TECK METALS LTD. - and - BRITISH COLUMBIA HYDRO AND POWER AUTHORITY CO- OWNERSHIP AND OPERATING AGREEMENT Dated as of March 5, 2010

EXHIBIT 99.1

TECK METALS LTD.

- and -

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY

CO-OWNERSHIP AND OPERATING AGREEMENT

Dated as of March 5, 2010

CO-OWNERSHIP AND OPERATING AGREEMENT

Table of Contents

1.	DEFINITIONS AND INTERPRETATIONS	1
1.1.	Definitions	1
1.2.	Interpretation	21
2.	REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS	22
2.1.	Representations and Warranties	22
2.2.	Covenants	23
2.3.	Title to Xxxxxx Assets	23
3.	PURPOSES AND TERM	24
3.1.	Purposes	24
3.2.	Effective Date and Term	25
4.	RELATIONSHIP OF THE CO-OWNERS	25
4.1.	No Partnership	25
4.2.	Limited Recourse and Several Liability	26
4.3.	Other Business Opportunities	26
4.4.	Taxation / Accounting	27
4.5.	Power of Attorney	27
5.	INTERESTS OF CO-OWNERS	28
5.1.	Initial Contributions	28
5.2.	Initial Participation Percentages	29
5.3.	Share of Generation and CPA Adjustments Reflect Participation Percentages	29
5.4.	Changes in Participation Percentages	29
5.5.	Continuing Liabilities Upon Adjustments of Participation Interests	29
5.6.	BC Hydro Operating Instructions	30
6.	OPERATING COMMITTEE	30
6.1.	Organization and Composition of Operating Committee	30
6.2.	Decisions	30
6.3.	Meetings	30
6.4.	Written Consent Resolutions	31
6.5.	Operating Committee Oversight	32
6.6.	Matters Requiring Majority Approval	32
6.7.	Matters Requiring Unanimous Approval (Subject to Resolution by Third Party Referee)	33
6.8.	Matters Requiring Unanimous Approval (Not Subject to Resolution by Third Party Referee)	36
6.9.	Appointment and Powers of Sub-Committees	37
6.10.	Operating Procedures	38
6.11.	Accounting Procedure	38

7.	OPERATOR	38
7.1.	Appointment of Operator/Operating Standard	38
7.2.	Duties of Operator	39
7.3.	Activities Absent Approval	41
7.4.	Operating and Management Plan	41
7.5.	Owner for purposes of Workers Compensation legislation	42
7.6.	Operator’s Obligation to Report to the Co-Owners	42
7.7.	Co-Owner’s Right to Access Xxxxxx Assets	44
7.8.	Reimbursement of Operator’s Costs	44
7.9.	Financial Audits	44
7.10.	Access to Books and Records	45
7.11.	Compliance Audits	45
7.12.	Resignation; Deemed Offer to Resign	46
7.13.	Transition on Change of Operator	47
7.14.	Limited Agency	48
8.	MANAGER	49
8.1.	Appointment of Manager	49
9.	OPERATING AND CAPITAL BUDGETS	49
9.1.	Operations Pursuant to Budgets and Operating and Management Plans	49
9.2.	Presentation of Budgets	50
9.3.	Review and Approval of Proposed Budgets	50
9.4.	Budget Variances	50
9.5.	Emergency or Unexpected Expenditures	51
10.	ACCOUNTS, SETTLEMENTS AND MONTHLY XXXXXXXX	51
10.1.	Costs to be Borne Proportionately	51
10.2.	Monthly Statements	51
10.3.	Monthly Invoices in Arrears	51
10.4.	Cash Calls In Advance	52
10.5.	Funds Held in Trust	53
10.6.	Failure to Pay Xxxxxxxx	53
10.7.	Failure to Make Payments	53
11.	WATER RENTAL FEES	55
11.1.	Water Rental Fees Payment and Adjustment Provisions	55
11.2.	Water Rental Fees based on Capacity	56
11.3.	Water Rental Fees based on Energy Output	57
11.4.	Additional Teck Generation	58
11.5.	Fees based on Occupation of Crown Land	58
11.6.	Changes in Participation Percentage	58
11.7.	Further Allocation/Adjustments	59
11.8.	Water Rental Fee Adjustments for Capacity	59
11.9.	Water Rental Fee Adjustments for Energy	59
11.10.	Failure to Pay	61
11.11.	Change to Determination of Water Rental Fees	61

12.	PROPERTY TAXES	62
12.1.	Property Taxes	62
13.	SHARE OF GENERATION	63
13.1.	Parties’ Share of Generation	63
13.2.	Share of Generation Adjustments Associated with WAX Coordination	64
14.	BI-LATERAL ADJUSTMENTS TO CPA ENTITLEMENT	64
14.1.	Bi-Lateral Adjustments to Teck’s Entitlement Capacity and Teck’s Entitlement Energy	64
14.2.	Initial Notice of Teck’s Entitlement Capacity and Teck’s Entitlement Energy Under the CPA	65
14.3.	Calculation of Adjustments to Teck’s Entitlement Capacity and Teck’s Entitlement Energy	65
14.4.	Adjustments to Teck’s Entitlement Capacity and Teck’s Entitlement Energy	67
14.5.	Potential for Further Adjustments	68
14.6.	Bi-Lateral Adjustments to Outage Factors	70
14.7.	Notice of Adjustments to Teck’s Entitlement Capacity and Teck’s Entitlement Energy Under the CPA	72
14.8.	Post December 31, 2035	72
14.9.	Adjustments to Tables 2, 3 or 4	72
14.10.	Replacement CPA	72
14.11.	Net Coordination Benefits Taken into Account	72
15.	ENTITLEMENT ADJUSTMENTS EXCEEDING ENTITLEMENT IN TABLE 9 OF CPA	73
15.1.	Entitlement Adjustments Exceeding Entitlement in Table 9 of CPA	73
16.	XXXXXX EXPANSION DELAY	75
16.1.	WAX Deferral Energy and WAX Deferral Capacity	75
16.2.	Disposal of WAX Deferral Energy	75
17.	CPA TO CONTINUE BETWEEN PARTIES	76
17.1.	Termination of CPA and Replacement CPA	76
17.2.	Termination of CPA Scheduling Agreement	77
18.	INTENTIONALLY DELETED	78
19.	TRANSMISSION PRIOR TO 2036	78
19.1.	Availability at the Kootenay Interconnection	78
19.2.	Schedule to the BC/US Boundary	78
19.3.	Maximum Transmission Capacity	79
19.4.	Unused Scheduling Rights and Transmission Capacity	79
19.5.	Planned Outages	80
19.6.	KI Delivery Limitations (Until January 1, 2036)	80
19.7.	BC/US Boundary Limitations (Until January 1, 2036)	81
19.8.	Teck Alternate Means (Until January 1, 2036)	81

19.9.	Teck and BC Hydro Alternate Means (Until January 1, 2036)	81
19.10.	Dispute Resolution (Until January 1, 2036)	81
19.11.	Greater Certainty (Until January 1, 2036)	82
20.	TRANSMISSION FROM AND AFTER 2036	82
20.1.	Availability at the Kootenay Interconnection (from and after January 1, 2036)	82
20.2.	Schedule to the BC/US Boundary (from and after January 1, 2036)	83
20.3.	Maximum Transmission Capacity (from and after January 1, 2036)	83
20.4.	Unused Scheduling Rights and Transmission Capacity (from and after January 1, 2036)	83
20.5.	Kootenay Interconnection Limitations (from and after January 1, 2036).	84
20.6.	BC/US Boundary Limitations (from and after January 1, 2036).	84
20.7.	Teck Alternate Means (From and After January 1, 2036)	85
20.8.	Teck and BC Hydro Alternate Means (From and After January 1, 2036)	85
21.	TRANSMISSION LOSSES AND OPERATING COSTS/ COVENANTS	85
21.1.	Transmission Losses	85
21.2.	Contribution to Operating Costs	86
21.3.	Covenants re Teck Transmission Rights	87
21.4.	Geographic Divisions of Scheduling Practices	89
21.5.	Survival	89
22.	ENVIRONMENTAL ATTRIBUTES	90
22.1.	Environmental Attributes	90
23.	REMEDIES FOR EXCESS USE AND/OR FAILURE TO DELIVER	91
23.1.	Teck’s Right to Purchase Market Power	91
23.2.	Liquidated Damages from Teck	91
23.3.	Liquidated Damages from BC Hydro	94
23.4.	No Penalty	94
23.5.	Replacement of Energy/Capacity	95
24.	EVENTS OF DEFAULT	95
24.1.	Events of Default	95
24.2.	Rights on Events of Default	97
24.3.	Liquidation of Certain Transactions under this Agreement and the Surplus Power Rights Agreement	98
24.4.	Restrictions on Remedies	100
24.5.	Exceptions to Restrictions	102
25.	TRANSFER OF INTEREST	102
25.1.	General	102
25.2.	Limitations on Free Transferability	103
25.3.	Right of First Offer	104
25.4.	Exemptions from the Right of First Offer	107
25.5.	Obligation to Notify	107
25.6.	BC Hydro Right to Become Operator	108

25.7.	Clarification	109
26.	SECURITY	109
26.1.	Initial Security	109
26.2.	Priority	109
26.3.	Additional Documents	109
26.4.	Further Assurances and Future Property	110
26.5.	Releases and Consents	110
27.	INSURANCE	110
27.1.	Obligation to Maintain Insurance	110
27.2.	Allocation of Premiums	111
27.3.	Delivery of Proposed Schedule and Related Documentation	111
27.4.	Information and Notice of Cancellation	112
27.5.	Claims Protocol	112
27.6.	Alternative Insurance	112
27.7.	Erosion of Insurance Coverage	113
27.8.	Insurance Proceeds	114
27.9.	Segregated Insurance Account	115
28.	OBLIGATIONS ON SUBSTANTIAL DAMAGE OR DESTRUCTION	115
28.1.	Decision to Repair/Rebuild Prior to January 1, 2036	115
28.2.	Deadlock on Decision to Repair/Rebuild From and After January 1, 2036	117
29.	DISPUTE RESOLUTION	119
29.1.	Arbitration	119
30.	CONFIDENTIALITY	120
30.1.	General	120
30.2.	Exceptions	120
30.3.	Duration of Confidentiality	121
30.4.	Exclusions from Confidentiality Restriction	122
31.	LIABILITY AND INDEMNITIES	122
31.1.	Indemnification by Operator	122
31.2.	Indemnification of Operator	122
31.3.	Mutual Indemnification	122
31.4.	Excluded Xxxxxx Equipment	123
31.5.	Water Use Planning	123
31.6.	Remediation Covenant	124
31.7.	No Consequential Damages	125
32.	GENERAL PROVISIONS	125
32.1.	Third Party Claims	125
32.2.	Notices	126
32.3.	Reliance on Specified Index or Indices	127
32.4.	Partition	128

32.5.	Modification	128
32.6.	Waiver	128
32.7.	Interpretation and Severability	128
32.8.	Governing Law	129
32.9.	Asset Purchase Agreement	129
32.10.	Further Assurances	129
32.11.	Survival of Terms and Conditions	129
32.12.	Enurement	129
32.13.	No Third Party Beneficiaries	130
32.14.	No Obligation to Serve	130
32.15.	Xxxxxx Reserve	130
32.16.	Consideration	130
32.17.	Counterparts	131

CO-OWNERSHIP AND OPERATING AGREEMENT

THIS AGREEMENT is made as of the 5th day of March, 2010

BETWEEN:

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY, a Crown corporation organized and existing under the laws of British Columbia

(“BC Hydro”)

AND:

TECK METALS LTD., a company incorporated under the laws of Canada

(“Teck”)

WHEREAS, BC Hydro and Teck jointly own the Xxxxxx Plant and the balance of the Xxxxxx Assets and wish to set out their respective rights and obligations with respect to their joint ownership thereof and the management and operation thereof pursuant to the terms of this Agreement.

NOW THEREFORE, this Agreement witnesses that for good and valuable consideration, the receipt and sufficiency of which each of the Parties acknowledges, the Parties hereto agree as follows:

1.	DEFINITIONS AND INTERPRETATIONS

1.1.	Definitions

(a)

“Accounting Procedure” means the accounting procedure set forth in Schedule A, as it may be amended, modified or restated from time to time.

(b)

“Adjustment Factor” has the same meaning as set forth in the CPA.

(c)

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly Controls, is Controlled by or is under common Control with, such Person.

(d)

“Agreed Inflation Factor” means, on any date, the fraction obtained where the numerator is the Consumer Price Index for Canada (all Items) for the applicable year and the denominator is the Consumer Price Index for Canada (all Items) for the immediately preceding year, with appropriate mathematical adjustment made to ensure that both numerator and denominator have been prepared on the same basis.

(e)

“Agreement” means this Agreement, including all written amendments and modifications thereof, and all Schedules and exhibits, which are incorporated herein by this reference.

(f)

“Alternate Means” means overcoming a KI Delivery Limitation or making BC Hydro’s Share of Actual Generation available at the Kootenay Interconnection or another point of interconnection with the BCTC System by alternate means, which may include, without limitation, new or upgraded transmission, use of other available transmission rights or wheeling on third party systems.

(g)

“Applicable Laws” means at any given time all applicable international, federal, state, provincial, municipal, local and foreign statutes, codes, ordinances, decrees, rules, regulations and by-laws, and judicial, executive, arbitral, administrative, ministerial, departmental or regulatory judgments, decrees, decisions, rulings, awards, policies, requirements, standards, guidelines, permits, licences, authorizations, approvals, orders and requirements of any Governmental Authority and other laws (including common law), in each case having the force of law and in force or effect at that time, including, without limitation, all Environmental Laws.

(h)

“Asset Purchase Agreement” means the asset purchase agreement dated September 22, 2009 between BC Hydro, Teck, Teck Resources Limited and TCAI Incorporated.

(i)

“BC Hydro Security Documents” means the security documents delivered by BC Hydro to Teck pursuant to Section 7.3(f) of the Asset Purchase Agreement and any additional documents that may be delivered from time to time by BC Hydro pursuant thereto or pursuant to Section 26 and all other security held by Teck from time to time for any of BC Hydro’s Obligations.

(j)

“BC Hydro’s Share of Actual Generation” has the meaning set forth in Section 13.1(a).

(k)

“BCTC” means British Columbia Transmission Corporation.

(l)

“BCTC System” means the transmission, protection, control and communication facilities: (i) owned by BCTC or by BC Hydro; and (ii) operated by BCTC in British Columbia, and includes all modifications thereto and repairs or replacements thereof.

(m)

“BCUC” means the British Columbia Utilities Commission.

(n)

“BC/US Boundary” means, subject to Section 21.4, the international boundary between Canada (limited to the southern border of British Columbia) and the United States of America.

(o)

“Books and Records” means the documents and records of any nature or kind and in any form (including software, passwords and other information and means of or

		for access thereto), in each case relating to the Xxxxxx Assets, of the Operator required to be maintained in accordance with the Operating Standard or to comply with Applicable Laws or Governmental Authorizations and of the Manager required to be maintained pursuant to the Management Agreement, including agreements; construction drawings and specifications; operating records; maintenance, inspection, test results, improvement and upgrading records; spare parts records; equipment specifications; age and condition reports on major equipment; manuals; engineering, environmental, appraisal and feasibility studies or reports; accounting records, financial statements and financial working papers.
	(p)	“Budget” means each Operating Budget, Sustaining Capital Budget and Non-Sustaining Capital Budget.

(q)

“Budgetary Period” means for each Budget, the first Fiscal Year contemplated by each such Budget.

(r)

“Business Day” means any day of the year except Saturdays, Sundays and statutory holidays in the Province of British Columbia.

(s)

“Cash Call” has the meaning set forth in Section 10.4.

(t)

“Clean or Renewable Electricity” means:

(i)

electricity that meets the requirements for clean or renewable electricity set out in the guidelines issued by the British Columbia Ministry of Energy, Mines and Petroleum Resources in June 2008, including any amendments thereto from time to time, and

(ii)

in the event that such requirements are substantially amended, modified, restated or replaced, electricity that meets any future requirements of the Province of British Columbia from time to time relating to acceptable sources of electricity for the purposes of contributing towards the Province’s goal of electricity self-sufficiency or other targets involving acceptable generation resources or technologies.

(u)

“Control” as used in Sections 1.1(c) and 2.3: (i) when applied to the relationship between a Person and a corporation, means the right by that Person to the exercise of, directly or indirectly, more than 50% of the voting rights attributable to the shares of the corporation; (ii) when applied to the relationship between a Person and a partnership, means either the beneficial ownership by that Person at the relevant time of more than 50% of the ownership interests of the partnership in circumstances where it can reasonably be expected that such Person directs the affairs of the partnership or that such Person otherwise directs the affairs of the partnership as a result of being, or having the right to exercise, directly or indirectly, more than 50% of the voting rights attributable to the shares of, the general partner or managing partner of the partnership; and (iii) when applied to the relation between a Person and a trust, means that Person that can reasonably be

		expected to direct the affairs of such trust. Without limiting the foregoing, the Province of British Columbia is deemed to Control a corporation: (i) that is, under an Act, an agent of the government, (ii) of which the government owns, directly or indirectly, more than 50% of the issued voting shares, or (iii) when a majority of the members of the corporation or of its board of directors or board of management consists of either or both of the following: (A) persons appointed as members by the Lieutenant Governor in Council, by a minister or by an Act; or (B) public officers acting as public officers.
	(v)	“Co-Owner” means a Person that has a Participation Interest.

(w)

“Costs” means all items of outlay and expense whatsoever, direct or indirect, with respect to Operations, including, without limitation:

(i)

Sustaining Capital Expenditures;

(ii)

Non-Sustaining Capital Expenditures, including, without limitation, the costs of completing any Upgrades;

(iii)

costs incurred by the Operator (as Operator but not as Co-Owner) in carrying out its obligations under this Agreement, including, without limitation, the costs charged by the Manager pursuant to the Management Agreement in performing its obligations thereunder as they relate solely to the Xxxxxx Assets, out of pocket costs, labour charges including benefits for its employees directly engaged in Operations and a reasonable allocation of overhead (excluding head office overhead), and any costs incurred by the Operator in accordance with Section 9.5, all as determined and allocated in the manner set forth in the Accounting Procedure;

(iv)

reimbursement of any Co-Owner for costs it incurs (in its capacity other than as Operator) in completing tasks assigned to it with the unanimous approval of the Operating Committee; and

(v)

other items of outlay and expense expressly identified as Costs under this Agreement,

but for certainty, excluding all items of outlay and expense whatsoever, direct or indirect, incurred by the Operator in connection with, or arising from, any assets of either Co-Owner that are not Xxxxxx Assets, including, without limitation, the Excluded Assets; and excluding property taxes and Water Rental Fees.

(x)

“Cover Payment” has the meaning set forth in Section 10.7(a).

(y)

“CPA” means the First Amended and Restated 2005 Canal Plant Agreement dated for reference February 15, 2010 between BC Hydro, FortisBC, Teck, Brilliant Power Corporation, Brilliant Expansion Power Corporation and Xxxxxx Expansion Power Corporation, as may be further amended, modified or restated from time to time.

(z)

“CPA Scheduling Agreement” means the Teck Cominco CPA Scheduling Agreement made as of the 1st day of July, 2005 between Teck and BC Hydro, as may be amended, modified or restated from time to time.

(aa)

“CPA Subagreement” means the Amended and Restated CPA Subagreement dated for reference February 15, 2010 between FortisBC, Teck, Brilliant Power Corporation, Brilliant Expansion Power Corporation, and Xxxxxx Expansion Power Corporation, as may be amended, modified or restated from time to time.

(bb)

“Dam Safety Plan” means a plan, program or system (by whatever name it is identified and in whatever format it is prepared) that conforms to dam engineering and safety assessment practices as set out in Applicable Laws, including the Water Act and British Columbia Dam Safety Regulations, and requirements and expectations of the Water Comptroller including to the extent applicable the principles of the Canadian Dam Association’s Dam Safety Guidelines, as may be amended or replaced from time to time, including any existing or future requirement to prepare, and to file with regulatory authorities as and when required any operational or dam safety management details such as: (i) an operating, maintenance and surveillance manual (ii) an annual dam safety report, (iii) annual pro-forma reports and compliance forms, (iv) an annual instrumentation plan, (v) emergency response plans, and (vi) periodic third party dam safety reviews. Such plan or system shall be designed for assuring the safety and operational integrity of the Xxxxxx Plant throughout the range of operating conditions (including emergency conditions), to reduce or otherwise manage the risk of uncontrolled release of water associated with the Xxxxxx Plant.

(cc)

“Defaulting Party” has the meaning set forth in Section 24.1.

(dd)

“Dispute” has the meaning set forth in Section 29.1.

(ee)

“Early Termination Date” has the meaning set forth in Section 24.3.

(ff)

“Effective Date” means the date first written above.

(gg)

“Emerald Substation” means the 63 kV switching station at Xxxxxxxx, X.X.

(hh)

“Emergency Response Plan” means a plan, program or system (by whatever name it is identified and in whatever format it is prepared) that is designed to assist in responding to emergency incidents associated with the Xxxxxx Plant and Operations as they occur.

(ii)

“Entitlement Calculation Program” has the same meaning as set forth in Schedule A of the CPA.

	(jj)	“Entitlement Capacity” has the same meaning as set forth in the CPA.
	(kk)	“Entitlement Capacity Deficit” has the meaning set forth in Section 15.1(a).

(ll)

“Entitlement Energy” has the same meaning as set forth in the CPA.

(mm)

“Entitlement Energy Deficit” has the meaning set forth in Section 15.1(b).

(nn)

“Entitlement Parties” has the same meaning as set forth in the CPA.

(oo)

“Environment” includes the air (including all layers of the atmosphere), land, (including soil, sediment deposited on land, fill, and lands submerged under water), and water (including oceans, lakes, reservoirs, rivers, streams, groundwater and surface water).

(pp)

“Environmental Attributes” means all attributes of an environmental nature that are created or otherwise arise from energy generated by or attributable to the Xxxxxx Plant, including, but not limited to tags, certificates or similar products or rights that may be associated with the Xxxxxx Plant as a “green” or “renewable” electric generation resource, including all credits, allowances, offsets and similar rights issued, recognized, created or otherwise arising and associated with energy generated by or attributable to the Xxxxxx Plant which may be used to claim responsibility for, or ownership of, any avoidance or reduction of emissions or pollutants, and specifically including the right to claim the energy as Clean or Renewable Electricity.

(qq)

“Environmental Contaminants” means any substance or material, the storage, manufacture, disposal, treatment, generation, use, transport, remediation, or release of which into the Environment is prohibited, regulated, controlled, or licenced under any Environmental Laws or by any Governmental Authority pursuant to any Environmental Laws including, without limitation, any contaminant, pollutant, hazardous, corrosive or toxic substance, flammable material, explosive material, radioactive material, dangerous goods or substance, gas, microwaves, waste, urea formaldehyde, mercury, asbestos materials, hydrocarbon contaminant, deleterious substance, noxious substance, and compounds known as chlorobiphenyls, and hazardous waste, provided however for purposes of this definition, water shall be considered an Environmental Contaminant only to the extent that it contains, or is itself, a deleterious substance for purposes of Environmental Laws.

(rr)

“Environmental Laws” means at any given time all applicable international, federal, state, provincial, municipal, local and foreign statutes, codes, ordinances, decrees, rules, regulations and by-laws, and judicial, executive, arbitral, administrative, ministerial, departmental or regulatory judgments, decrees, decisions, rulings, awards, policies, requirements, standards, guidelines, permits, licences, authorizations, approvals, orders and requirements of any Governmental Authority and other laws (including common law), in each case having the force of law and in force and effect at that time in any way relating to (i) the protection of the Environment; (ii) plant species or wildlife (including, without limitation, birds, land-based and aquatic species, fish and fish habitat) including the health or

		preservation thereof; (iii) human health including occupational health and safety; or (iv) the transportation of dangerous goods.
	(ss)	“Environmental Management Plan” means a plan, program or system (by whatever name it is identified and in whatever format it is prepared) that is designed to remove or reduce the risk of environmental hazards and impacts associated with the Xxxxxx Plant and Operations (including impacts on fish and fish habitat) and which (i) identifies actual and potential environmental hazards and impacts; (ii) identifies the physical barriers and non-physical control measures in place and/or to be employed to address the environmental hazards and impacts; and (iii) identifies the risks associated with the hazards and impacts before and after barriers and control measures are in place.

(tt)

“Event of Default” has the meaning set forth in Section 24.1.

(uu)

“Exchange Accounts” has the same meaning as set forth in the CPA.

(vv)

“Excluded Assets” means the Excluded Assets identified in Schedule 1.1(cc) of the Asset Purchase Agreement and all tangible personal property of BC Hydro or Teck that is used periodically in connection with Operations but primarily for other purposes and is not in the ordinary course located at the Xxxxxx Plant.

	(ww)	“Excluded Xxxxxx Equipment” means, for the purposes of this Agreement including Sections 21.3(b) and 31.4, all electrical and ancillary equipment located on, under or in the Xxxxxx Substation and / or the Xxxxxx Substation yard providing for the transfer of electricity from the Xxxxxx Plant to any transmission assets interconnected with the Xxxxxx Substation, as such equipment may be upgraded or replaced from time to time, but excluding (i) the four generation feeder transmission lines running from the powerhouse up to and including their respective disconnects at the Xxxxxx Substation, together with any equipment required for the operation of each generation feeder transmission line and its associated revenue quality unit generation meter located on the generation side of each such disconnect at the Xxxxxx Substation (which are Xxxxxx Assets and do not form part of the Excluded Assets); and (ii) the equipment and assets comprising the Interconnection Facilities as such term is defined in the Xxxxxx 18 Line Agreement (May 1, 2007) between Teck and FortisBC (which do form part of the Excluded Assets).
	(xx)	“Existing Xxxxxx Upgrades” means those upgrades to the Units forming part of the Xxxxxx Plant that were completed from 1996 to 2007 and which resulted in the output from the Xxxxxx Plant being increased from 375MW to 493MW.
	(yy)	“Expiry Date” has the meaning set forth in Section 28.2(a).
	(zz)	“FERC License” has the same meaning as set forth in the Asset Purchase Agreement.

(aaa)

“Fiscal Year” means a calendar year, provided that the first Fiscal Year shall commence on the Effective Date and end on December 31, 2010.

(bbb)

“Force Majeure” means any event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance is not within the reasonable control of, or the result of the negligence of, that Party, and which, by the exercise of due diligence, that Party is unable to overcome or avoid or cause to be avoided.

(ccc)

“FortisBC” means FortisBC Inc.

(ddd)

“FortisBC Line 71 Rights” has the meaning set forth in Section 19.4(c).

(eee)

“Freshet” means the calendar months of May, June and July of each year.

(fff)

“GAAP” means accounting principles generally accepted in Canada for publicly accountable enterprises, from time to time.

(ggg)

“Good Utility Practice” means any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry in the Western Electricity Coordinating Council region during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be acceptable practices, methods or acts generally accepted in the Western Electricity Coordinating Council region.

(hhh)

“Governmental Authority” means any federal, provincial, state, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, having jurisdiction over the subject matter, and includes any department, commission, bureau, board, administrative agency or regulatory body of any of the foregoing, but for certainty, excludes BC Hydro.

(iii)	“Governmental Authorizations” means those permits, licenses, authorizations, approvals and orders forming part of the Xxxxxx Assets from time to time including, without limitation, as at the Effective Date those permits, licences authorizations, approvals and orders set forth in Schedule 1.1(gg) to the Asset Purchase Agreement.
(jjj)	“ICE Index” means for any given day:
	(i)	for On-Peak hours, the Mid-C Peak Index, being the volume-weighted “average” price for Mid-C day ahead transactions in On-Peak hours in that day (or days where the index covers more than one day), as published in the ICE (Intercontinental Exchange) Day Ahead Power Price Report; and

(ii)

for Off-Peak hours, the Mid-C Off-Peak Index, being the volume-weighted “average” price for Mid-C day ahead transactions in Off-Peak hours in that day (or days where the index covers more than one day), as published in the ICE (Intercontinental Exchange) Day Ahead Power Price Report,

		as the case may be, and as such index may be amended, updated or revised from time to time.
	(kkk)	“Independent Accountant” means the accountant appointed pursuant to Section 6.7(a)(iv).

(lll)

“Industrial Load” means the electricity requirements of the Industrial Operations, net of any self-generation.

(mmm)

“Industrial Operations” means Teck’s zinc refinery, lead smelter and associated industrial operations at Trail and Warfield, British Columbia, including the oxygen plant and other third party-owned facilities integrated into those industrial operations.

(nnn)

“Insolvency Proceeding” means any:

	(i)	action or proceeding for the winding up or dissolution of either Party, including, without limitation, the appointment or application for appointment of any liquidator or Person with similar powers for such purposes;
	(ii)	action or proceeding in respect of either Party (including, without limitation, the making of a general assignment for the benefit of creditors, the filing of a proposal or plan of arrangement or an application for appointment of any Receiver) under any bankruptcy or insolvency legislation or any other legislation providing for a moratorium or restructuring of debts and other liabilities (including, without limitation, the Bankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada)); or
	(iii)	appointment (whether pursuant to any instrument or by court order) of a Receiver over all or substantially all of the assets of a Co-Owner or any part of a Co-Owner’s Participation Interest.

	(ooo)	“00.XX Delivery Limitations” has the meaning set forth in Section 19.6.
	(ppp)	“Kootenay Interconnection” has the meaning set forth in Schedule B to the CPA, or in any Replacement CPA, and any additional points of interconnection that BCTC designates as being included within the “Kootenay Interconnection” scheduling point.
	(qqq)	“Legal Obligations” means at any given time, obligations pursuant to, and the requirements of, Applicable Laws, Governmental Authorizations, and the Assumed

Contracts (as that term is defined in the Asset Purchase Agreement) and any other agreements, contracts or commitments forming part of the Xxxxxx Assets at that time.

(rrr)

“Liabilities” means claims, actions, causes of action, suits, proceedings, assessments, losses, damages, liabilities, debts, costs and expenses (including, without limitation, interest, penalties and reasonable legal fees on a solicitor and his own client basis) of every nature and kind.

(sss)

“Lien” means, whether or not registered or registrable or recorded or recordable and regardless of how created or arising, any:

(i)

mortgage, security interest, pledge, lien, hypothec, assignment by way of security, lease, conditional sale or title retention agreement (including, without limitation, any capital lease), or security created under the Bank Act (Canada), that secures performance of any obligation or payment to any Person, including Taxes;

(ii)

encumbrance, charge or interest in property or assets, howsoever created or arising, whether absolute or contingent, fixed or floating, legal or equitable, perfected or otherwise, that secures performance of any obligation or payment to any Person, including Taxes; and

(iii)

agreement to create, or right capable of becoming, any of the foregoing.

(ttt)

“Line 71” means the 230 kV transmission line running from the Xxxxxx Substation to the Nelway substation and to the BC/US Boundary where it interconnects with the transmission system of Bonneville Power Administration, and includes any associated transformers, breakers and ancillary equipment and upgrades or replacements thereto owned by Teck from time to time.

(uuu)	“Line 71 Agreement” means the agreement dated April 15, 2002 between Teck and BC Hydro, as amended by the Line 71 Amending Agreement dated for reference December 6, 2002 (in each case as may be assigned by BC Hydro to BCTC), which describes the rights and obligations between the parties thereto relating to Teck’s power exports to and imports from the United States of America, as may be further amended, modified, or restated from time to time.
(vvv)	“Line 71 Assets” means:
	(i)	Line 71;
	(ii)	the Line 71 Substation Equipment; and
	(iii)	any real property and real property rights (including rights of way) owned or held by Teck associated with any of the foregoing, but for certainty, excluding any real property and real property rights that are Waneta Assets.

(www)

“Line 71 Scheduling Rights” means the rights available to Teck under the Line 71 Agreement to schedule the export of power from British Columbia to the United States of America.

(xxx)

“Line 71 Substation Equipment” means all electrical and ancillary equipment located on, under or in the Xxxxxx Substation and / or the Xxxxxx Substation yard required for the transfer of electricity from the Xxxxxx Plant to Line 71, as such equipment may be upgraded or replaced from time to time, but excluding the four generation feeder transmission lines running from the powerhouse up to and including their respective disconnects at the Xxxxxx Substation, together with any equipment required for the operation of each generation feeder transmission line and its associated revenue quality unit generation meter located on the generation side of each such disconnect at the Xxxxxx Substation (which are Xxxxxx Assets and do not form part of the Line 71 Substation Equipment).

(yyy)

“Manager” means the Person appointed under Section 8.

(zzz)

“Management Agreement” means the Waneta Management Agreement made the 1^st day of May, 1996 between Cominco Ltd. (now Teck) and West Kootenay Power Ltd. (now FortisBC), as amended by the Waneta Management Amending Agreement dated January 1, 1998, the Waneta Management Amending Agreement No. 2 dated July 18, 2003 and the Xxxxxx Management Amending Agreement No. 3 dated as of January 21, 2010, as may be further amended, modified or restated from time to time, or any replacement agreement pursuant to which the Operator engages the services of the Manager, regardless of whether FortisBC is a party thereto or not.

(aaaa)	“Minimum Take” has the same meaning as set forth in the CPA.
(bbbb)	“Monthly Invoice” has the meaning set forth in Section 10.3.
(cccc)	“Nelway Arrangements” means:
	(i)	the Nelway Agreement between Teck Cominco Metals Ltd. (now Teck) and BC Hydro dated December 6, 2002;
	(ii)	the right of way granted by BC Hydro to Teck registered in the Kamloops Land Title Office under no’s LB350362, LB350363, LB357643 and LB357644; and
	(iii)	the interconnection agreement dated April 5, 2004 between Teck and BCTC.
(dddd)	“NERC Holiday” means any day designated as a holiday by the North American Electric Reliability Council or any successor organization or other applicable regional reliability organization.
(eeee)	“Non-Defaulting Party” means the Co-Owner that is not the Defaulting Party.

(ffff)

“Non-Routine Compliance Audit” has the meaning set forth in Section 7.11.

(gggg)

“Non-Selling Co-Owner” has the meaning set forth in Section 25.3(a).

(hhhh)

“Non-Sustaining Capital Budget” means an estimate of all Non-Sustaining Capital Expenditures to be incurred by the Co-Owners for the next ensuing ten Fiscal Years or longer period, pursuant to (i) approved capital projects and plans, (ii) capital projects and plans for which approval is sought, and (iii) capital projects and plans under consideration but for which approval is not yet sought, in each case relating to non-sustaining capital items, including a detailed description and estimates of Non-Sustaining Capital Expenditures by month for the Budgetary Period, together with supporting documentation for each project or plan for which approval is sought, which shall include project scope documents and capital project approval process documentation (presently known as ‘capital project stage gating process’) for the Budgetary Period and future Fiscal Years for which it is available.

(iiii)

“Non-Sustaining Capital Expenditures” means all capital expenditures made or to be made other than Sustaining Capital Expenditures.

(jjjj)	“Obligations” means, with respect to a Party, all obligations to be performed by such Party under this Agreement (whether as Co-Owner or Operator), the CPA (including any Replacement CPA), the Surplus Power Rights Agreement and the Security Documents, which for greater certainty shall include any obligation of such Party thereunder to pay money to the other Party, including, without limitation, any obligation of such Party to pay to the other Party:
	(i)	damages arising from any breach, disclaimer, termination or cancellation (including, without limitation, by any Person acting on behalf of such Party or on behalf of its creditors in any Insolvency Proceeding) of this Agreement, the CPA (including any Replacement CPA), the Surplus Power Rights Agreement and/or the Security Documents or any of the representations, warranties, covenants or obligations of such Party under them (whether or not specifically payable under any such agreement), including any liquidated or agreed damages provided for in any such agreement;
	(ii)	all costs incurred by the other Party in the enforcement of this Agreement, the CPA (including any Replacement CPA), the Surplus Power Rights Agreement and/or Security Documents (including, without limitation, all amounts expended by or on behalf of the other Party in performance of any of the Obligations following default thereof by such Party); and
	(iii)	interest on amounts payable by such Party to the other Party under or in respect of any of this Agreement, the CPA (including any Replacement CPA), the Surplus Power Rights Agreement and/or the Security Documents, from the due date to the date of payment, at the applicable rate

specified in the applicable agreement, or if no rate is specified at the rate specified in Section 10.6(b).

(kkkk)

“Off-Peak” means hours ending (“HE”) 0100 through HE 0600 and HE 2300 through HE 2400 PPT and all hours on Sundays and NERC Holidays.

(llll)

“Offered Participation Interest” has the meaning set forth in Section 25.3(a).

(mmmm)

“Offer” has the meaning set forth in Section 28.2.

(nnnn)

“Offeror” has the meaning set forth in Section 28.2.

(oooo)

“On-Peak” means hours ending (“HE”) 0700 through HE 2200 (16 hours per day) PPT, Monday through Saturday (6 days per week), excluding NERC Holidays.

(pppp)

“Operating and Management Plan” means the Dam Safety Plan, Emergency Response Plan, Environmental Management Plan, Public Safety Plan and Worker Safety Plan.

	(qqqq)	“Operating Budget” means a detailed estimate of Costs (other than Sustaining Capital Expenditures and Non-Sustaining Capital Expenditures) to be incurred by the Co-Owners by month during the Budgetary Period in connection with owning, operating, managing and maintaining the Xxxxxx Assets in accordance with the Operating and Management Plan, and an estimate of annual operating expenditures for at least the next succeeding four Fiscal Years (the Co-Owners recognizing that the estimates will be less detailed and accurate in the later Fiscal Years), in each case together with reasonable supporting documentation with respect to each category of Costs.
	(rrrr)	“Operating Committee” means the committee established under Section 6 to oversee the Operator and to make certain fundamental decisions regarding Operations.
	(ssss)	“Operating Month” has the meaning set forth in Section 10.4.
	(tttt)	“Operating Standard” has the meaning set forth in Section 7.1.
	(uuuu)	“Operations” means all activities carried out from and after the Effective Date in respect of the ownership, management, operation and maintenance of the Xxxxxx Assets including, without limitation, capital work and operation and maintenance of the Xxxxxx Plant.
	(vvvv)	“Operations Account” has the meaning set forth in the Accounting Procedure.
	(wwww)	“Operator” means the Person appointed as operator under Section 7, or any successor Operator.

(xxxx)

“Party” means a party to this Agreement, its successors and permitted assigns.

(yyyy)

“Participation Interest” means, in respect of either Co-Owner, that Co-Owner’s undivided interest in the Xxxxxx Assets, and all rights and obligations arising under this Agreement, as such interest may from time to time be adjusted hereunder.

(zzzz)	“Participation Percentage” means, in respect of a Co-Owner, that Co-Owner’s Participation Interest relative to the Co-Owners’ aggregate Participation Interests expressed as a percentage. Participation Percentages shall be calculated to four decimal places and rounded to three (e.g., 33.3333% rounded to 33.333%). Decimals with the number “6” or more appearing in the fourth decimal place are rounded up, decimals with the number “4” or less appearing in the fourth decimal place are rounded down, and decimals with the number “5” appearing in the fourth decimal place are rounded up or down to the nearest even number (or zero) in the third decimal place. The initial Participation Percentages of the Co-Owners are set forth in Section 5.2. For certainty, the Participation Percentages of the Co-Owners shall always add up to 100%.
(aaaaa)	“PASDA” means the Power Asset Sale and Development Agreement made the 18th day of May, 1994 between Her Majesty the Queen in right of the Province of British Columbia as represented by the Minister of Employment and Investment, and Cominco Ltd., as amended by the Power Asset Amendment Agreement (Brilliant) between Cominco Ltd. and Columbia Power Corporation dated May 22, 1996, and as may be amended, modified or restated from time to time.
(bbbbb)	“Permitted Encumbrances” means
	(i)	inchoate, unregistered Liens for Taxes which are not delinquent;
	(ii)	other Liens for Taxes, provided and for so long as the validity of the liability for such Taxes is being contested at the time in good faith by proper legal proceedings and provided further that adequate provision has been made for their payment;
	(iii)	inchoate or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, material men, carriers and others in respect of the construction, maintenance, repair or operation of the Xxxxxx Assets, provided adequate holdbacks are being maintained as required by Applicable Laws;
	(iv)	Liens granted by a Co-Owner in favour of a Person, provided that such Person has agreed in writing with and in favour of the other Co-Owner (such agreement to be in form and substance to the satisfaction of the other Co-Owner acting reasonably), that such Liens rank subordinate in all respects to the interests of the other Co-Owner (including, without limitation, the interest of such other Co-Owner under the Security Documents held by such other Co-Owner and any interest acquired by such

other Co-Owner pursuant to Section 10.7(c)) and are subject to the terms of this Agreement, that enforcement of its Liens shall be in accordance with, and subject to the terms of, this Agreement and for greater certainty, such Person shall be bound by the obligations of such granting Co-Owner under Section 25 with respect to any Transfer arising from such enforcement; and

(v)

Purchase Money Liens.

(ccccc)

“Person” means an individual, legal personal representative, corporation, body corporate, firm, partnership, trust, trustee, syndicate, joint venture, unincorporated organization, association or Governmental Authority.

(ddddd)

“PPT” means the prevailing time in the Pacific time zone.

(eeeee)	“Preceding Year” means, with respect to the 2010 calendar year or any subsequent Fiscal Year, the calendar year immediately prior thereto.
(fffff)	“Prime Rate” means, on any date, the annual rate of interest publicly announced from time to time by The Royal Bank of Canada at its principal office in Vancouver, BC as its reference rate for determining floating rates of interest for loans made by it in Canadian Dollars to Canadian borrowers and as to which from time to time a certificate of an officer of The Royal Bank of Canada shall be conclusive evidence.
(ggggg)	“Projected Deficiency” has the meaning set forth in Section 24.4(a)(i).
(hhhhh)	“Projected Net Operating Proceeds” has the meaning set forth in Section 24.4(a)(i).
(iiiii)	“Public Safety Plan” means a plan, program or system (by whatever name it is identified and in whatever format it is prepared) that is designed to remove or reduce the risk of public injury or death at, or associated with the Xxxxxx Assets and Operations, and which (i) identifies public safety hazards related to public access to the Xxxxxx Assets and its infrastructure, the headpond and the immediately affected river downstream as well as related banks and slopes; (ii) identifies public activities in the area affected by the Xxxxxx Assets and Operations; and (iii) identifies safety control measures to be employed to protect the public.
(jjjjj)	“Purchase Money Lien” means any Lien (including, for greater certainty, any capital lease and any refinancing of such Lien which does not increase the principal amount secured or extend the charge of such Lien to other property) on property comprising Xxxxxx Assets which:
	(i)	secures payment of the unpaid purchase price of such property (together with interest thereon and associated costs);

(ii)

does not charge any other Xxxxxx Assets;

(iii)

arises after the Effective Date in accordance with this Agreement;

(iv)

charges the Participation Interest of each Co-Owner in such property and has been consented to by each such Co-Owner; and

(v)

the holder thereof has provided to the Co-Owners any consent or agreement required or contemplated by this Agreement in connection with the charging of such property by the Security Documents.

(kkkkk)

“Receiver” means a receiver, receiver and manager, receiver-manager, custodian, trustee in bankruptcy, liquidator, monitor, court or any Person with like powers.

	(lllll)	“Recipient” has the meaning set forth in Section 28.2.
	(mmmmm)	“Replacement Contract” has the meaning set forth in Section 23.5(b).
	(nnnnn)	“Replacement CPA” means any agreement that replaces the CPA as between Teck and BC Hydro, or among Teck, BC Hydro and others, including, without limitation, any agreement entered into pursuant to Section 17.1(a), and any replacement agreement contemplated by Section 17.1(f) that replaces such agreement, in each case, as may be amended, modified or restated from time to time.
	(ooooo)	“Replacement Price” has the meaning set forth in Section 23.2(d).
	(ppppp)	“Reply Notice” has the meaning set forth in Section 25.3(d).
	(qqqqq)	“Reviewing Party” has the meaning set forth in Section 7.11.
	(rrrrr)	“ROFO Closing Date” has the meaning set forth in Section 25.3(e).
	(sssss)	“Routine Compliance Audit” has the meaning set forth in Section 7.11.
	(ttttt)	“Sale Circumstances” has the meaning set forth in Section 24.4.
	(uuuuu)	“Sale Notice” has the meaning set forth in Section 25.3(b).
	(vvvvv)	“Season” has the same meaning as set forth in the CPA.
	(wwwww)	“Security Documents” means the BC Hydro Security Documents or the Teck Security Documents, as the context may require.
	(xxxxx)	“Segregated Bank Account” has the meaning set forth in Section 10.4.
	(yyyyy)	“Segregated Insurance Account” has the meaning set forth in Section 27.9.
	(zzzzz)	“Seller’s Offer” has the meaning set forth in Section 25.3(a).

(aaaaaa)

“Selling Co-Owner” has the meaning set forth in Section 25.3(a).

(bbbbbb)

“Settlement Amount” has the meaning set forth in Section 24.3(b).

(cccccc)

“Shotgun Closing Date” has the meaning set forth in Section 28.2(d).

(dddddd)

“Standstill Period” has the meaning set forth in Section 24.4.

(eeeeee)

“Surplus Power Rights Agreement” means the Surplus Power Rights Agreement dated the date hereof between BC Hydro and Teck, as may be amended, modified or restated from time to time.

	(ffffff)	“Sustaining Capital Budget” means an estimate of all Sustaining Capital Expenditures to be incurred by the Co-Owners for the next ensuing 5 Fiscal Years or longer period, pursuant to (i) approved capital projects and plans, (ii) capital projects and plans for which approval is sought, and (iii) capital projects and plans under consideration but for which approval is not yet sought, in each case relating to sustaining capital items, including a detailed description and estimates of Sustaining Capital Expenditures by month for the Budgetary Period, together with supporting documentation for each project or plan for which approval is sought, which shall include project scope documents and capital project approval process documentation (presently known as ‘capital project stage gating process’) for the Budgetary Period and future Fiscal Years for which it is available.
	(gggggg)	“Sustaining Capital Expenditures” means capital expenditures made or to be made with a view to maintaining and sustaining the existing output and reliability of the Xxxxxx Assets (or increasing the existing output or reliability of the Xxxxxx Assets where such increase is incidental to non-discretionary replacement of existing equipment).
	(hhhhhh)	“Tax” and “Taxes” means any or all Canadian federal, provincial, local or foreign (i.e., non-Canadian) income, gross receipts, real property gains, goods and services, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add on minimum, or other taxes, levies, governmental charges or assessments of any kind whatsoever.
	(iiiiii)	“Teck Security Documents” means the security documents delivered by Teck to BC Hydro pursuant to Section 7.2(i) of the Asset Purchase Agreement and any additional documents that may be delivered from time to time by Teck pursuant thereto or pursuant to Section 26 and all other security held by BC Hydro from time to time for any of Teck’s Obligations.
	(jjjjjj)	“Teck’s Entitlement Capacity” means the Entitlement Capacity under the CPA attributable to Teck’s Participation Percentage of the Waneta Plant.

(kkkkkk)

“Teck’s Entitlement Energy” means the Entitlement Energy under the CPA attributable to Teck’s Participation Percentage of the Waneta Plant.

(llllll)

“Teck’s Share of Actual Generation” has the meaning set forth in Section 13.1(b).

(mmmmmm)

“Teck Transmission Rights” means, all of the transmission-related rights and benefits of Teck, including, without limitation, all rights and benefits of Teck to Line 71 and under or pursuant to the Line 71 Agreement necessary to satisfy its obligations under Sections 19 and 20.

(nnnnnn)	“Terminated Transactions” has the meaning set forth in Section 24.3(b).
(oooooo)	“Termination Date” has the meaning set forth in Section 25.3(g).
(pppppp)	“Termination Payment” has the meaning set forth in Section 24.3(b).
(qqqqqq)	“Third Party Referee” has the meaning set forth in Section 6.7(b).
(rrrrrr)	“Transfer” means any sale, exchange, transfer, assignment, gift, alienation, transmission or a transaction, whether voluntary, involuntary or by operation of law by which any or all of the legal or beneficial right, title and interest in the Participation Interest of a Co-Owner (or in the case of Section 21.3(c), the Line 71 Assets) passes from one Person to another, whether or not for value, and “Transfer”, “Transferred”, “Transferor” and “Transferee” and similar expressions have corresponding meanings, and for certainty “Transfer” specifically excludes any Lien constituting a Permitted Encumbrance contemplated by Section 1.1(bbbbb)(iv) or Section 1.1(bbbbb)(v), but shall include any transfer, assignment, alienation or other disposition of any right, title or interest arising pursuant to the enforcement of such Lien (including, for greater certainty, any such transfer arising from order absolute of foreclosure or any other legal process).
(ssssss)	“Unit” means machinery and equipment making up a complete and independent hydro-electric generator including water passages, turbine, exciter, generator and generator output transformer and replacements thereof.
(tttttt)	“Unit 3 Life Extension Upgrade” means the unit 3 life extension and turbine replacement projects currently identified in the “Capital Projects – Draft” budget under Planning No. X070106 and described as P6 U3 Unit Life Extension and P6 U3 Turbine Replacement therein, but for certainty does not include any material increase to the scope of such projects from that as so described.
(uuuuuu)	“Upgrade” means:
	(i)	that portion of any action and/or capital expenditure undertaken with the intent to increase the Entitlement Capacity and/or Entitlement Energy (in each case attributable to 100% of the Xxxxxx Plant as determined by the

Entitlement Calculation Program) by at least 3 MW and/or 10 GWh/year (as unanimously determined by the Operating Committee);

(ii)

any other action and/or capital expenditure that the Operating Committee has unanimously approved and designated as an Upgrade for the purposes of this Agreement; and/or

(iii)

the Unit 3 Life Extension Upgrade.

	(vvvvvv)	“Value” has the meaning set forth in Section 28.2.
	(wwwwww)	“Xxxxxx Assets” means collectively, the Xxxxxx Plant and those properties, assets, equipment, parts, permits, licences, authorizations or agreements of every nature and kind, real, personal or mixed, and whether tangible or intangible that are owned by the Co-Owners or in which the Co-Owners have an interest and that are used from time to time in connection with the operation and maintenance of the Xxxxxx Plant including, without limitation, as of the Effective Date the “Xxxxxx Assets” (as that term is defined in the Asset Purchase Agreement), and any successor or substitute assets therefor, in each case other than to the extent that any of them comprise part of the Excluded Assets.
	(xxxxxx)	“Xxxxxx Expansion” or “WAX” means the hydro-electric facilities to be constructed near the Waneta Plant using the hydraulic head created by the Xxxxxx dam, including upgrades thereto from time to time, as contemplated by PASDA.
	(yyyyyy)	“Waneta Plant” means the Xxxxxx dam located on the Pend d’Oreille River and its generating station, and any Upgrades thereto, the Waneta Substation, transmission infrastructure and equipment between the Xxxxxx dam and the Xxxxxx Substation, all related tangible assets and equipment owned by the Co-Owners or in which the Co-Owners have an interest and that are used by the Co-Owners in connection with the operation and maintenance of those assets from time to time, and any successor or substitute assets therefor, excluding the Excluded Assets.
	(zzzzzz)	“Waneta Release Coordination Agreement” means the Waneta Release Coordination Agreement made the 30th day of June, 2004 between Teck Cominco Metals Ltd. and Xxxxxx Expansion Power Corporation, as may be amended, modified or restated from time to time.
	(aaaaaaa)	“Waneta Reserve” means the water reserve on the unrecorded waters of the Pend d’Oreille River at Waneta, granted by Order in Council 608 approved May 2, 1991, as amended by Order in Council 0772 approved July 24, 2003, and as may be further amended, supplemented or replaced from time to time.
	(bbbbbbb)	“Xxxxxx Substation” means the substation located on the Real Properties (as that term is defined in the Asset Purchase Agreement) connecting the Xxxxxx Plant’s generators to, among other things, Line 71 and transmission lines running to Emerald Substation.

(ccccccc)

“Water Comptroller” means the Comptroller of Water Rights appointed under the Water Act.

(ddddddd)

“Water Rental Fees” means the fees payable from time to time under the Water Act and regulations thereunder, including in respect of generating capacity, generation and permits to use crown lands.

(eeeeeee)

“WAX Deferral Capacity” means the decrement of Entitlement Capacity attributable to 100% of the Xxxxxx Plant that would occur upon WAX commencing service. The Co-Owners have as at the Effective Date, for the purposes of this Agreement, assumed that the decrement of Entitlement Capacity attributable to 100% of the Waneta Plant that would result from WAX commencing service and which would be available to increase Teck’s Entitlement Capacity in each month from and after April 1, 2014 if the WAX In-Service Date was deferred past April 1, 2014, is as follows:

Month	Units	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul
Capacity	MW	14.3	7.3	7.7	7.4	7.7	7.4	7.9	7.7	7.8	3.5	22.6	41.6

(fffffff)

“WAX Deferral Energy” means the decrement of Entitlement Energy attributable to 100% of the Xxxxxx Plant that would occur upon WAX commencing service. The Co-Owners have as at the Effective Date, for the purposes of this Agreement, assumed that the decrement of Entitlement Energy attributable to 100% of the Waneta Plant that would result from WAX commencing service and which would be available to increase Teck’s Entitlement Energy in each month from and after April 1, 2014 if the WAX In-Service Date was deferred past April 1, 2014, is as follows:

Month	Units	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul
Energy	MW.h	337	-828	9,276	-695	11,815	1,843	3,290	11,494	38,986	19,455	13,805	33,569

(ggggggg)

“WAX In-Service Date” means the date on which a re-determination of Teck’s Entitlement Energy and Teck’s Entitlement Capacity under the CPA becomes effective as a result of WAX entering into service.

(hhhhhhh)

“Worker Safety Plan” means a plan, program or system (by whatever name it is identified and in whatever format it is prepared) that is designed to remove or reduce the risk of injury or death to workers at, or associated with, the Xxxxxx

Assets and Operations and which identifies and mitigates known dangers and hazards associated with the Xxxxxx Assets and prescribes control measures that are employed to protect workers, and includes the allocation of “owner” and other safety responsibilities as between the Operator and the Manager.

	(iiiiiii)	“1996 Exemption Order” means the exemption order dated March 29, 1996 and made pursuant to then section 27 (now section 22) of the Utilities Commission Act, which exempts Teck from most of the provisions of Part 3 of the Utilities Commission Act.
1.2.	Interpretation
	(a)	In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa, words importing gender include all genders, “or” is not exclusive, “including” is not limiting, whether or not non-limiting language (such as “without limitation”) is used with reference thereto, a grammatical variation of a defined term shall have a corresponding meaning, and reference to any Person includes such Person’s successors and assigns but, if applicable, only if the succession by such successor or assignment to such assignee is not prohibited hereby.
	(b)	In this Agreement, in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
	(c)	The inclusion of headings in this Agreement is for convenience only and shall not affect the construction or interpretation of this Agreement.
	(d)	Any reference in this Agreement to a designated Section, subsection, paragraph, Table or other subdivision or to a Schedule or Appendix is to the designated Section, subsection, paragraph, Table or other subdivision of, or Schedule or Appendix to, this Agreement, unless the context otherwise requires.
	(e)	Except where otherwise expressly provided, the words “herein”, “hereof”, “hereby” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, subsection, paragraph or other subdivision, Schedule or Appendix.
	(f)	Except where otherwise expressly provided, any reference in this Agreement to a statute includes and is a reference to such statute and to the regulations made pursuant to it, with all amendments to them and in force from time to time, and to any statute or regulations that may be passed which supplement or supersede such statute and such regulations.
	(g)	Except where otherwise expressly provided, all monetary amounts referred to in this Agreement are stated and shall be paid in Canadian currency.
	(h)	Except where otherwise expressly provided, any accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP applied on a basis consistent with that of prior periods.

(i)

The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party.

	(i)	The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party.
	(j)	Attached hereto and forming part of this Agreement are the following Schedules and Appendices:

Schedule A	–	Accounting Procedure
Schedule B	–	Powers of Attorney
Appendix 1	–	Water Rental Fee Payment and Adjustment Calculations

2.	REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS

2.1.	Representations and Warranties

Each of the initial Co-Owners represents and warrants to the other as of the Effective Date as follows:

(a)

that it has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all other actions required to authorize it to enter into and perform this Agreement have been properly taken;

(b)

that the execution, delivery and performance by it of this Agreement does not (and would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or a violation of, or conflict with, or allow any other Person to exercise any rights existing as at the Effective Date under, any of the terms or provisions of its constating documents or by-laws or any contracts or instruments to which it is a party or pursuant to which any of its assets or property may be affected (subject to obtaining any requisite consents or approvals) or any judgment, order, writ, injunction or, to the best of its knowledge, any decree of any Governmental Authority having jurisdiction over it (subject to obtaining any requisite consents or approvals), that would have a material adverse affect on the Xxxxxx Assets;

(c)

that this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms;

(d)

that no consent or approval of any third party or Governmental Authority is required for the execution, delivery or performance by it of this Agreement, other than as contemplated in the Asset Purchase Agreement; and

(e)

that it is the legal and beneficial owner of its Participation Interest free and clear of all Liens and adverse claims, except Permitted Encumbrances (provided that in the case of BC Hydro only, Teck has pursuant to the terms of the Asset Purchase Agreement, transferred to BC Hydro, BC Hydro’s Participation Interest free and clear of all Liens and adverse claims, except Permitted Encumbrances).

2.2.	Covenants
	Each of the Co-Owners shall:
	(a)	from time to time give prompt notice to the other of any notice of default, lawsuit, proceeding, action or damages of which it becomes aware and which might affect the Xxxxxx Assets, whether directly or indirectly;

(b)

not, without the prior written consent of the other Co-Owner, create, assume or permit to exist any Lien or other encumbrance on any part of its Participation Interest, other than Permitted Encumbrances and those other encumbrances identified or contemplated by Schedule 1.1(uu) of the Asset Purchase Agreement;

(c)

perform all of its obligations under and in accordance with the Security Documents granted by it; and

(d)

in the case of Teck:

(i)

not amend or agree to amend any of the operating procedures under the CPA or any Replacement CPA if such amendment would have, directly or indirectly, an adverse affect on BC Hydro’s Participation Interest;

(ii)

not amend or agree to amend the CPA Subagreement or the Line 71 Agreement, if such amendment would have, directly or indirectly, an adverse affect on BC Hydro’s Participation Interest; and

(iii)

not create, assume or permit to exist any Lien on any part of any property charged or intended to be charged by any of the Teck Security Documents, other than Permitted Encumbrances;

in each case, without the prior written consent of BC Hydro.

2.3.	Title to Xxxxxx Assets

Title to the Xxxxxx Assets shall be held:

	(a)	in the names of each of the Co-Owners in proportion to their respective Participation Percentages, as adjusted from time to time, provided that if at any time and from time to time title to the Xxxxxx Assets is not so held, the Co-Owner holding title in excess of its Participation Percentage, shall hold title to such excess portion, in trust, as trustee for the other Co-Owner and each Co-Owner shall upon the request of the other Co-Owner:
		(i)	execute and acknowledge instruments necessary to evidence the transfer of title in respect of such excess portion to the requesting Co-Owner in such form as is satisfactory to the requesting Co-Owner acting reasonably;

	(ii)	make, or cause to be made, all such filings and submissions under all Applicable Laws, as may be required for the transfer of title in respect of such excess portion; and
	(iii)	use its commercially reasonable efforts to obtain, or cause to be obtained, and secure all consents necessary or advisable to be obtained by it for the transfer of title in respect of such excess portion; and/or

(b)

with the prior agreement of the Co-Owners, in the name of the Operator in trust for the Co-Owners in proportion to their respective Participation Percentages as adjusted from time to time, in which case, the Operator shall only make use of any Xxxxxx Assets so held in accordance with this Agreement.

Each Co-Owner shall have the right to receive, forthwith upon making demand therefor, from the Operator such documents as it may reasonably require to confirm its Participation Interest.

Teck hereby represents and warrants that as of the Effective Date, TCAI Incorporated, an indirectly wholly-owned subsidiary of Teck, holds the FERC License in trust as trustee for the benefit of Xxxxxx Holdings (US) Inc. and Teck, in proportion to the respective Participation Percentages of BC Hydro and Teck, pursuant to a separate trust agreement of even date herewith. Teck shall by way of a separate guarantee, guarantee the obligations of TCAI Incorporated under the trust agreement to maintain the FERC License in good standing free and clear of Liens other than Permitted Encumbrances and not to transfer the FERC License in whole or in part except with the consent of BC Hydro or in accordance with the provisions of this Agreement and BC Hydro shall by way of a separate guarantee, guarantee the financial obligations of Xxxxxx Holdings (US) Inc. under the trust agreement. Teck shall, upon the request by BC Hydro, cause TCAI Incorporated to use commercially reasonable efforts to transfer the FERC License to a newly formed corporation owned by Teck and BC Hydro or Affiliates thereof in the same proportions as their respective Participation Percentages. For so long as TCAI Incorporated holds the FERC License, Teck shall continue to Control TCAI Incorporated.

3.	PURPOSES AND TERM

3.1.

Purposes

While this Agreement is in force, the Co-Owners agree that this Agreement shall govern and define, and is being entered into for the purpose of governing and defining, their respective rights, proceeds, benefits, liabilities, interests, powers and obligations as co-owners of the Xxxxxx Assets and with respect to the ownership, management, operation, maintenance and periodic upgrade of the Xxxxxx Assets and the scope of the venture contemplated by this Agreement shall be so limited, but except as expressly prohibited hereby, nothing herein restricts a Co-Owner from entering into, or remaining party to, other arrangements in respect of its Participation Interest, including, without limitation, the Surplus Power Rights Agreement and, in respect of Teck, the CPA and CPA Subagreement.

3.2	Effective Date and Term

This Agreement shall commence on the Effective Date and shall continue in force and effect until the
earlier of:

(a)

the 900^th anniversary of the Effective Date;

(b)

the date on which only one Co-Owner holds a Participation Interest;

(c)

the date on which both Co-Owners acting together collectively dispose of all of their respective Participation Interests; or

(d)

the date this Agreement is terminated by written agreement of the Co-Owners or is otherwise terminated in accordance with this Agreement,

at which time this Agreement shall terminate. On termination of this Agreement, each Co-Owner shall remain liable for its obligations and liabilities incurred or accrued under this Agreement prior to the termination of this Agreement, whether arising before or after termination, including, without limitation, obligations and liabilities resulting from its breach or default under this Agreement prior to its termination and the other Co-Owner’s rights and remedies under this Agreement in respect of such obligations and liabilities shall continue and survive (all subject to those provisions of this Agreement which expressly survive termination of this Agreement). On termination of this Agreement, the Co-Owners shall make such payments to each other as to fairly and adequately adjust for any property taxes, Water Rental Fees or insurance premiums (for insurance maintained for the benefit of both Co-Owners) that have been paid or that may be payable in or in respect of the Fiscal Year in which the Agreement is terminated or any insurance proceeds (for insurance maintained for the benefit of both Co-Owners) in respect of an insurable event occurring prior to the date of termination.

4.	RELATIONSHIP OF THE CO-OWNERS

4.1.	No Partnership

Nothing in this Agreement nor any acts of the Co-Owners pursuant to this Agreement shall constitute or be interpreted to constitute the Co-Owners as partners, nor except as otherwise herein expressly provided, to constitute any Co-Owner the agent of the other Co-Owner. Each Co-Owner expressly disclaims any intention to create a partnership or to create any fiduciary relationship with each other (except to the extent that this Agreement expressly provides for a Co-Owner (in its capacity as Co-Owner or Operator) to act as a trustee of the other Co-Owner or the Co-Owners) and covenants with the other Co-Owner that it shall not at any time, allege or claim that such a partnership or fiduciary relationship was created. Except as expressly provided herein, nothing in this Agreement shall give a Co-Owner any power or authority to act or assume any obligation or responsibility for or on behalf of the other Co-Owner. Each Co-Owner expressly declares its intention to rely on:

	(a)	the provisions of Section 4 of the Partnership Act (British Columbia), as amended or re-enacted from time to time, to the effect, inter alia, that tenancy-in-common, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenant or owners do or do not share any profits made by the use thereof; and
	(b)	the statutory and common law that applies to tenants-in-common, save only to the extent that such statutory and common law is inconsistent with the terms of this Agreement.

4.2.	Limited Recourse and Several Liability

The Co-Owners acknowledge and agree as between themselves, that:

(a)

the rights, duties, obligations and liabilities of the Co-Owners shall be several and not joint or collective; and

(b)

each Co-Owner shall be responsible only for its obligations as herein set out and shall be liable only for its share of the Costs as provided herein, it being the express purpose and intention of the Co-Owners that their ownership of the Xxxxxx Assets and the rights acquired hereunder shall be as tenants-in-common.

The Co-Owners shall use all reasonable efforts to cause all documents, contracts, agreements, instruments and Governmental Authorizations hereafter entered into creating obligations of the Co-Owners to third parties in respect of the Xxxxxx Assets to contain provisions to the effect that each Co-Owner shall be bound thereby only to the extent of its proportionate Participation Percentage. The Co-Owners acknowledge and agree that notwithstanding the foregoing, there may be circumstances where the Co-Owners agree that, or where Applicable Laws require that, the rights, duties, obligations and liabilities of the Co-Owners are joint and not several, provided however that in each such case, the rights and responsibilities of the Co-Owners (as between themselves) as set forth in this Agreement including, without limitation, the rights of indemnification between the Co-Owners, shall continue unaffected by any such agreement or any such requirement under Applicable Laws.

4.3.	Other Business Opportunities

Except as expressly provided in this Agreement, each Co-Owner shall have the right independently to engage in and receive full benefits from business activities and opportunities, whether or not competitive with Operations, without consulting with, or any obligation to, the other. The doctrines of “corporate opportunity” or “business opportunity” shall not be applied to any other activity, venture, or operation of either Co-Owner. Notwithstanding the foregoing, each Co-Owner shall consult with the other Co-Owner and shall reasonably consider the interests (both short-term and long-term) of the other Co-Owner under this Agreement before taking any action that will materially and disproportionately affect either the Xxxxxx Assets or the other Co-Owner’s interest in the generation (either directly or through the CPA or a Replacement CPA) from the Xxxxxx

	Plant; provided that neither Co-Owner shall have any fiduciary or similar obligation to the other Co-Owner in connection therewith.
4.4.	Taxation / Accounting

Except as expressly provided in this Agreement, all Costs incurred hereunder shall be for the account of the Co-Owners in proportion to their respective Participation Percentages, and each Co-Owner on whose behalf any Costs have been so incurred shall be entitled to claim all Tax benefits, write-offs and deductions with respect thereto.

Notwithstanding the manner in which Costs are presented in any Budget, each Co-Owner shall be entitled for its own purposes to account for such Costs as an operating expense or capital expenditure in accordance with its own internal accounting procedures.

4.5.	Power of Attorney

(a)

Each Co-Owner hereby irrevocably makes, constitutes and appoints as its true and lawful attorney and agent the other Co-Owner with full power and authority to act in the Co-Owner’s place and stead to execute and deliver on behalf of and in the name of the Co-Owner all notices, instruments and other documents pursuant to Section 6.7 or 6.8 of Schedule A to the CPA in the circumstances contemplated by Section 14.7 of this Agreement (or any other provision of this Agreement which requires the Co-Owners to provide written notice pursuant to Section 6.7 or 6.8 of Schedule A of the CPA where a Co-Owner has failed to provide such notice on demand from the other Co-Owner or is otherwise a Defaulting Party), to effectively specify Teck’s Entitlement Capacity and Teck’s Entitlement Energy, as applicable, to change the “Capacity Entitlement Adjustments” factors or “Energy Entitlement Adjustments” factors set forth in Table 10 of the CPA, as applicable, or to change the procedure for determining the amount of “MW on Outage” to be used in determining from Table 10 of the CPA either the “Capacity Entitlement Adjustments” factors or “Energy Entitlement Adjustments” factors set forth in Table 10 of the CPA, as applicable.

(b)

Teck hereby irrevocably makes, constitutes and appoints as its true and lawful attorney and agent, BC Hydro with full power and authority to act in Teck’s, place and stead to provide schedules to BCTC pursuant to the Line 71 Agreement and appropriate instructions to FortisBC and BCTC and any other applicable Person in respect of all applicable interconnection agreements to which Teck is a party and to execute and deliver all notices, instruments and other documents and do all such other acts and things as BC Hydro determines in good faith to be reasonably necessary for the purpose of exercising its rights pursuant to Section 24.2(e).

(c)

Such appointments, being coupled with an interest, are irrevocable by the appointing Co-Owner, extend to and are binding upon the successors and permitted assigns of the Co-Owner and shall not be revoked by the insolvency or bankruptcy of the Co-Owner and the Co-Owner agrees to ratify and confirm all that the other Co-Owner may do or cause to be done pursuant to the foregoing.

		The Co-Owner hereby agrees to be bound by any act of the other Co-Owner and any successor thereto, while acting in good faith pursuant to the within powers of attorney, and the Co-Owner hereby waives any and all defences which may be available to it, to contest, negate or disaffirm the action of the other Co-Owner and any successor thereto taken in good faith in accordance with the terms of the within powers of attorney.
	(d)	To evidence the authority conferred on the other Co-Owner under this Section 4.5, each Co-Owner shall execute under seal a form of power of attorney substantially in the form as set out in Schedule B.

5.	INTERESTS OF CO-OWNERS

5.1.	Initial Contributions

(a)

As their respective initial contributions for the purposes of this Agreement:

(i)

BC Hydro hereby contributes:

all its undivided right, title and interest in and to the Xxxxxx Assets;

BC Hydro’s Share of Actual Generation and any Environmental Attributes associated therewith; and

its rights under the amendments made to the CPA as at the Effective Date that are necessary to achieve the allocation as between the Co-Owners of capacity, energy, Environmental Attributes and risks (including outage risk and risk of re-determinations under the CPA) attributable to the Xxxxxx Plant from time to time, all as provided for in this Agreement.

(ii)

Teck hereby contributes:

all its undivided right, title and interest in and to the Xxxxxx Assets;

Teck’s Share of Actual Generation and any Environmental Attributes associated therewith; and

(b)

Teck covenants to use its right, title and interest in and to the Teck Transmission Rights as required in order to fulfil its obligations under this Agreement.

5.2.

Initial Participation Percentages

The initial Participation Percentages of the Co-Owners shall be as follows:

BC Hydro

33.333%

Teck

66.667%.

5.3.	Share of Generation and CPA Adjustments Reflect Participation Percentages

BC Hydro and Teck each acknowledge and agree that:

(a)

the reduction in BC Hydro’s obligation to provide Entitlement Energy and Entitlement Capacity under the CPA until January 1, 2036 as provided in Table 4 (as amended from time to time) plus BC Hydro’s Share of Actual Generation from and after January 1, 2036, represent its share (in terms of Participation Percentage) by value of the capacity and energy forecast to be made available to the owners of the Xxxxxx Assets; and

(b)

Teck’s Entitlement Capacity and Teck’s Entitlement Energy until January 1, 2036 as forecast in Table 3 (as may be amended from time to time) plus entitlement received under the CPA or a Replacement CPA from Teck’s Share of Actual Generation from and after January 1, 2036, represent its share (in terms of Participation Percentage) by value of the capacity and energy forecast to be made available to the owners of the Xxxxxx Assets.

5.4.	Changes in Participation Percentages

The Participation Percentages of the Co-Owners shall be changed as follows:

(a)

as provided in Section 10.7(c); or

(b)

by Transfer by a Co-Owner of any or all of its Participation Interest in accordance with Section 25.

5.5.	Continuing Liabilities Upon Adjustments of Participation Interests

From and after the Effective Date, any reduction of a Co-Owner’s Participation Interest shall not relieve such Co-Owner of its share of any liability, whether it accrues before or after such reduction, arising out of Operations conducted prior thereto or as a result of its Participation Interest prior thereto (for greater certainty, excluding the reduction of indebtedness such Co-Owner may have to the other Co-Owner upon the dilution of such Co-Owner’s Participation Interest pursuant to Section 10.7(c)). For the purposes of the foregoing, such Co-Owner’s share of such liability shall be in proportion to its Participation Interest at the time such liability was incurred except as otherwise expressly contemplated by this Agreement. The increased Participation Interest accruing to a Co-Owner as a result of the reduction of the other Co-Owner’s Participation Interest shall be free of Liens or adverse claims arising by, through or under such other Co-Owner.

5.6	BC Hydro Operating Instructions
	For so long as the CPA or a Replacement CPA is in effect, BC Hydro’s operating instructions for its Participation Percentage of the Xxxxxx Plant shall be consistent with its operating instructions for Teck’s Participation Percentage of the Xxxxxx Plant pursuant to the CPA or the Replacement CPA.

6.	OPERATING COMMITTEE

6.1.	Organization and Composition of Operating Committee

As of the Effective Date, the Co-Owners have by notice to each other of their respective appointed members, established an Operating Committee to oversee the Operator and to make certain fundamental decisions regarding Operations. The Operating Committee shall consist of four members, two members to be appointed by each Co-Owner, or such other number as the Parties may mutually agree so long as each Co-Owner has equal representation. Each Co-Owner may appoint one or more alternates to act in the absence of a regular member. Any alternate so acting shall be deemed a member. Appointments shall be made or changed by notice to the other Co-Owner. Each Co-Owner shall be entitled to invite a member or members of its internal staff to attend any meeting of the Operating Committee where such person’s presence is required in the opinion of such Co-Owner, acting reasonably, to speak to specific matters appearing in the agenda for such meeting, but no such person shall be entitled to vote on any matter before the Operating Committee.

6.2.

Decisions

Each Co-Owner, acting through its appointed members shall have one vote on the Operating Committee which vote shall, except as provided in Sections 7.12, 24.2(c), 25.3(i) and 25.6, be equal to its Participation Percentage. Except as set out in Sections 6.7 and 6.8, all decisions of the Operating Committee shall be decided by a majority vote of the Participation Percentages such that, by way of example and for greater clarity, the vote of a Co-Owner holding a Participation Percentage greater than 50% is a majority vote which would be effective to make the decision of the Operating Committee.

6.3.

Meetings

The Operating Committee shall hold regular meetings at least quarterly, either by telephone conference, or in person at Vancouver and Trail on an alternating basis, or at other mutually agreed places. The Operator shall give 30 days’ notice to the Co-Owners of such regular meetings. Additionally, any Co-Owner may call a special meeting upon 5 Business Days’ notice to the other Co-Owner. In case of emergency, reasonable notice of a special meeting shall suffice. There shall be a quorum if notice was given as provided in this Section 6.3 and at least one member representing each Co-Owner is present (in person or by telephone conference), provided that:

(a)

if, within one-half hour from the time set for the holding of a meeting of the Operating Committee, a quorum is not present, the meeting stands adjourned to

		the same time and place (or where the meeting was to take place by telephone conference, the same time and conference line details), on the next following Business Day; and
	(b)	if, at the meeting to which the meeting referred to in Section 6.3(a) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the member or members of the Operating Committee present at such meeting shall constitute a quorum.

Each notice of a meeting shall include an itemized agenda (including in reasonable detail, matters for which the approval of the Operating Committee shall be sought at the meeting) prepared by the Operator in the case of a regular meeting, or by the Co-Owner calling the meeting in the case of a special meeting, but any matters may be considered with the consent of each Co-Owner. Each Co-Owner shall be provided, together with any notice of meeting, all such information as is reasonably necessary to allow such Co-Owner to properly consider any matter set forth in the agenda and to make an informed decision thereon at the meeting. The Operator shall prepare minutes of all meetings and shall distribute copies of such minutes to the Co-Owners within 14 days after the meeting. The Co-Owners shall have 14 days from receipt of the draft minutes to approve or comment upon the draft minutes. If a Co-Owner does not object to or comment upon the draft minutes within such period, the Co-Owner shall be deemed to have approved the minutes. If a Co-Owner objects to or comments upon the draft minutes within such period, the Operator shall then have 14 days to revise the draft minutes, taking into account any comments received, and shall distribute copies of such revised minutes to the Co-Owners. The Co-Owners shall have 14 days from receipt of the revised minutes to approve or comment upon the revised minutes. If a Co-Owner objects to or comments upon the revised minutes within such period, either Co-Owner may submit the finalization of such minutes to be resolved in accordance with Section 29. The minutes shall be the official record of the decisions made by the Operating Committee and shall be binding on the Operator and the Co-Owners. If the Manager or other personnel employed in Operations are required to attend an Operating Committee meeting, reasonable costs incurred in connection with such attendance shall be borne by the Co-Owners in proportion to their Participation Percentages. All other costs associated with attendance at meetings shall be paid for by the Co-Owners individually.

6.4.	Written Consent Resolutions

A resolution of the Operating Committee may be passed without a meeting if at least one representative on the Operating Committee of each Co-Owner consents to it in writing. A written consent resolution under this Section 6.4 may be signed by document, fax, e-mail or any other method of transmitting legibly recorded messages. A written consent resolution may be in two or more counterparts which together are deemed to constitute one written consent resolution. A resolution of the Operating Committee passed in accordance with this Section 6.4 is effective on the date stated in the written consent resolution or otherwise on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of the Operating Committee and to be as valid and effective as if

	it had been passed at a meeting of the Operating Committee that satisfies the requirements of this Agreement relating to meetings of the Operating Committee.
6.5.	Operating Committee Oversight
	The Operating Committee shall have oversight of the Operator in performing its duties and responsibilities under this Agreement.
6.6.	Matters Requiring Majority Approval

Subject to Section 9.5(a), the matters that require prior majority approval from the Operating Committee are:

(a)

the proposed purchase, termination, replacement or renewal of, or any material amendment to, the terms of any of the insurance coverage that the Operator is required to obtain and maintain pursuant to the provisions of Section 27 for the benefit of both Co-Owners, including, without limitation,

(i)

annual renewals of such insurance coverage;

(ii)

any proposed material change to such insurance coverage (including, without limitation, any proposed changes in wording of specific policies, the nature or scope of coverage, premiums, deductibles, limits and sublimits); and

(iii)

the approval of any change to or variation from the claims management process for insurance claims related to the Xxxxxx Assets, as set out in Section 27.5,

it being understood that approvals will need to provide appropriate flexibility to the Operator to effect renewals on the most favourable terms achievable, but not on terms materially less favourable than those approved;

(b)

Budgets other than those Budgets or portions thereof that require unanimous approval as set forth in Sections 6.7 or 6.8;

(c)

Non-Sustaining Capital Expenditures or a series of related Non-Sustaining Capital Expenditures in any Budgetary Period or over a period greater than a Budgetary Period, in amounts in the aggregate which, together with the associated loss of capacity and/or energy from the Xxxxxx Plant during construction and/or installation, would be $10,000,000 (adjusted for inflation annually as of the last day of each Fiscal Year at the Agreed Inflation Factor) or less;

(d)

the:

(i)

commencement or institution of any legal action or proceeding against a third party relating to Operations, involving payments, commitments or obligations of $2,000,000 (adjusted for inflation annually as of the last day

		of each Fiscal Year at the Agreed Inflation Factor) (in aggregate) or less in cash and/or value by either Co-Owner (in such capacity) or the Operator (in such capacity) or the compromise or settlement of the same;
	(ii)	settlement or compromise of any legal action or proceeding brought by a third party relating to Operations, involving payments, commitments or obligations of $2,000,000 (adjusted for inflation annually as of the last day of each Fiscal Year at the Agreed Inflation Factor) (in aggregate) or less in cash and/or value against the Operator (in such capacity), except such legal actions or proceedings in respect of which the Operator has assumed sole responsibility for the loss, liability, costs and expenses thereof and has delivered a written acknowledgement to each Co-Owner confirming its responsibility and that it shall have no claim against the Co-Owners through recovery of Costs or otherwise in respect of such action or proceeding;

	(e)	the appointment of representatives of the Co-Owners to the "Technical Working Group" under the Xxxxxx Cooperation Agreement, appointment of a representative of the Co-Owners to the "Operating Committee" under the Xxxxxx Release Coordination Agreement, and appointment of representatives of the Co-Owners under such other operating or technical committees that may exist from time to time;
	(f)	the decision to dispute a single assessment notice as it relates to the classification or assessed values of the Xxxxxx Assets pursuant to Section 12.1(f); and

(g)

any other matter which pursuant to the terms of this Agreement requires the approval or consent of the Operating Committee (other than unanimous approval or consent) and which is not specifically listed in this Section 6.6.

6.7.	Matters Requiring Unanimous Approval (Subject to Resolution by Third Party Referee)

(a)

Notwithstanding any other provision of this Agreement, but subject to Section 9.5(a), the following matters shall require the prior unanimous approval of the Operating Committee (for greater certainty, the approval of the Co-Owners holding in aggregate 100% of the Participation Percentages):

(i)

the approval of each plan forming part of the Operating and Management Plan and any amendments and updates thereto;

(ii)

any Sustaining Capital Expenditures for a project (to be incurred in a Budgetary Period or over a period greater than a Budgetary Period), in amounts in the aggregate in excess of $10,000,000 (adjusted for inflation annually as of the last day of each Fiscal Year at the Agreed Inflation Factor), or Sustaining Capital Expenditure(s) in any Budgetary Period that would result in the average annual Sustaining Capital Expenditures for that Budgetary Period and the previous 4 calendar years (including spending in calendar years prior to the Effective Date) varying by more than 10%

		(positive or negative) from the average annual Sustaining Capital Expenditures for the 5 calendar years preceding that Budgetary Period (including spending in calendar years prior to the Effective Date). For the purpose of this Section 6.7(a)(ii), Sustaining Capital Expenditures in the first Fiscal Year of this Agreement shall be pro rated as though such first Fiscal Year were a full calendar year;
	(iii)	an Operating Budget for a Budgetary Period that would result in the average annual operating Costs during such Budgetary Period and the previous 4 calendar years (including spending in calendar years prior to the Effective Date) varying by more than 10% (positive or negative) from the average annual operating Costs for the 5 calendar years preceding such Budgetary Period (without taking into account any revisions to the Operating Budgets pursuant to Section 9.4 for those prior Budgetary Periods). For the purpose of this Section 6.7(a)(iii), operating Costs to be incurred in the first Fiscal Year of this Agreement shall be pro rated as though such first Fiscal Year were a full calendar year;
	(iv)	the appointment of or any change of Independent Accountant;

(v)

the appointment of or change of a non-Co-Owner third party Operator in accordance with Section 7.12;

(vi)

any matter set forth in the Accounting Procedure which expressly requires the unanimous approval of the Operating Committee;

(vii)

the amendment or replacement of the Accounting Procedure pursuant to Section 6.11; and

(viii)

the approval, development, modification, termination or replacement of any operating procedures pursuant to Section 6.10.

(b)

If the Co-Owners’ representatives on the Operating Committee are unable to reach agreement on any matter requiring unanimity described in Section 6.7(a), then either Co-Owner shall have the right, upon written notice to the other, to have the matter referred to a mutually agreeable independent third party to resolve the disagreement (the “Third Party Referee”). Unless otherwise agreed, the Third Party Referee shall be an engineer or engineering firm experienced in hydro generation matters and free of any current or historical relationship with either Co-Owner that might give rise to a reasonable apprehension of bias. The Third Party Referee shall be appointed as soon as practicable but not later than 20 days after the date on which such notice has been provided and shall make its determination within 30 days of its having been appointed. Where such a disagreement is referred to a Third Party Referee (whether by mutual agreement or pursuant to Section 6.7(c)):

	(i)	the Third Party Referee shall act as expert and not as arbitrator and its decision shall be final and binding on the Co-Owners;
	(ii)	each Co-Owner shall present its proposal for resolution of the matter in dispute and the Third Party Referee shall select whichever proposal is in its view more consistent with that of a prudent owner acting in accordance with Legal Obligations and Good Utility Practice, taking into account the effect of each proposal on each of the Co-Owners, including with respect to Teck’s Entitlement Capacity and Teck’s Entitlement Energy under the CPA and BC Hydro’s rights to output from the Xxxxxx Plant under this Agreement;
	(iii)	the Operator shall implement such selected proposal as if it had been unanimously approved by the Operating Committee;

(iv)

the Co-Owner whose proposal is not selected by the Third Party Referee shall bear the costs of the Third Party Referee and the expert determination; and

(v)

if the matter referred to the Third Party Referee relates to:

an Operating Budget, the Operator shall continue to operate the Xxxxxx Assets in accordance with the previous Operating Budget, until the disagreement is resolved; and

a Sustaining Capital Budget, the Operator shall implement those Sustaining Capital Expenditures contemplated by the Sustaining Capital Budget that are not in dispute and shall not implement those Sustaining Capital Expenditures that are in dispute until the disagreement is resolved.

In the event that the Parties are unable to agree on the appointment of a Third Party Referee, the selection of the Third Party Referee shall be determined in accordance with Section 6.7(c).

(c)

In the event that the Co-Owners are unable to agree on the appointment of a Third Party Referee pursuant to Section 6.7(b), then each of the Co-Owners shall prepare and deliver to the other Co-Owner, within 5 days after the expiry of the initial time period required under Section 6.7(b), a list of three proposed independent third party referees, each of which must, unless otherwise agreed, be an engineer or engineering firm experienced in hydro generation matters and free of any current or historical relationship with either Co-Owner that might give rise to a reasonable apprehension of bias. Each Co-Owner shall, within 5 days after receipt of the list of the other Co-Owner’s proposed independent third party referees, select one of the other Co-Owner’s proposed independent third party referees to be entered into a lottery, pursuant to which one of the two proposed independent third party referees so entered into the lottery shall be selected by coin flip. If either Co-Owner does not provide to the other Co-Owner its list of three

		proposed independent third party referees within the 5 day period specified herein, then the other Co-Owner who has so provided its list, shall be entitled to select one Person from its own list to act as the Third Party Referee. If the proposed independent third party is unable or unwilling to act, each Co-Owner shall select one of the other Co-Owner’s proposed independent third party referees other than the one who is unable or unwilling to act and this provision shall be applied again until an independent third party is engaged.
6.8.	Matters Requiring Unanimous Approval (Not Subject to Resolution by Third Party Referee)
	(a)	Notwithstanding any other provision of this Agreement, but subject to Section 9.5(a), the following matters shall require the prior unanimous approval of the Operating Committee (for greater certainty, the approval of the Co-Owners holding in aggregate 100% of the Participation Percentages):
		(i)	the appointment of any sub-committees of the Operating Committee pursuant to Section 6.9;

(ii)

the determination as to whether an action and/or capital expenditures contemplated by Section 1.1(uuuuuu)(i) constitutes an Upgrade or the approval and designation of an Upgrade pursuant to Section 1.1(uuuuuu)(ii);

(iii)

any action or expenditure that would have the effect of permanently reducing power generation or capacity of any Unit by more than 5% (as compared to the generation or capacity of such Unit prior to such action or expenditure);

(iv)

any Non-Sustaining Capital Expenditures or a series of related Non-Sustaining Capital Expenditures in any Budgetary Period or over a period greater than a Budgetary Period in amounts in the aggregate which, together with the associated loss of capacity and/or energy from the Xxxxxx Plant during construction and/or installation, would be greater than $10,000,000 (adjusted for inflation annually as of the last day of each Fiscal Year at the Agreed Inflation Factor);

(v)

any reconstruction or replacement of all or a material portion of the Xxxxxx Assets following substantial damage or destruction;

(vi)

any abandonment of all or a material portion of the Xxxxxx Assets or any permanent cessation of generation from the Xxxxxx Plant;

(vii)

the commencement or institution of any legal action or proceeding against a third party relating to Operations, involving payments, commitments or obligations of more than $2,000,000 (adjusted for inflation annually as of the last day of each Fiscal Year at the Agreed Inflation Factor) (in aggregate) in cash and/or value by either Co-Owner (in such capacity) or

the Operator (in such capacity) or the compromise or settlement of the same; and

(viii)

the settlement or compromise of any legal action or proceeding brought by a third party relating to Operations, involving payments, commitments or obligations of more than $2,000,000 (adjusted for inflation annually as of the last day of each Fiscal Year at the Agreed Inflation Factor) (in aggregate) in cash and/or value against both Co-Owners (in such capacity) or the Operator (in such capacity) except such legal actions or proceedings in respect of which the Operator has assumed sole responsibility for the loss, liability, costs and expenses thereof and has delivered a written acknowledgement to each Co-Owner confirming its responsibility and that it will have no claim against the Co-Owners through recovery of Costs or otherwise in respect of such action or proceeding.

(b)

If there is not unanimous approval of the Operating Committee in respect of any matter set forth in Section 6.8(a), the resolution of any dispute in respect of the approval of such matter shall not, absent mutual agreement of the Co-Owners, be referred for expert determination by a Third Party Referee pursuant to Section 6.7(b) nor shall such matter be referred to dispute resolution pursuant to Section 29 (except for determination as to whether such matter is one of the matters set forth in Section 6.8(a)). If any of the foregoing matters does not receive unanimous approval of the Operating Committee, the Operator shall not proceed with such matter.

6.9.	Appointment and Powers of Sub-Committees

(a)

The Operating Committee may, by unanimous approval, appoint one or more sub-committees consisting of such representatives of each Co-Owner as the Operating Committee considers appropriate to consider such issues and matters as determined from time to time by the Operating Committee and to make recommendations to the Operating Committee in respect thereof.

(b)

The Operating Committee shall not be entitled to delegate to any sub-committee appointed under Section 6.9(a) any of the Operating Committee’s powers, it being acknowledged and agreed that the role of any sub-committee shall only be advisory in nature.

(c)

Any sub-committee appointed under Section 6.9(a), must:

(i)

conform to any rules that may from time to time be imposed on it by the Operating Committee;

(ii)

report to the Operating Committee as and when required by the Operating Committee; and

(iii)

unless the Co-Owners otherwise agree, have equal representation from each Co-Owner.

	(d)	The Operating Committee may, at any time, with respect to a sub-committee appointed under Section 6.9(a):
		(i)	terminate the appointment of, or change the membership of, the sub-committee; and
		(ii)	fill vacancies on the sub-committee.
6.10.	Operating Procedures
	The Operating Committee shall in a timely manner develop and approve operating procedures setting forth additional details on accounting, notice periods, scheduling practices and other operational issues as may be reasonably required to implement this Agreement. The Operating Committee may from time to time, terminate or replace operating procedures. The Operating Committee shall modify, terminate or replace operating procedures as may reasonably be required to implement this Agreement. Each operating procedure developed by the Operating Committee in accordance with this Agreement, shall be binding on the Operator and Co-Owners, each of which shall take all reasonable steps to implement the operating procedures.
6.11.	Accounting Procedure

It is the intention that the Operator (if it is also a Co-Owner) not make a profit or suffer a loss in connection with acting as Operator, subject to Section 31.1. The Parties agree that as at the Effective Date, the Accounting Procedure reflects the foregoing principles. The Operating Committee shall in a timely manner review and amend the Accounting Procedure as may be necessary to continue to provide that the Operator (if it is also a Co-Owner) shall, subject to Section 31.1, not make a profit or suffer a loss from acting as such. Any dispute as to whether the Accounting Procedure continues to reflect the foregoing principles may be referred to dispute resolution in accordance with Section 29. The arbitrator is authorized and directed to amend the Accounting Procedure in accordance with the foregoing criteria.

7.	OPERATOR

7.1.	Appointment of Operator/Operating Standard

Teck is hereby appointed as the initial Operator of the Xxxxxx Assets. In carrying out its obligations and duties in accordance with this Agreement, the Operator shall:

(a)

operate, manage and maintain the Xxxxxx Assets as would a prudent owner with the objective of ensuring that the Xxxxxx Assets shall continue to provide safe and reliable generation; and

(b)

exercise the degree of care and skill that an experienced dam operator would exercise in the conduct of its own affairs acting in accordance with Good Utility Practice,

	(the standards set forth in Sections 7.1(a) and 7.1(b) are collectively referred to as the “Operating Standard”).
7.2.	Duties of Operator
	The Operator shall operate, manage and maintain the Xxxxxx Assets in accordance with the terms of this Agreement. The duties of the Operator shall include, without limitation:
	(a)	complying with, and maintaining the Xxxxxx Assets and conducting Operations in compliance with, Legal Obligations, this Agreement, Teck’s obligations pursuant to Section 2.10 of the CPA Subagreement (or any extension or replacement of Section 2.10 on substantially similar terms) for so long as they are in force, approved Budgets and each Operating and Management Plan (and all parts thereof);
	(b)	for so long as the CPA or a Replacement CPA is in effect, conducting Operations in a manner consistent with Teck’s obligations under the CPA (or a Replacement CPA) in respect of Teck’s Participation Interest;

(c)

dispatching each Co-Owner’s Participation Percentage of the Xxxxxx Plant in accordance with such Co-Owner’s instructions, provided that:

(i)

they are consistent with Legal Obligations and this Agreement;

(ii)

for so long as the CPA or a Replacement CPA is in effect, BC Hydro’s operating instructions for its Participation Percentage of the Xxxxxx Plant shall be consistent with its operating instructions for Teck’s Participation Percentage of the Xxxxxx Plant pursuant to the CPA or a Replacement CPA; and

(iii)

the Operator may alter the dispatch of the Xxxxxx Plant from that in the provided operating instructions for reasons of (A) local reliability; (B) local reactive power support; or (C) reliability of the Xxxxxx Plant, as long as the alteration of the dispatch of the Xxxxxx Plant is done in such a manner that the magnitude and duration of the altered dispatch is no more than reasonably required;

(d)

managing and maintaining all Governmental Authorizations (including in the case of the FERC License, pursuant to the bare trust agreement, indirectly through TCAI Incorporated) required to carry on Operations, and providing reasonable notice to the Operating Committee when any such Governmental Authorization requires renewal, replacement or amendment or when a new Governmental Authorization is required and facilitating the Co-Owners obtaining such new Governmental Authorizations and the renewal, replacement or amendment of any Governmental Authorization;

(e)

if an order or directive is issued by a Governmental Authority to the Operator or the Co-Owners (or either of them) to remediate or otherwise clean-up all or any

		part of the Xxxxxx Assets in order to comply with any Environmental Laws, subject to Section 31.6 and subject to any agreement of the Co-Owners to appeal or challenge such order or directive, taking such steps and taking such actions as are required to complete such remediation or clean-up or to otherwise so comply;
	(f)	complying with its obligations under this Agreement including, without limitation, the provisions of Sections 7.4 and 27;
	(g)	preparing and presenting Budgets as described in Section 9 for approval by the Operating Committee and implementing approved Budgets;
	(h)	implementing the decisions of the Operating Committee;
	(i)	purchasing or otherwise acquiring materials, supplies, equipment and services required for Operations and in connection therewith obtaining such customary warranties and guarantees as are available in connection with such purchases and acquisitions;
	(j)	reporting to the Co-Owners in accordance with Section 7.6 and reporting to the Operating Committee at such times and in such manner as is required by the Operating Committee;

(k)

conducting such title examinations and curing such title defects as may be advisable in the reasonable judgment of the Operator;

(l)

using its commercially reasonable efforts to keep the Xxxxxx Assets free and clear of (i) all Liens and adverse claims arising from Operations, except Permitted Encumbrances; and (ii) all other encumbrances arising after the Effective Date other than those arising in the ordinary course of Operations and that do not have a material adverse affect on any of the Xxxxxx Assets or which have been consented to by the Co-Owners;

(m)

keeping and maintaining:

(i)

those Books and Records which pertain or relate to the condition (physical, environmental or otherwise), design, engineering, construction, maintenance, operations, inspections, specifications, safety of any of the Xxxxxx Assets or any environmental issues associated with any of the Xxxxxx Assets, indefinitely; and

(ii)

other Books and Records for such period of time as is necessary to comply with the Operating Standard,

including all required accounting and financial records pursuant to the Accounting Procedure and in accordance with GAAP consistently applied;

(n)

defending on its own behalf and if requested by a Co-Owner, on the Co-Owner’s behalf, legal actions or proceedings brought by third parties relating to Operations,

		but the Operator shall not initiate legal actions or proceedings against third parties without any required approval of the Operating Committee. If the Operator fails to seek the required approval of the Operating Committee in respect of the commencement, institution, settlement or compromise of any legal proceeding, it shall bear 100% of all losses, liabilities, costs and expenses incurred in connection with such legal action or proceeding. The Operator shall keep the Operating Committee reasonably informed of the commencement and progress of any such legal actions or proceedings; and
	(o)	undertaking all other activities reasonably necessary to fulfil the foregoing.
7.3.	Activities Absent Approval
	If the Operating Committee for any reason fails to approve any Budget or Operating and Management Plan (or any part thereof), then subject to the contrary unanimous direction of the Operating Committee and to the receipt of necessary funds, the Operator shall continue to conduct Operations in accordance with the most recently approved Budgets, if any, and otherwise at levels necessary to maintain and protect the Xxxxxx Assets and to comply with all Legal Obligations, and the most recently approved Operating and Management Plan (or any approved part thereof). The Co-Owners shall fund such Operations in proportion to their then current Participation Percentages until the failed Budget (as may be revised) or Operating and Management Plan (as may be revised), as the case may be, has been approved.
7.4.	Operating and Management Plan

(a)

The Operator shall be responsible for preparing Operating and Management Plans from time to time. The Operator has prepared and submitted to the Co-Owners the first Operating and Management Plan before the Effective Date, which has been approved by each Co-Owner and shall be considered to have been approved by the Operating Committee and constitute the first Operating and Management Plan for the purposes of this Agreement. After the Effective Date, the Operator shall review, amend and update the Operating and Management Plan on or about October 1 of each Fiscal Year as appropriate to reflect (i) changes in the Applicable Laws; (ii) changes in circumstances and/or changes in the underlying requirements of the Operating Standard from time to time; and (iii) the directions of the Operating Committee.

(b)

The Operator shall submit the Operating and Management Plan and any amendments and updates thereto for consideration by the Operating Committee each Fiscal Year in accordance with Section 6.7(a); and Section 6.7(b) shall apply to any Operating and Management Plan (or any part thereof) that is not unanimously approved by the Operating Committee.

(c)

The Operating and Management Plan shall be prepared to the Operating Standard.

(d)

The Operator shall ensure that each of the Dam Safety Plan, Emergency Response Plan, Environmental Management Plan, Public Safety Plan and Worker Safety Plan

		included in the Operating and Management Plan provides for (i) control or other measures that have as their objective achieving the purposes of the plan, (ii) procedures for review and modification of control measures, (iii) criteria and protocols for worker training, (iv) monitoring to ensure compliance and effectiveness of the plan, (v) regular reporting at least annually and immediate incident reporting, (vi) incident response and corrective action, and (vii) regulatory reporting if and as required.
	(e)	The Operator shall cause the Dam Safety Plan to be reviewed and updated periodically by a knowledgeable and independent third party to ensure that it is current and appropriate.
	(f)	For so long as FortisBC is the Manager, the Operator may comply with the requirements with respect to the Worker Safety Plan by obtaining an annual third party audit report (prepared by a firm with appropriate expertise in occupational health and safety matters) to the effect that there is a plan, program or system in place with respect to the Xxxxxx Plant that substantially meets the requirements for a Worker Safety Plan under this Agreement and that the Manager is complying with the requirements of the plan, program or system.
	(g)	The Operator or Manager may retain an auditor to report whether any plan comprised in the Operating and Management Plan meets applicable requirements, including reporting. To the extent the auditor’s report provides the required information under a plan, that report shall be deemed to meet the reporting requirements under the plan.

(h)

Each Co-Owner’s representatives on the Operating Committee shall be entitled to receive all information and reports provided to the Operator pursuant to the Operating and Management Plan (whether provided by the Manager or the Operator’s own staff or consultants) concurrently with such information and reports being provided to the Operator and, subject to Section 9.5, shall be invited to participate in any meetings called for purposes of considering or responding to serious incidents identified in any such information or reports.

7.5.	Owner for purposes of Workers Compensation legislation

Notwithstanding that either or both of the Co-Owners may in future be found to be an “owner” of the Xxxxxx Assets under the Workers Compensation Act, the Co-Owners agree that, for the purposes of Part 3 thereof, the Operator (either itself or through the Manager from time to time), and not the other Co-Owner, shall assume the occupational health and safety obligations of the “owner” of the Xxxxxx Assets.

7.6.	Operator’s Obligation to Report to the Co-Owners

The Operator shall keep the Co-Owners apprised of all Operations by reporting to each of the Co-Owners in accordance with this Section 7.6. The Operator shall:

(a)

prepare or cause the Manager to prepare and submit to each Co-Owner:

	(i)	a monthly costs summary report for the purposes of invoicing for each month, by the 15^th Business Day of the following month. The report shall be set out in accordance with agreed cost summary categories, initially in the format provided for in the Management Agreement, including both Costs incurred by the Operator and the Manager. In addition, capital projects shall be shown by project with a total for each period;
	(ii)	a cost and variance report for both the current month and for the year-to-date, as well as any expected budget variations for the Fiscal Year, together with an explanation; and
	(iii)	a yearly costs summary report, by no later than one month following the end of the Fiscal Year covered by the report. The yearly report shall have the same format as the monthly report with the actual, budget and variance amounts, together with an explanation of variances. The actual labour dollars, material dollars and labour hours for each cost summary category for the Fiscal Year covered by the report shall also be provided.
	The Co-Owners, through their representatives on the Operating Committee, may vary the forms of reporting from time to time;
(b)	provide to the Co-Owners monthly operating and maintenance reports, including performance and outage reports and other reports, that the Operator obtains or receives from the Manager, pertaining to the Xxxxxx Plant and/or Operations, as soon as they are obtained or received;

(c)

prepare, or cause the Manager to prepare, and submit to each Co-Owner:

(i)

reports as contemplated under the then current Operating and Management Plan, including reports on variances, incidences of non-compliance and remedial actions taken or proposed to be taken;

(ii)

reports in reasonable detail reporting on any instance, event or circumstance whereby any of the Operations or Xxxxxx Assets are not or may not be, in any material respect, in compliance with any Legal Obligations, within 24 hours of such non-compliance or potential non-compliance becoming known to the Operator;

(iii)

in the case of BC Hydro, reports containing such information as BC Hydro advises the Operator is required in order for BC Hydro to comply with its financial reporting requirements, its operating and capital forecast requirements and other reporting requirements as a Crown corporation and a regulated public utility; and

(iv)

reports on such other matters, aspects or issues relating to the Xxxxxx Assets or Operations as may be reasonably requested from time to time by a Co-Owner,

		provided that if a Co-Owner requests reports pursuant to Section 7.6(c)(iii) or 7.6(c)(iv) that it is not otherwise entitled to receive under this Agreement and the costs to be incurred by the Operator in providing such reports are material, the Operator shall upon receipt of such request advise the requesting Co-Owner of such costs, whereupon the requesting Co-Owner may elect to receive such reports, provided that it shall reimburse the Operator for the costs incurred in providing such reports; and
	(d)	provide t