of the representations and warranties of the Borrower herein or the data made available to any of the Lenders in connection with the negotiation of this Agreement, or for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (ii) shall not have any duty to ascertain or to enquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower or any of its Subsidiaries; and (iii) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any instrument or document furnished pursuant hereto.

13.6 Prompt Notice to the Lenders

          Notwithstanding any other provision herein, the Agent agrees to provide to the Lenders, with copies where appropriate, all information, notices and reports required to be given to the Agent by the Borrower, promptly upon receipt of same, excepting therefrom information and notices relating solely to the role of Agent hereunder.

13.7 Agent’s and Lenders’ Authorities

          With respect to its Commitment and the Drawdowns, Rollovers, Conversions and Loans made by it as a Lender, the Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent. Subject to the express provisions hereof relating to the rights and obligations of the Agent and the Lenders in such capacities, the Agent and each Lender may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower and its Subsidiaries or any

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corporation or other entity owned or controlled by any of them and any person which may do business with any of them without any duties to account therefor to the Agent or the other Lenders and, in the case of the Agent, all as if it was not the Agent hereunder.

13.8 Lender Credit Decision

          It is understood and agreed by each Lender that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of the Borrower and its Subsidiaries. Each Lender represents to the Agent that it is engaged in the business of making and evaluating the risks associated with commercial revolving or term loans, or both, to corporations similar to the Borrower, that it can bear the economic risks related to the transaction contemplated hereby, that it has had access to all information deemed necessary by it in making such decision (provided that this representation shall not impair its rights against the Borrower) and that it is entering into this Agreement in the ordinary course of its commercial lending business. Accordingly, each Lender confirms with the Agent that it has not relied, and will not hereafter rely, on the Agent (i) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower or any other person under or in connection with this Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter distributed to such Lender by the Agent), or (ii) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or any of its Subsidiaries. Each Lender acknowledges that a copy of this Agreement has been made available to it for review and each Lender acknowledges that it is satisfied with the form and substance of this Agreement. Each Lender hereby covenants and agrees that, subject to Section 13.4, it will not make any arrangements with the Borrower for the satisfaction of any Loans or other Obligations without the consent of all the other Lenders.

13.9 Indemnification of Agent

          The Lenders hereby agree to indemnify the Agent (to the extent not reimbursed by the Borrower), on a pro rata basis in accordance with their respective Commitment as a proportion of the aggregate of all outstanding Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under or in respect of this Agreement in its capacity as Agent; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs expenses or disbursements resulting from the Agent’s gross negligence or willful misconduct. If the Borrower subsequently repays all or a portion of such amounts to the Agent, the Agent shall reimburse the Lenders their pro rata shares (according to the amounts paid by them in respect thereof) of the amounts received from the Borrower. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its portion (determined as above) of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Lenders under, or the enforcement of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrower.

13.10 Successor Agent

          The Agent may, as hereinafter provided, resign at any time by giving 45 days’ prior written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Lenders shall, after soliciting the view of the Borrower, have the right to appoint another Lender as a successor agent (the “Successor Agent”) who shall be acceptable to the Borrower, acting reasonably. If no Successor Agent shall have been so appointed by the Lenders and shall have accepted such appointment within 30 days after the retiring Agent’s giving of notice of resignation, then the retiring Agent shall, on behalf of the Lenders, appoint a Successor Agent who shall be a Lender acceptable to the Borrower, acting reasonably. Upon the acceptance of any appointment as Agent hereunder by a Successor

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Agent, such Successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall thereupon be discharged from its further duties and obligations as Agent under this Agreement. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Article shall continue to enure to its benefit as to any actions taken or omitted to be taken by it as Agent or in its capacity as Agent while it was Agent hereunder.

13.11 Taking and Enforcement of Remedies

          Each of the Lenders hereby acknowledges that, to the extent permitted by applicable law, the remedies provided hereunder to the Lenders are for the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder are to be exercised not severally, but collectively by the Agent upon the decision of the Majority of the Lenders regardless of whether acceleration was made pursuant to Section 10.2. Notwithstanding any of the provisions contained herein, each of the Lenders hereby covenants and agrees that it shall not be entitled to individually take any action with respect to the Credit Facility, including, without limitation, any acceleration under Section 10.2, but that any such action shall be taken only by the Agent with the prior written agreement or instructions of the Majority of the Lenders; provided that, notwithstanding the foregoing, if (a) the Agent, having been adequately indemnified against costs and expenses of so doing by the Lenders, shall fail to carry out any such instructions of the Majority of the Lenders, any Lender may do so on behalf of all Lenders and shall, in so doing, be entitled to the benefit of all protections given the Agent hereunder or elsewhere, and (b) in the absence of instructions from the Majority of the Lenders and where in the sole opinion of the Agent the exigencies of the situation warrant such action, the Agent may without notice to or consent of the Lenders or any of them take such action on behalf of the Lenders as it deems appropriate or desirable in the interests of the Lenders. Each of the Lenders hereby further covenants and agrees that upon any such written consent being given by the Majority of the Lenders, or upon a Lender or the Agent taking action as aforesaid, it shall cooperate fully with the Lender or the Agent to the extent requested by the Lender or the Agent in the collective realization including, without limitation, and, if applicable, the appointment of a receiver, or receiver and manager to act for their collective benefit. Each Lender covenants and agrees to do all acts and things and to make, execute and deliver all agreements and other instruments, including, without limitation, any instruments necessary to effect any registrations, so as to fully carry out the intent and purpose of this Section; and each of the Lenders hereby covenants and agrees that, subject to Section 5.7, Section 13.4 and Section 9.2(a) it has not heretofore and shall not seek, take, accept or receive any security for any of the obligations and liabilities of the Borrower hereunder or under any other document, instrument, writing or agreement ancillary hereto and shall not enter into any agreement with any of the parties hereto or thereto relating in any manner whatsoever to the Credit Facility, unless all of the Lenders shall at the same time obtain the benefit of any such security or agreement.

          With respect to any enforcement, realization or the taking of any rights or remedies to enforce the rights of the Lenders hereunder, the Agent shall be a trustee for each Lender, and all monies received from time to time by the Agent in respect of the foregoing shall be held in trust and shall be trust assets within the meaning of applicable bankruptcy or insolvency legislation and shall be considered for the purposes of such legislation to be held separate and apart from the other assets of the Agent, and each Lender shall be entitled to their Rateable Portion of such monies. In its capacity as trustee, the Agent shall be obliged to exercise only the degree of care it would exercise in the conduct and management of its own business and in accordance with its usual practice concurrently employed or hereafter instituted for other substantial commercial loans.

13.12 Reliance Upon Agent

          The Borrower shall be entitled to rely upon any certificate, notice or other document or other advice, statement or instruction provided to it by the Agent pursuant to this Agreement, and the Borrower shall generally be entitled to deal with the Agent with respect to matters under this Agreement which the Agent is authorized to deal with without any obligation whatsoever to satisfy itself as to the authority of the Agent to act on behalf of the Lenders and without any liability whatsoever to the Lenders for relying upon any certificate, notice or

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other document or other advice, statement or instruction provided to it by the Agent, notwithstanding any lack of authority of the Agent to provide the same.

13.13 No Liability of Agent

          The Agent shall have no responsibility or liability to the Borrower on account of the failure of any Lender to perform its obligations hereunder (unless such failure was caused, in whole or in part, by the Agent’s failure to observe or perform its obligations hereunder), or to any Lender on account of the failure of the Borrower or any Lender to perform its obligations hereunder.

13.14 The Agent and Defaulting Lenders

     (1) Each Defaulting Lender shall be required to provide to the Agent cash in an amount, as shall be determined from time to time by the Agent in its discretion, equal to all obligations of such Defaulting Lender to the Agent that are owing or may become owing pursuant to this Agreement, including such Defaulting Lender’s obligation to pay its Rateable Portion of any indemnification or expense reimbursement amounts not paid by the Borrower. Such cash shall be held by the Agent in one or more cash collateral accounts, which accounts shall be in the name of the Agent and shall not be required to be interest bearing. The Agent shall be entitled to apply the foregoing cash in accordance with Section 13.9.

     (2) In addition to the indemnity and reimbursement obligations noted in Section 13.9, the Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower and without limiting the obligations of the Borrower hereunder) rateably according to their respective Rateable Portions (and in calculating the Rateable Portion of a Lender, ignoring the Commitments of Defaulting Lenders) any amount that a Defaulting Lender fails to pay the Agent and which is due and owing to the Agent pursuant to Section 13.9. Each Defaulting Lender agrees to indemnify each other Lender for any amounts paid by such Lender and which would otherwise be payable by the Defaulting Lender.

     (3) The Agent shall be entitled to set off any Defaulting Lender’s Rateable Portion of all payments received from the Borrower against such Defaulting Lender’s obligations to fund payments and Loans required to be made by it and to purchase participations required to be purchased by it in each case under this Agreement and the other Documents. The Agent shall be entitled to withhold and deposit in one or more non-interest bearing cash collateral accounts in the name of the Agent all amounts (whether principal, interest, fees or otherwise) received by the Agent and due to a Defaulting Lender pursuant to this Agreement, which amounts shall be used by the Agent:

(a)	first, to reimburse the Agent for any amounts owing to it by the Defaulting Lender pursuant to any Document;
(b)	second, to repay on a pro rata basis any (i) Loans made by a Lender pursuant to Section 14.2(4) in order to fund a shortfall created by a Defaulting Lender which repayment shall be in the form of an assignment by each such Lender of such Loan to the Defaulting Lender against receipt of such repayment, and (ii) any payments made by a Lender pursuant to Section 13.14(2) in order to fund a shortfall created by a Defaulting Lender;
(c)	third, to cash collateralize all other obligations of such Defaulting Lender to the Agent owing pursuant to this Agreement in such amount as shall be determined from time to time by the Agent in its discretion, including such Defaulting Lender’s obligation to pay its Rateable Portion of any indemnification or expense reimbursement amounts not paid by the Borrower; and
(d)	fourth, to fund from time to time the Defaulting Lender’s Rateable Portion of Loans.

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     (4) For greater certainty and in addition to the foregoing, neither the Agent nor any of its Affiliates nor any of their respective shareholders, officers, directors, employees, agents or representatives shall be liable to any Lender (including, without limitation, a Defaulting Lender) for any action taken or omitted to be taken by it in connection with amounts payable by the Borrower to a Defaulting Lender and received and deposited by the Agent in a cash collateral account and applied in accordance with the provisions of this Agreement, save and except for the gross negligence or wilful misconduct of the Agent as determined by a final non-appealable judgement of a court of competent jurisdiction.

13.15 Article for Benefit of Agent and Lenders

          The provisions of this Article 13 which relate to the rights and obligations of the Lenders to each other or to the rights and obligations between the Agent and the Lenders shall be for the exclusive benefit of the Agent and the Lenders, and, except to the extent provided in Sections 13.1, 13.2, 13.6, 13.10, 13.11, 13.12, 13.13, 13.14 and this Section 13.15, the Borrower shall not have any rights or obligations thereunder or be entitled to rely for any purpose upon such provisions. Any Lender may waive in writing any right or rights which it may have against the Agent or the other Lenders hereunder without the consent of or notice to the Borrower.

ARTICLE 14
GENERAL

14.1 Exchange and Confidentiality of Information

     (1) The Borrower agrees that the Agent and each Lender may provide any assignee or participant or any bona fide prospective assignee or participant pursuant to Sections 14.6 or 14.7 with any information concerning the financial condition of the Borrower and its Subsidiaries provided such party agrees in writing with the Agent or such Lender for the benefit of the Borrower to be bound by a like duty of confidentiality to that contained in this Section.

     (2) Each of the Agent and the Lenders acknowledges the confidential nature of the financial, operational and other information and data provided and to be provided to them by the Borrower pursuant hereto (the “Information”) and agrees to prevent the disclosure thereof provided, however, that:

(a)	the Agent and the Lenders may disclose all or any part of the Information if, in their reasonable opinion, such disclosure is required: (i) by their respective auditors, or (ii) in connection with any actual or threatened judicial, administrative or governmental proceedings (including proceedings initiated under or in respect of this Agreement or upon the request of its independent auditors or a Governmental Authority having jurisdiction over it);
(b)	the Agent and the Lenders shall incur no liability in respect of any Information required to be disclosed by any applicable law, or by applicable treaty, order, policy or directive having the force of law, to the extent of such requirement;
(c)	the Agent and the Lenders may provide Lenders’ Counsel and their other agents and professional advisors with any Information; provided that such persons shall be under a like duty of confidentiality to that contained in this Section 14.1;
(d)	the Agent and each of the Lenders shall incur no liability in respect of any Information: (i) which is or becomes readily available to the public (other than by a breach hereof) or which has been made readily available to the public by the Borrower or its Subsidiaries, (ii) which the Agent or the relevant Lender can show was, prior to receipt thereof from the Borrower, lawfully in the Agent’s or Lender’s possession and not then subject to any obligation on its part to the Borrower to

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	maintain confidentiality, or (iii) which the Agent or the relevant Lender received from a third party who was not, to the knowledge of the Agent or such Lender, under a duty of confidentiality to the Borrower at the time the information was so received;
(e)	the Agent and the Lenders may disclose the Information to other financial institutions and other persons in connection with the assignment by a Lender of the Credit Facility or the granting by a Lender of a participation in the Credit Facility where such financial institution or other person agrees to be under a like duty of confidentiality to that contained in this Section; and
(f)	the Agent and the Lenders may disclose all or any part of the Information so as to enable the Agent and the Lenders to initiate any lawsuit against the Borrower or to defend any lawsuit commenced by the Borrower the issues of which touch on the Information, but only to the extent such disclosure is necessary to the initiation or defense of such lawsuit.

14.2 Nature of Obligation under this Agreement; Defaulting Lenders

     (1) The obligations of each Lender and of the Agent under this Agreement are several. The failure of any Lender to carry out its obligations hereunder shall not relieve the other Lenders, the Agent or the Borrower of any of their respective obligations hereunder.

     (2) Without derogating from the operation of Section 13.14 and this Section 14.2, neither the Agent nor any Lender shall be responsible for the obligations of any other Lender hereunder.

     (3) Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)	the standby fees payable pursuant to Section 5.6 shall cease to accrue on the unused portion of the Commitment of such Defaulting Lender;
(b)	a Defaulting Lender shall not be included in determining whether, and the Commitment and the Rateable Portion of the Outstanding Principal of such Defaulting Lender shall not be included in determining whether, all Lenders or the Majority of the Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 14.10), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender; and
(c)	for the avoidance of doubt, the Borrower shall retain and reserve its other rights and remedies respecting each Defaulting Lender.

     (4) Should any Lender fail to fund its Rateable Portion of a Loan hereunder, then each other Lender shall fund a portion of such defaulted amount in an amount equal to such other Lender’s Rateable Portion (and in calculating the Rateable Portion of a Lender, ignoring the Commitments of Defaulting Lenders) of such unfunded portion; provided that, for certainty, no Lender shall be obligated by this Section to make or provide Loans in excess of its Commitment.

     (5) If any Lender shall cease to be a Defaulting Lender, then, upon becoming aware of the same, the Agent shall notify the other Lenders and (in accordance with the written direction of the Agent) such Lender (which has ceased to be a Defaulting Lender) shall purchase, and the other Lenders shall on a rateable basis sell and assign to such Lender, portions of such Loans equal in total to such Lender’s Rateable Portion thereof without regard to Section 14.2 (4).

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14.3 Notices

          Any demand, notice or communication to be made or given hereunder shall be in writing and may be made or given by personal delivery or by facsimile transmission or other electronic means of communication addressed to the respective parties as follows:

          To the Borrower:

Potash Corporation of Saskatchewan Inc.
Suite 500, 122 1^st Avenue South
Saskatoon, Saskatchewan
S7K 7G3

Attention:     Chief Financial Officer
Facsimile No.:     (306) 933-8888

To the Agent:

The Bank of Nova Scotia
Wholesale Banking Operations
Loan Administration and Agency Services
720 King Street West, 3^rd Floor
Toronto, Ontario
M5V 2T3
Canada

Attention:     Andrew Yiu or John Hall
Facsimile No.:     (416) 866-5991

To each Lender: As set forth in the most recent administrative questionnaire or other written notification provided to the Agent by such Lender (a copy of which shall be provided to the Borrower upon request to the Agent)

or to such other address or facsimile number as any party may from time to time notify the others in accordance with this Section. Any demand, notice or communication made or given by personal delivery or by facsimile transmission or other electronic means of communication during normal business hours at the place of receipt on a Banking Day shall be conclusively deemed to have been made or given at the time of actual delivery or transmittal, as the case may be, on such Banking Day. Any demand, notice or communication made or given by personal delivery or by facsimile transmission or other electronic means of communication after normal business hours at the place of receipt or otherwise than on a Banking Day shall be conclusively deemed to have been made or given at 9:00 a.m. (Toronto time) on the first Banking Day following actual delivery or transmittal, as the case may be.

14.4 Governing Law

          This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein, without prejudice to or limitation of any other rights or remedies available under the laws of any jurisdiction where property or assets of the Borrower may be found.

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14.5 Benefit of the Agreement

          This Agreement shall enure to the benefit of and be binding upon the Borrower, the Lenders, the Agent and their respective successors and permitted assigns.

14.6 Assignment

          Any Lender may, without consent during the continuance of an Event of Default and at all other times with the prior written consent of each of the Borrower and the Agent, which consents shall not be unreasonably withheld or delayed, sell, assign, transfer or grant an interest in its Commitment, its Rateable Portion of the Loans and its rights under the Documents; provided that, except during the continuance of an Event of Default or except with the consent of the Borrower and the Agent, such consents not to be unreasonably withheld or delayed, no Lender shall, without the consent of the Borrower and the Agent, sell, assign, transfer or grant an interest in its Commitment if the effect of the same would be to have a Lender with a Commitment of less than U.S. $25,000,000 (such amount to be reduced in proportion to any partial reductions in the Credit Facility), and further provided that, it shall be a precondition to any such sale, assignment, transfer or grant that the contemplated assignee Lender shall have paid to the Agent, for the Agent’s own account, a transfer fee of U.S. $3,500.00. Upon any such sale, assignment, transfer or grant, the granting Lender shall have no further obligation hereunder with respect to such interest. Upon any such sale, assignment, transfer or grant, the granting Lender, the new Lender, the Agent and the Borrower shall execute and deliver an Assignment Agreement. Subject to the provisions of Section 9.2(b), the Borrower shall not assign its rights or obligations hereunder without the prior written consent of all of the Lenders.

14.7 Participations

          Any Lender may, without the consent of the Borrower, grant one or more participations in its Commitment and its Rateable Portion of the Loans to other persons, provided that the granting of such a participation shall be at the Lender’s own cost and shall not affect the obligations of such Lender hereunder nor shall it increase the costs to the Borrower hereunder or under any of the other Documents. No such participant shall by virtue of such participations be party to this Agreement.

14.8 Severability

          Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

14.9 Whole Agreement

          This Agreement and the other Documents constitute the whole and entire agreement between the parties hereto regarding the subject matter hereof and thereof and cancel and supersede any prior agreements, undertakings, declarations, commitments, representations, written or oral, in respect thereof.

14.10 Amendments and Waivers

          Any provision of this Agreement and the other Documents may be amended only if the Majority of the Lenders so agree in writing and, except as otherwise specifically provided herein, may be waived only if the Majority of the Lenders so agree in writing, but:

(a) an amendment or waiver which changes or relates to (i) the amount or type of the Loans available hereunder (or decreases in the periods of notice for Drawdowns, Conversions, Rollovers or voluntary prepayment of Loans) or any Lender’s Commitment, (ii) decreases in the rates of

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interest, Bankers’ Acceptance fees or standby fees, or deferral of the dates of payment of interest, Bankers’ Acceptance fees, standby fees or mandatory repayments of principal, (iii) Section 2.3, Section 2.4, Section 2.16, Section 2.17 or Section 2.18, (iv) decreases in the amount of or deferral of the dates of payment of other amounts payable hereunder (other than fees payable for the account of Agent), (v) the subordination of any of the Obligations, (vi) the definition of “Majority of the Lenders”, (vii) any provision hereof contemplating or requiring consent, approval or agreement of “all Lenders”, “the Lenders” or similar expressions or permitting waiver of conditions or covenants or agreements by “all Lenders”, “the Lenders” or similar expressions, (viii) the definition of “Event of Default” or (ix) this Section, shall require the agreement or waiver of all the Lenders; and

(b)

an amendment or waiver which changes or relates to the rights and/or obligations of the Agent shall also require the agreement of the Agent thereto.

Any such waiver and any consent by the Agent, any Lender, the Majority of the Lenders or all of the Lenders under any provision of this Agreement must be in writing and may be given subject to any conditions thought fit by the person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given.

14.11 Further Assurances

          The Borrower, the Lenders and the Agent shall promptly cure any defect by it in the execution and delivery of this Agreement, the other Documents or any of the agreements provided for hereunder to which it is a party. The Borrower, at its expense, shall promptly execute and deliver to the Agent, upon request by the Agent (acting reasonably), all such other and further deeds, agreements, opinions, certificates, instruments, affidavits, registration materials and other documents reasonably necessary for the Borrower’s compliance with, or accomplishment of the covenants and agreements of the Borrower hereunder.

14.12 Attornment

          The parties hereto each hereby attorn and submit to the non-exclusive jurisdiction of the courts of the Province of Ontario in regard to legal proceedings relating to the Documents. For the purpose of all such legal proceedings, this Agreement shall be deemed to have been performed in the Province of Ontario and the courts of the Province of Ontario shall have jurisdiction to entertain any action arising under this Agreement. Notwithstanding the foregoing, nothing in this Section shall be construed nor operate to limit the right of any party hereto to commence any action relating hereto in any other jurisdiction, nor to limit the right of the courts of any other jurisdiction to take jurisdiction over any action or matter relating hereto.

14.13 Time of the Essence

          Time shall be of the essence of this Agreement.

14.14 Credit Agreement Governs

          In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the other Documents, the provisions of this Agreement, to the extent of the conflict or inconsistency, shall govern and prevail.

[The remainder of this page has been intentionally left blank.]

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14.15 Counterparts

          This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or by sending a scanned copy by electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement.

          IN WITNESS WHEREOF the parties hereto have executed this Agreement.

POTASH CORPORATION OF SASKATCHEWAN INC.
By:	/s/ Wayne Brownlee
	Name:	Wayne Brownlee
	Title:	Executive Vice President and Chief Financial Officer
By:	/s/ Denis Sirois
	Name:	Denis Sirois
	Title:	Vice President and Controller

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LENDERS:

THE BANK OF NOVA SCOTIA
By:	/s/ Richard Lee
	Name:	Richard Lee
	Title:	Managing Director
By:	/s/ Jeff Cebryk
	Name:	Jeff Cebryk
	Title:	Director

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ROYAL BANK OF CANADA
By:	/s/ Stam Fountoulakis
	Name:	Stam Fountoulakis
	Title:	Authorized Signatory

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BANK OF MONTREAL
By:	/s/ Sean P. Galloway
	Name:	Sean P. Galloway
	Title:	Vice President

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HSBC BANK CANADA
By:	/s/ Greg Gannett
	Name:	Greg Gannett
	Title:	Director
By:	/s/ Quyen Quach
	Name:	Quyen Quach
	Title:	Relationship Manager

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BANK OF AMERICA, N.A., CANADA BRANCH
By:	/s/ Clara McGibbon
	Name:	Clara McGibbon
	Title:	Assistant Vice President

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CANADIAN IMPERIAL BANK OF COMMERCE
By:	/s/ Kevin Charko
	Name:	Kevin Charko
	Title:	Director
By:	/s/ Tim Thomas
	Name:	Tim Thomas
	Title:	Managing Director

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EXPORT DEVELOPMENT CANADA
By:	/s/ Margaret Michalski
	Name:	Margaret Michalski
	Title:	Senior Associate, Financing
By:	/s/ Carl Burlock
	Name:	Carl Burlock
	Title:	Director, Financing

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AGENT: THE BANK OF NOVA SCOTIA, in its capacity as the Agent
By:	/s/ Alastair Borthwick
	Name:	Alastair Borthwick
	Title:	Director

SCHEDULE A

LENDERS AND COMMITMENTS

Lender	Commitment
The Bank of Nova Scotia	Commitment:
	U.S. $350,000,000
Royal Bank of Canada	Commitment:
	U.S. $350,000,000
Bank of Montreal	Commitment:
	U.S. $350,000,000
HSBC Bank Canada	Commitment:
	U.S. $100,000,000
Bank of America, N.A., Canada Branch	Commitment:
	U.S. $100,000,000
Canadian Imperial Bank of Commerce	Commitment:
	U.S. $100,000,000
Export Development Canada	Commitment:
	U.S. $150,000,000

SCHEDULE B

LENDER ASSIGNMENT AGREEMENT

THIS LENDER ASSIGNMENT AGREEMENT is made as of the   ·   day of   ·   ,   ·  

BETWEEN:

·  

(hereinafter referred to as the “Assignor”),

OF THE FIRST PART,

- and -

·  

(hereinafter referred to as the “Assignee”),

OF THE SECOND PART,

- and -

THE BANK OF NOVA SCOTIA, a Canadian chartered bank, as
agent of the Lenders (hereinafter referred to as the “Agent”),

OF THE THIRD PART.

     WHEREAS the Assignor is a Lender under the Credit Agreement made as of May 29, 2008 and amended and restated as of January 21, 2009 between Potash Corporation of Saskatchewan Inc. (the “Borrower”), the Lenders and the Agent, (as amended, modified, supplemented or restated from time to time, the “Credit Agreement”);

     AND WHEREAS the Assignor has agreed to assign and transfer to the Assignee certain rights under the Credit Agreement in compliance with the Credit Agreement, and the Assignee has agreed to accept such rights and assume certain obligations of the Assignor under the Credit Agreement;

     AND WHEREAS this Agreement is delivered to the Assignee pursuant to Section 14.6 of the Credit Agreement.

     NOW THEREFORE, in consideration of the premises and other good and valuable consideration (the receipt and sufficiency of which are hereby conclusively acknowledged), the parties hereby agree as follows:

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1. INTERPRETATION

(a) In this Agreement, including the recitals, capitalized terms used herein, and not otherwise defined herein, shall have the same meanings attributed thereto as set forth in the Credit Agreement. In addition, the following terms shall have the following meanings:

(i) “Assigned Commitment” has the meaning set forth in Section 2 hereof;

(ii) “Assigned Interests” has the meaning set forth in Section 2 hereof; and

(iii) “Assumed Obligations” has the meaning set forth in Section 4 hereof.

(b) The division of this Agreement into Articles, Sections, paragraphs and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof.

(c) In this Agreement:

(i) the terms “this Agreement”, “hereof”, “herein”, “hereunder” and similar expressions refer, unless otherwise specified, to this Lender Assignment Agreement taken as a whole and not to any particular section, subsection or paragraph;

(ii) words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa; and

(iii) words and terms denoting inclusiveness (such as “include” or “includes” or “including”), whether or not so stated, are not limited by their context or by the words or phrases which precede or succeed them.

(d) This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The parties hereby irrevocably submit to the non-exclusive jurisdiction of the courts of the Province of Ontario, without prejudice to the rights of the parties to take proceedings in any other jurisdictions.

(e) If any provision of this Agreement shall be invalid, illegal or unenforceable in any respect in any jurisdiction, it shall not affect the validity, legality or enforceability of any such provision in any other jurisdiction or the validity, legality or enforceability of any other provision of this Agreement.

2. ASSIGNMENT OF RIGHTS BY ASSIGNOR

        Effective as of the date hereof, the Assignor hereby absolutely assigns and transfers to the Assignee:

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(a) subject as provided in Section 3(a) hereof, [all OR   ·   % of all] of the Assignor’s right, title and interest in, to and under each of the outstanding Loans and other Obligations owing by the Borrower to the Assignor under the Credit Facility, as more particularly described in Exhibit A attached hereto; and

(b) [all OR   ·   %] of the Assignor’s Commitment, being U.S. $  ·   of such Commitment (the “Assigned Commitment”);

together with all of the Assignor’s other rights under the Credit Agreement and the other Documents but only insofar as such other rights relate to (a) and (b) above (collectively, the “Assigned Interests”).

3. OUTSTANDING LIBOR LOANS AND ASSIGNOR BAs

(a) The parties hereby acknowledge that, on the date hereof, Libor Loans and Bankers’ Acceptances accepted by the Assignor and each having terms to maturity ending on or after the date hereof may be outstanding (collectively, the “Outstanding Libor Loans and Assignor BAs”). Notwithstanding any provision of the Credit Agreement or this Agreement, the Assignee shall have no right, title, benefit or interest in or to any Outstanding Libor Loans and Assignor BAs. The Assignee shall assume no liability or obligation to the Assignor in respect of such Outstanding Libor Loans and Assignor BAs, including in respect of the failure of the Borrower to reimburse the Assignor for any such Bankers’ Acceptances accepted by the Assignor on the maturity thereof or any fees or other amounts due in respect thereof.

(b) From time to time, as the Outstanding Libor Loans and Assignor BAs mature and Rollovers and Conversions are made by the Borrower in respect thereof, the Assignee shall participate in the Loans effecting such Rollovers and Conversions to the full extent of its Assigned Commitment in its capacity as a Lender.

4. ASSUMPTION OF OBLIGATIONS BY ASSIGNEE

        The Assignee assumes and covenants and agrees to be responsible for all obligations relating to the Assigned Interests to the extent such obligations arise or accrue on or after the date hereof (collectively, the “Assumed Obligations”) and agrees that it will be bound by the Credit Agreement and the other Documents to the extent of the Assumed Obligations as fully as if it had been an original party to the Credit Agreement.

5. CREDIT AGREEMENT REFERENCES; NOTICES

        Effective as of the date hereof:

(a) the Assignee shall be a Lender for all purposes of the Credit Agreement and the other Documents and all references therein to “Lenders” or “a Lender” shall be deemed to include the Assignee;

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(b) the Commitment of the Assignee shall be the Assigned Commitment and all references in the Credit Agreement to “Commitment” of the Assignee shall be deemed to be to the Assigned Commitment;

(c) any demand, notice or communication to be given to the Assignee in accordance with section 14.3 of the Credit Agreement shall be made or given to the following address or facsimile number (until the Assignee otherwise gives notice in accordance with such section 14.3):   ·   ; and

(d) Schedule A to the Credit Agreement shall be deemed to be and is hereby amended to the extent necessary to give effect to the assignment of the Assigned Commitment contemplated hereby and to give effect to Sections 5(a), 5(b) and 5(c) hereof.

6. THE AGENT

        Without in any way limiting the provisions of Section 4 hereof, the Assignee irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with the provisions of the Credit Agreement.

7. NO ENTITLEMENT TO PRIOR INTEREST OR OTHER FEES

        Except as otherwise agreed in writing between the Assignor and the Assignee, notwithstanding any provision of the Credit Agreement or other Documents or any other provision of this Agreement, the Assignee shall have no right, title or interest in or to any interest or fees paid or to be paid to the Assignor under, pursuant to or in respect of:

(a) the fees paid to the Assignor in respect of the establishment of the Credit Facility;

(b) [the fees payable to the Agent pursuant to section 5.7 of the Credit Agreement;] or [Note: Section 7(b) to be inserted for any assignment by the Lender which is also acting as the Agent.]

(c) the Loans, the Credit Facility or the Credit Agreement for any period of time or in respect of any event or circumstance prior to the date hereof, including, without limitation, any standby fees pursuant to section 5.6 of the Credit Agreement.

8. CONSENT OF AGENT

        The Agent hereby consents to the assignment of the Assigned Interests to the Assignee and the assumption of the Assumed Obligations by the Assignee and agrees to recognize the Assignee as a Lender under the Credit Agreement as fully as if the Assignee had been an original party to the Credit Agreement. The Agent agrees that the Assignor shall have no further liability or obligation in respect of the Assumed Obligations.

- 5 -

9. REPRESENTATIONS AND WARRANTIES

        Each of the parties hereby represents and warrants to the other parties as follows:

(a) it is duly incorporated and validly subsisting under the laws of its governing jurisdiction;

(b) it has all necessary corporate power and authority to enter into this Agreement and to perform its obligations hereunder and under the Credit Agreement and the other Documents;

(c) the execution, delivery, observance and performance on its part of this Agreement has been duly authorized by all necessary corporate and other action and this Agreement constitutes a legal, valid and binding obligation of such party enforceable against it in accordance with its terms; and

(d) all Governmental Authorizations, if any, required for the execution, delivery, observance and performance by it of this Agreement, the Credit Agreement and the other Documents have been obtained and remain in full force and effect, all conditions have been duly complied with and no action by, and no notice to or other filing or registration with any Governmental Authority is required for such execution, delivery, observance or performance.

        The Assignor represents and warrants to the Assignee that it has the right to sell to the Assignee the Assigned Interests and that the same are free and clear of all Liens. The Assignor also represents and warrants to the Assignee that it has not received written notice of any Default or Event of Default having occurred under the Credit Agreement which is continuing.

        The representations and warranties set out in this Agreement shall survive the execution and delivery of this Agreement and notwithstanding any examinations or investigations which may be made by the parties or their respective legal counsel.

        Except as expressly provided herein, the Assignee confirms that this Agreement is entered into by the Assignee without any representations or warranties by the Assignor or the Agent on any matter whatsoever, including, without limitation, on the effectiveness, validity, legality, enforceability, adequacy or completeness of the Credit Agreement or any Document delivered pursuant thereto or in connection therewith or any of the terms, covenants and conditions therein or on the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower.

10. ASSIGNEE CREDIT DECISION

        The Assignee acknowledges to the Assignor and the Agent that the Assignee has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of the Borrower and its Subsidiaries, all of the matters and transactions contemplated herein and in the Credit Agreement and other Documents and all other matters incidental to the Credit

- 6 -

Agreement and the other Documents. The Assignee confirms with the Assignor and the Agent that it does not rely, and it will not hereafter rely, on the Agent or the Assignor:

(a) to check or inquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower, any Subsidiary or any other person under or in connection with the Credit Agreement and other Documents or the transactions therein contemplated (whether or not such information has been or is hereafter distributed to the Assignee by the Agent); or

(b) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower and its Subsidiaries.

The Assignee acknowledges that a copy of the Credit Agreement (including a copy of the Schedules) has been made available to it for review and further acknowledges and agrees that it has received copies of such other Documents and such other information that it has requested for the purposes of its investigation and analysis of all matters related to this Agreement, the Credit Agreement, the other Documents and the transactions contemplated hereby and thereby. The Assignee acknowledges that it is satisfied with the form and substance of the Credit Agreement and the other Documents.

11. PAYMENTS

        The Assignor and the Assignee acknowledge and agree that all payments under the Credit Agreement in respect of the Assigned Interests from and after the date hereof received by the Agent on or after the date hereof shall be the property of the Assignee and the Agent shall be entitled to treat the Assignee as solely entitled thereto.

12. AMENDMENTS AND WAIVERS

        Any amendment or modification or waiver of any right under any provision of this Agreement shall be in writing (in the case of an amendment or modification, signed by the parties) and any such waiver shall be effective only for the specific purpose for which given and for the specific time period, if any, contemplated therein. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof and any waiver of any breach of the provisions of this Agreement shall be without prejudice to any rights with respect to any other or further breach.

13. GENERAL PROVISIONS

(a) The parties hereto shall from time to time and at all times do all such further acts and things and execute and deliver all such documents as are required in order to fully perform and carry out the terms of this Agreement.

(b) The provisions of this Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and permitted assigns.

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(c) This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one full set of counterparts.

        IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by its duly authorized representative(s) as of the date first above written.

·   , as Assignor
Per:
	·
Per:
	·

·   , as Assignee
Per:
	·
Per:
	·

THE BANK OF NOVA SCOTIA, in its capacity as Agent
Per:
	·
Per:
	·

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Borrower’s Acknowledgement and Consent to Assignment:

With respect to the foregoing Lender Assignment Agreement, and as of the date thereof, the Borrower does hereby:

(a) acknowledge and consent to the assignment of the Assigned Interests to the Assignee and the assumption of the Assumed Obligations by the Assignee;

(b) agree to recognize the Assignee as a Lender under the Credit Agreement as fully as if the Assignee had been an original party to the Credit Agreement; and

(c) agree that the Assignor shall have no further liability or obligation in respect of the Assumed Obligations.

POTASH CORPORATION OF SASKATCHEWAN INC.
Per:
	·
Per:
	·

SCHEDULE C

COMPLIANCE CERTIFICATE

TO: The Bank of Nova Scotia, in its capacity as agent of the Lenders (the “Agent”)

AND TO: Each of the Lenders

1.	Reference is made to the Credit Agreement made as of May 29, 2008 and amended and restated as of January 21, 2009 between Potash Corporation of Saskatchewan Inc., as Borrower, The Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, HSBC Bank Canada, Bank of America, N.A., Canada Branch, Canadian Imperial Bank of Commerce and Export Development Canada and the other persons who are or may become party thereto in their capacity as Lenders and the Agent and relating to the establishment of a certain credit facility in favour of the Borrower (as amended, modified, supplemented or restated from time to time, the “Credit Agreement”). Capitalized terms used herein, and not otherwise defined herein, shall have the meanings attributed to such terms in the Credit Agreement.
2.	This Compliance Certificate is delivered to the Agent pursuant to Section 9.1(a)(iv) of the Credit Agreement.
3.	The undersigned, [name], [title] of the Borrower, hereby certifies that, as of the date of this Compliance Certificate, I have made or caused to be made such investigations as are necessary or appropriate for the purposes of this Compliance Certificate and:

(a)	as at the end of the aforementioned [Fiscal Quarter OR Fiscal Year], the ratio of Long Term Debt as at the last day of such period to EBITDA for the four consecutive Fiscal Quarters ending on such day was [  ·   ]:1.0;
(b)	as at the end of the aforementioned [Fiscal Quarter OR Fiscal Year], the ratio of Debt to Capital was [  ·   ]:1.0;
(c)	as at the end of the aforementioned [Fiscal Quarter OR Fiscal Year], the Tangible Net Worth of the Borrower was U.S. $[  ·   ];
(d)	as at the end of the aforementioned [Fiscal Quarter OR Fiscal Year], the aggregate Debt of the Subsidiaries of the Borrower was U.S. $[  ·   ]; [and]
(e)	[during the Fiscal Year ending   ·   , 20   ·   , the aggregate net book value of the assets disposed of by the Companies (including any disposition by reason of an expropriation of such assets but excluding any disposition of inventory in the ordinary course of business and the disposition of assets as a result of the securitization of assets shall only be included in the foregoing calculation if the assets are transferred to create a securitized asset pool or to increase the overall size of a securitized asset pool but not if the assets are transferred to replenish a depleting securitized asset pool) was U.S.$ [  ·   ] and Total Assets as of the last day of the immediately preceding Fiscal Year was U.S.$ [  ·   ]; and]

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	[Note: Insert 3(e) only for year end Compliance Certificate.]
(f)	to the best of my knowledge, information and belief and after due inquiry, no Default or Event of Default has occurred and is continuing.

        I give this Compliance Certificate on behalf of the Borrower and in my capacity as the [title] of the Borrower, and no personal liability is created against or assumed by me in the giving of this Certificate.

        Dated at [  ·   ], this [  ·   ] day of [  ·   ], [  ·   ]

Name:
Title:

SCHEDULE D

CONVERSION NOTICE

TO: The Bank of Nova Scotia, in its capacity as agent of the Lenders (the “Agent”)

DATE:

1.

This Conversion Notice is delivered to you pursuant to the terms and conditions of the Credit Agreement made as of May 29, 2008 and amended and restated as of January 21, 2009 between Potash Corporation of Saskatchewan Inc., as Borrower, The Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, HSBC Bank Canada, Bank of America, N.A., Canada Branch, Canadian Imperial Bank of Commerce and Export Development Canada and the other persons party thereto in their capacity as Lenders and the Agent and relating to the establishment of a certain credit facility in favour of the Borrower (as amended, modified, supplemented or restated, the “Credit Agreement”). Unless otherwise expressly defined herein, capitalized terms set forth in this Conversion Notice shall have the respective meanings set forth in the Credit Agreement.

2.

The Borrower hereby requests a Conversion as follows:

(a)	Conversion Date:
(b)	Conversion of the following Loans under the Credit Facility:

(i)	Type of Loan:
(ii)	Amount being converted (specify aggregate face amount at maturity in the case of Bankers’ Acceptances):
(iii)	Interest Period maturity (for Libor Loans and Bankers’ Acceptances):
	INTO the following Loan:
(iv)	Type of Loan:
(v)	Interest Period (specify term of Libor Loans or Bankers’ Acceptances):

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(c) Payment, delivery or issuance instructions (if any):

Yours very truly, POTASH CORPORATION OF SASKATCHEWAN INC.
Per:
	Name:
	Title:
Per:
	Name:
	Title:

SCHEDULE E

DRAWDOWN NOTICE

TO: The Bank of Nova Scotia, in its capacity as agent of the Lenders (the “Agent”)

DATE:

1.

This Drawdown Notice is delivered to you pursuant to the terms and conditions of the Credit Agreement made as of May 29, 2008 and amended and restated as of January 21, 2009 between Potash Corporation of Saskatchewan Inc., as Borrower, The Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, HSBC Bank Canada, Bank of America, N.A., Canada Branch, Canadian Imperial Bank of Commerce and Export Development Canada and the other persons party thereto in their capacity as Lenders and the Agent and relating to the establishment of a certain credit facility in favour of the Borrower (as amended, modified, supplemented or restated, the “Credit Agreement”). Unless otherwise expressly defined herein, capitalized terms set forth in this Drawdown Notice shall have the respective meanings set forth in the Credit Agreement.

2.

The Borrower hereby requests a Drawdown as follows:

(a)	Drawdown Date:
(b)	Amount of Drawdown (specify aggregate face amount at maturity in the case of Bankers’ Acceptances):
(c)	Type of Loan:
(d)	Interest Period (specify term for Libor Loans and Bankers’ Acceptances):
(e)	Payment, delivery or issuance instructions (if any):

- 2 -

Yours very truly, POTASH CORPORATION OF SASKATCHEWAN INC.
Per:
	Name:
	Title:
Per:
	Name:
	Title:

SCHEDULE F

REPAYMENT NOTICE

TO: The Bank of Nova Scotia, in its capacity as agent of the Lenders (the “Agent”)

DATE:

1.

This Repayment Notice is delivered to you pursuant to the terms and conditions of the Credit Agreement made as of May 29, 2008 and amended and restated as of January 21, 2009 between Potash Corporation of Saskatchewan Inc., as Borrower, The Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, HSBC Bank Canada, Bank of America, N.A., Canada Branch, Canadian Imperial Bank of Commerce and Export Development Canada and the other persons party thereto in their capacity as Lenders and the Agent and relating to the establishment of a certain credit facility in favour of the Borrower (as amended, modified, supplemented or restated, the “Credit Agreement”). Unless otherwise expressly defined herein, capitalized terms set forth in this Repayment Notice shall have the respective meanings set forth in the Credit Agreement.

2.

The Borrower hereby gives notice of a repayment as follows:

(a)	Date of repayment:
(b)	Loan(s):
(c)	Interest Period maturity (specify for Libor Loans and Bankers’ Acceptances):
(d)	Amount being repaid (specify aggregate face amount at maturity in the case of Bankers’ Acceptances):
(e)	Repayment instructions (if any):

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Yours very truly, POTASH CORPORATION OF SASKATCHEWAN INC.
Per:
	Name:
	Title:
Per:
	Name:
	Title:

SCHEDULE G

ROLLOVER NOTICE

TO: The Bank of Nova Scotia, in its capacity as agent of the Lenders (the “Agent”)

DATE:

1.

This Rollover Notice is delivered to you pursuant to the terms and conditions of the Credit Agreement made as of May 29, 2008 and amended and restated as of January 21, 2009 between Potash Corporation of Saskatchewan Inc., as Borrower, The Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, HSBC Bank Canada, Bank of America, N.A., Canada Branch, Canadian Imperial Bank of Commerce and Export Development Canada and the other persons party thereto in their capacity as Lenders and the Agent and relating to the establishment of a certain credit facility in favour of the Borrower (as amended, modified, supplemented or restated, the “Credit Agreement”). Unless otherwise expressly defined herein, capitalized terms set forth in this Rollover Notice shall have the respective meanings set forth in the Credit Agreement.

2.

The Borrower hereby requests a Rollover as follows:

(a)	Rollover Date:
(b)	Amount of Rollover (specify aggregate face amount at maturity in the case of Bankers’ Acceptances):
(c)	Type of Loan:
(d)	New Interest Period (specify term of Libor Loans and Bankers’ Acceptances):
(e)	Payment, delivery or issuance instructions (if any):

- 2 -

Yours very truly, POTASH CORPORATION OF SASKATCHEWAN INC.
Per:
	Name:
	Title:
Per:
	Name:
	Title:

SCHEDULE H

	January 21, 2009
The Bank of Nova Scotia, as Agent Loan Administration and Agency Services 720 King Street West, 3rd Floor Toronto, Ontario M5V 2T3	McCarthy Tétrault LLP Suite 3300, 421 – 7th Avenue SW Calgary, Alberta Canada T2P 4K9
The Lenders party to the Credit Agreement on the date hereof

Ladies and Gentlemen:

Re: Potash Corporation of Saskatchewan Inc.

     We have acted as Ontario counsel to Potash Corporation of Saskatchewan Inc. (the “Borrower”) in connection with a credit agreement dated May 29, 2008 as amended and restated pursuant to an amended and restated credit agreement dated as of January 21, 2009 (such amended and restated credit agreement, the “Credit Agreement”) among the Borrower, as borrower, The Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, HSBC Bank Canada, Bank of America, N.A., Canada Branch, Canadian Imperial Bank of Commerce and Export Development Canada, together with such other persons as become parties thereto, as lenders (collectively, the “Lenders”) and The Bank of Nova Scotia, as agent of the Lenders (the “Agent”). Our opinion relates to the Credit Agreement as in effect on the date hereof and does not speak to any expansion of the Credit Facility under Section 2.18 of the Credit Agreement. Capitalized terms used in this opinion that we do not define have the meanings given to them in the Credit Agreement.

     This opinion is being provided to you pursuant to Section 3.2(d) of the Credit Agreement. We have participated in the preparation of and examined an executed copy of the Credit Agreement.

     For the purposes of this opinion, we have also examined originals or copies, certified or otherwise identified to our satisfaction, and relied upon the following documents (collectively, the “Corporate Documents”):

(a) the articles of continuance of the Borrower;

(b) the by-laws of the Borrower;

(c) certain resolutions of the Borrower’s directors relating to the Credit Agreement;

(d) a certificate of compliance provided by governmental authorities of Canada with respect to the Borrower (the “Certificate of Compliance”); and

(e) a certificate of an officer of the Borrower (the “Officer’s Certificate”).

     Duplicate copies of the Officer’s Certificate are delivered contemporaneously with this opinion. Copies of the other Corporate Documents, other than the Certificate of Compliance, are annexed to the Officer’s Certificate. We have relied upon the Corporate Documents without independent investigation of the matters provided for in them for the purpose of providing our opinions expressed below. We have not conducted a review of the minute books of the Borrower.

     In examining all documents and in providing our opinions below we have assumed that:

(a) all individuals had the requisite legal capacity;

(b) all signatures are genuine;

(c) all documents submitted to us as originals are complete and authentic and all photostatic, certified, telecopied, notarial or other copies conform to the originals;

(d) all facts set forth in the official public records, certificates and documents supplied by public officials or otherwise conveyed to us by public officials are complete, true and accurate;

(e) the articles of continuance are conclusive evidence that the Borrower is incorporated under the Canada Business Corporations Act;

(f) all facts set forth in the certificates supplied by the respective officers and directors of the Borrower including, without limitation, the Officer’s Certificate are complete, true and accurate;

(g) the Credit Agreement has been duly authorized, executed and delivered by and is enforceable in accordance with its terms against each party to it other than the Borrower; and

(h) performance of the obligations would not be illegal under the law of the place of performance if that is a place other than Ontario.

     Our opinion below is expressed only with respect to the laws of the province of Ontario (the “Jurisdiction”) and of the laws of Canada applicable in the Jurisdiction. Any reference to the laws of the Jurisdiction includes the laws of Canada that apply in the Jurisdiction.

     Our opinion is expressed with respect to the laws of the Jurisdiction in effect on the date of this opinion and we do not accept any responsibility to take into account or inform the addressees, or any other person authorized to rely on this opinion, of any changes in law, facts or other developments subsequent to this date that do or may affect the opinions we express, nor do we have any obligation to advise you of any other change in any matter addressed in this opinion or to consider whether it would be appropriate for any other person other than the addressees to rely on our opinion.

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          Based on the above, and subject to the qualifications below, we are of the opinion that:

1. The Borrower (a) is a corporation incorporated and existing under the laws of Canada, and (b) has the corporate power to enter into and perform its obligations under the Credit Agreement.

2. The execution and delivery of and performance by the Borrower of the Credit Agreement have been authorized by all necessary corporate action on the part of the Borrower.

3. The execution and delivery of and performance by the Borrower of the Credit Agreement does not constitute or result in a violation or breach of or a default under:

(a) its articles of continuance or by-laws; or

(b) any applicable law in the Jurisdiction.

4. No authorization, consent or approval of, or filing, registration, qualification or recording with any Governmental Authority having jurisdiction in the Jurisdiction is required in connection with the execution and delivery of or performance by the Borrower of the Credit Agreement, except any continuous disclosure filings required to be made by a reporting issuer pursuant to applicable securities laws.

5. The Credit Agreement has been duly executed and delivered by the Borrower.

6. The Credit Agreement constitutes a legal, valid and binding agreement of the Borrower enforceable against it in accordance with its terms.

          All of the opinions expressed above are subject to the following qualifications:

(a) the enforceability of the Credit Agreement may be limited by bankruptcy, winding-up, insolvency, arrangement, fraudulent preference and conveyance, assignment and preference and other similar laws of general application affecting the enforcement of creditors’ rights;

(b) a court may exercise discretion in the granting of equitable remedies such as specific performance and injunction;

(c) the enforceability of the Credit Agreement may be limited by general principles of law and equity relating to the conduct of the Agent and/or the Lenders prior to execution of or in the administration or performance of the Credit Agreement, including, without limitation, (i) estoppel and waiver, (ii) laches, and (iii) reasonableness and good faith in the exercise of discretionary powers;

(d) the discretion that a court may reserve to itself to decline to hear an action if it is not the proper forum to hear the action or if concurrent proceedings are being brought elsewhere;

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(e) the Currency Act (Canada) precludes a court in Canada from giving judgment in any currency other than Canadian currency;

(f) a court may decline to accept the factual and legal determinations of a party notwithstanding that a contract or instrument provides that the determinations of that party shall be conclusive;

(g) we express no opinion as to the enforceability of any term providing for the severance of illegal or unenforceable provisions from the remaining provisions of an agreement;

(h) we express no opinion as to the enforceability of any provision that states that modifications, amendments or waivers are not binding unless in writing;

(i) we express no opinion as to the enforceability of any provision exculpating any party from liability in respect of acts or omissions that may be illegal, fraudulent or involve wilful misconduct or gross negligence;

(j) any provision that provides for interest to be paid at a higher rate after than before default, that provides for a forfeiture of a deposit or any other property or that provides for a particular calculation of damages upon breach may not be enforceable if it is interpreted by a court to be a penalty or if the court determines that relief from forfeiture is appropriate;

(k) a court may decline to enforce rights of indemnification or contribution to the extent that they directly or indirectly relate to liabilities imposed by law on the indemnified party for which it would be contrary to public policy to require indemnification by the indemnifying party or which relate to liabilities for non-Canadian taxes;

(l) we express no opinion as to the enforceability of, nor as to the manner in which a court would interpret and apply, any provision of the Credit Agreement which refers to, incorporates by reference, or requires compliance with any law, statute, rule or regulation of any jurisdiction other than the Jurisdiction;

(m) we express no opinion as to the enforceability by or against a person who is not a party to the Credit Agreement of any provision in the Credit Agreement which purports to bind or affect or confer a benefit upon that person;

(n) we express no opinion as to the enforceability of any provisions of the Credit Agreement which require the Borrower to pay or indemnify the Agent or the Lenders for costs and expenses in connection with judicial proceedings since the recoverability of such costs and expenses are in the discretion of the court and the court has the discretion to determine by whom and to what extent these costs shall be paid;

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(o) we express no opinion as to the enforceability of the provisions of the Credit Agreement which purport to waive generally all defences which might be available to or constitute a discharge of the liability of the Borrower;

(p) the Agent on behalf of the Lenders may be required to give the Borrower a reasonable time to repay following a demand for payment prior to taking any action to enforce right of repayment or before exercising any of the rights and remedies expressed to be exercisable by the Agent and/or the Lenders in the Credit Agreement;

(q) the provisions for the payment of interest in the Credit Agreement may not be enforceable if those provisions provide for the receipt of interest by the Agent and/or the Lenders at a “criminal rate” within the meaning of section 347 of the Criminal Code (Canada); and

(r) we express no opinion as to compliance with the Personal Information Protection and Electronic Documents Act or any other privacy laws with respect to any provision in the Credit Agreement which purport to grant to the Agent, the Lenders or any other person, access to books, correspondence, records or other information of the Borrower.

          This opinion is solely for the benefit of the addressees and not for the benefit of any other person except that it may be relied on by a person who becomes a Lender from time to time under the Credit Agreement. It is rendered solely in connection with the transaction to which it relates. It may not be quoted, in whole or in part or otherwise referred to or used for any purpose without our prior written consent.

Yours truly,

/s/  Stikeman Elliott LLP

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SCHEDULE I

SUBSIDIARIES

	Jurisdiction of
	Incorporation or
Name of Entity	Formation
101070338 Saskatchewan Ltd.	Saskatchewan
175360 Canada Inc.	Canada
609430 Saskatchewan Ltd.	Saskatchewan
628550 Saskatchewan Ltd.	Saskatchewan
AA Sulfuric Corporation	Louisiana
Canpotex Bulk Terminals Limited	Canada
Chilkap Resources Ltd.	Yukon
Inversiones El Boldo Limitada	Chile
Inversiones El Coigüe S.A.	Chile
Inversiones El Roble Limitada	Chile
Inversiones El Sauce Limitada	Chile
Inversiones PCS Chile S.A.	Chile
Inversiones RAC Chile Limitada	Chile
Minera Saskatchewan Limitada	Chile
PCS Administration (USA), Inc.	Delaware
PCS (Barbados) Holdings SRL	Barbados
PCS (Barbados) Investment Company Ltd.	Barbados
PCS (Barbados) Shipping, Ltd.	Barbados
PCS Cassidy Lake Company	Ontario
PCS Cassidy Lake Limited	Canada
PCS Chesapeake LLC	Delaware
PCS Chile I LLC	Delaware
PCS Chile II LLC	Delaware
PCS Fosfatos do Brasil Ltda.	Brazil
PCS Hungary Holding Limited Liability Company	Hungary
PCS Industrial Products Inc.	Delaware
PCS Joint Venture, Ltd.	Florida
PCS Jordan LLC	Delaware
PCS L.P. Inc.	Delaware
PCS LP LLC 2	Delaware
PCS Nitrogen Ammonia Terminal Corporation I	Texas
PCS Nitrogen Ammonia Terminal Corporation II	Delaware
PCS Nitrogen Delaware LLC	Delaware
PCS Nitrogen Fertilizer, L.P.	Delaware
PCS Nitrogen Fertilizer Limited	Trinidad
PCS Nitrogen Fertilizer Operations, Inc.	Delaware
PCS Nitrogen, Inc.	Delaware
PCS Nitrogen LCD Corporation	Delaware
PCS Nitrogen Limited	Trinidad
PCS Nitrogen Ohio, L.P.	Delaware

	Jurisdiction of
	Incorporation or
Name of Entity	Formation
PCS Nitrogen Payroll Corporation	Delaware
PCS Nitrogen Trinidad Corporation	Delaware
PCS Nitrogen Trinidad Limited	Trinidad
PCS Phosphate Company, Inc.	Delaware
PCS Purified Phosphates	Virginia
PCS Sales (Canada) Inc.	Saskatchewan
PCS Sales (Indiana), Inc.	Indiana
PCS Sales (Iowa), Inc.	Iowa
PCS Sales (USA), Inc.	Delaware
PCS USA LLC	Delaware
Pérola S.A.	Brazil
Phosphate Holding Company, Inc.	Delaware
Potash Corporation of Saskatchewan (Florida) Inc.	Florida
Potash Corporation of Saskatchewan Transport Limited	Saskatchewan
PotashCorp Finance (Barbados) Limited	Barbados
Potash Holding Company, Inc.	Delaware
RAC Investments Ltd.	Cayman
Texasgulf Aircraft Inc.	Delaware
TG Corporation	Delaware
White Springs Agricultural Chemicals, Inc.	Delaware

SCHEDULE J

PARTNERSHIPS, JOINT VENTURES AND SYNDICATES

See Schedule I

EX-11

Exhibit 11

POTASH CORPORATION OF SASKATCHEWAN INC.
COMPUTATION OF PER SHARE EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30

	2009			2008
A   Net income as reported, Canadian GAAP ($ millions)		495.4			1,471.1
B   Items adjusting net income ($ millions)		(1.1	)		(27.4	)
C   Net income, US GAAP ($ millions)		494.3			1,443.7
D   Weighted average number of shares outstanding		295,338,000			313,138,000
E   Net additional shares issuable for diluted earnings per share calculation (Canadian GAAP)		8,398,000			10,578,000
F   Net additional shares issuable for diluted earnings per share calculation (US GAAP)		8,398,000			10,572,000
CANADIAN GAAP
Basic earnings per share (A/D)		1.68			4.70
Diluted earnings per share (A/(D+E))		1.63			4.54
UNITED STATES GAAP
Basic earnings per share (C/D)		1.67			4.61
Diluted earnings per share (C/(D+F))		1.63			4.46

EX-31.A

Exhibit 31(a)

CERTIFICATION

I, William J. Doyle, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Potash Corporation of Saskatchewan Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2009

By:  /s/  WILLIAM J. DOYLE

William J. Doyle

President and Chief Executive Officer

EX-31.B

Exhibit 31(b)

CERTIFICATION

I, Wayne R. Brownlee, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Potash Corporation of Saskatchewan Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2009

By:  /s/  WAYNE R. BROWNLEE

Wayne R. Brownlee

Executive Vice President and

Chief Financial Officer

EX-32

Exhibit 32

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Potash Corporation of Saskatchewan Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (the “Form 10-Q”), of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2009

By:  /s/  WILLIAM J. DOYLE

William J. Doyle

President and Chief Executive Officer

Date: August 6, 2009

By:  /s/  WAYNE R. BROWNLEE

Wayne R. Brownlee

Executive Vice President, Treasurer and

Chief Financial Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K, section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q.