COMBINATION AGREEMENT between FORDING INC. - and - TECK COMINCO LIMITED - and - WESTSHORE TERMINALS INCOME FUND - and - ONTARIO TEACHERS’ PENSION PLAN BOARD - and - SHERRITT INTERNATIONAL CORPORATION January 12, 2003 OSLER, HOSKIN & HARCOURT LLP

COMBINATION AGREEMENT

between

FORDING INC.

- and -

TECK COMINCO LIMITED

- and -

WESTSHORE TERMINALS INCOME FUND

- and -

ONTARIO TEACHERS’ PENSION PLAN BOARD

- and -

SHERRITT INTERNATIONAL CORPORATION

January 12, 2003

OSLER, XXXXXX & HARCOURT LLP

ARTICLE 1
	DEFINITIONS AND PRINCIPLES OF INTERPRETATION		3
	1.1	Definitions	3
	1.2	Certain Rules of Interpretation	13
	1.3	Entire Agreement	15
	1.4	Schedules	15
	1.5	Accounting Matters	16
	1.6	Knowledge	16
ARTICLE 2
	THE COMBINATION		16
	2.1	The Arrangement	16
	2.2	Funding of the Cash Option	16
	2.3	Agreements of the Parties with respect to the Transaction	17
	2.4	Related Agreements	20
	2.5	Public Announcement	20
	2.6	Implementation Steps for Fording	20
	2.7	Support of Transaction	21
	2.8	Effective Date Matters	21
	2.9	Preparation of Filings, etc	21
ARTICLE 3
	REPRESENTATIONS AND WARRANTIES		22
	3.1	Representations and Warranties of Fording - General	22
	3.2	Representations and Warranties of Fording - Prairie Operations	28
	3.3	Representations and Warranties of Teck	31
	3.4	Representations and Warranties of Westshore	37
	3.5	Representations and Warranties of OTPP	38
	3.6	Representations and Warranties of Sherritt	40
	3.7	Representations and Warranties of OTPP and Sherritt Regarding Luscar Contributed Assets	41
	3.8	Nature and Survival	46
ARTICLE 4
	COVENANTS		47
	4.1	Covenants of Fording	47
	4.2	Covenants of Other Parties	48
	4.3	Ordinary Course Covenants	49
	4.4	Fording Covenants Regarding Non-Solicitation	50
	4.5	Right of First Refusal	52
	4.6	Access to Information	52
	4.7	Completion of Transaction	53
ARTICLE 5
	CONDITIONS		53
	5.1	Mutual Conditions Precedent	53
	5.2	Additional Conditions Precedent to the Obligations of Teck and Westshore	55
	5.3	Effect of Breach	56
	5.4	Additional Conditions Precedent to the Obligations of Fording	56
	5.5	Effect of Breach	57
	5.6	Additional Conditions Precedent to the Obligations of OTPP and Sherritt	57
	5.7	Effect of Breach	58
	5.8	Notice and Cure Provisions	58
	5.9	Satisfaction of Conditions	59
ARTICLE 6
	AMENDMENT AND TERMINATION		60
	6.1	Amendment	60
	6.2	Termination	60
	6.3	Break Fee	61
	6.4	Remedies	62
ARTICLE 7
	GENERAL		63
	7.1	Notices	63
	7.2	Assignment	65
	7.3	Co-Operation and Further Assurances	65
	7.4	Effect on Westshore Trustee	65
	7.5	Expenses	66
	7.6	Execution and Delivery	66
	7.7	Transfer Tax Elections	66
	7.8	Assignment of Tax Pools	66

Schedule	Description
Schedule 2.1	Amended Plan
Schedule 2.3(a)	Partnership Agreement Term Sheet
Schedule 2.3(c)	Prairie Operations Term Sheet
Schedule 2.3(d)	Teck Contribution Term Sheet
Schedule 2.3(e)	Fording Contribution Term Sheet
Schedule 2.3(n)	Non-Competition Term Sheet
Schedule 2.4	Working Capital Term Sheet
Schedule 2.4	Governance Term Sheet
Schedule 2.4	Trust Indenture Term Sheet
Schedule 2.5	Form of Press Release
Schedule 4.1	Regulatory Approvals

THIS AGREEMENT is made the 12^th day of January, 0000

X X X X X X X:

FORDING INC.

a corporation existing under the laws of Canada

(“Fording”)

- and -

TECK COMINCO LIMITED

a corporation existing under the laws of Canada

(“Teck”)

- and -

WESTSHORE TERMINALS INCOME FUND

an open-ended mutual fund trust existing under the laws of British Columbia

(“Westshore”)

- and -

ONTARIO TEACHERS’ PENSION PLAN BOARD

a corporation existing under the laws of Ontario

(“OTPP”)

- and -

SHERRITT INTERNATIONAL CORPORATION

a corporation existing under the laws of New Brunswick

(“Sherritt”).

RECITALS:

A meeting of Fording securityholders (the “Securityholders”) is scheduled to be held on January 22, 2003 to consider the adoption of a plan of arrangement (the “Plan of Arrangement”) involving Teck and Westshore to reorganize the way in which equity in the business of Fording is held by its Securityholders through the conversion of Fording into the Fording Canadian Coal Trust (the “Fund”), an open-ended mutual fund trust to be created under the laws of Alberta.

Xxxxxxx, Teck, Westshore, OTPP and Sherritt wish to further enhance the value to Securityholders of the conversion of Fording into an income trust contemplated by the Plan of Arrangement through offering the combination of certain metallurgical coal assets and operations of Teck and the Luscar/CONSOL Joint Ventures (defined below) with the assets of Fording (other than the Fording Prairie Operations and Fording’s Industrial Minerals Operations) to be held in a general partnership (the “Partnership”) organized under the Fund, together with the contemporaneous cash investments by Teck, Westshore and Sherritt Coal Partnership II (“SCPII”), a partnership comprised of Sherritt and OTPP, in the Fund and the Partnership to permit the Cash Option to be increased to $1,050 million, all in the manner described herein (collectively, the “Transaction”).

C.	Luscar Ltd. (“Luscar”) is a wholly owned subsidiary of Luscar Energy Partnership, a partnership comprised as to 50/50 of wholly-owned subsidiaries of each of OTPP and Sherritt.

D.	Luscar and CONSOL Energy Inc. (“CONSOL”) are joint venture participants as to 50/50 in the Cardinal River Coal Joint Venture and the Line Creek Joint Venture (collectively, the “Luscar/CONSOL Joint Ventures”).

The terms of the Plan of Arrangement previously announced by Fording will be amended to enable Shareholders to elect to receive one unit (a “Unit”) of the Fund per Common Share (the “Unit Option”) up to a maximum of approximately the number of Common Shares outstanding at Closing less 30 million, being approximately 21,432,477 Units or $35.00 in cash per Common Share (the “Cash Option”), to a maximum of $1,050 million, or a combination of cash and Units, subject to proration as described herein.

F.	Pursuant to the terms of the Amended Plan:

(i)

Certain of Teck’s and Teck’s Affiliates’ North American metallurgical coal assets (consisting primarily of the Elkview Mine), the Luscar/CONSOL Joint Ventures’ metallurgical coal assets, (consisting primarily of its Line Creek Mine, Cheviot and the Luscar mines, and its interests in the Neptune Terminal) and Fording’s assets (other than its Industrial Minerals Operations, the Prairie Operations and any liabilities associated with the Mount Washington Mine site) will be contributed, directly or indirectly, to the Partnership in order to realize significant synergies.

(ii)

Fording will sell and SCPII or an affiliated entity will purchase the Prairie Operations for $225 million;

(iii)

Fording and Westshore will build upon their historical relationship by having a subsidiary of Westshore enter into a long-term coal terminal agreement with Fording consistent with their existing negotiations.

(iv)

Teck will contribute $125 million to the Partnership to acquire a partnership interest therein.

(v)

Teck will make an investment in Units of the Fund of $150 million.

(vi)

Westshore will make an investment in Units of the Fund of $150 million.

(vii)

SCPII will make an investment in Units of the Fund of $375 million.

(viii)

The combination of the Teck Contributed Assets, the Luscar Contributed Assets and the Fording Contributed Assets will enable Fording to borrow or cause to be borrowed additional funds in the aggregate of $336 million, which will be used to fund, in part, the Cash Option and for other purposes.

- 2 -

G.	It is anticipated that the Amended Plan will be considered at a meeting of Securityholders to be held on or about February 19, 2003.

H.	In the event that the Amended Plan is approved and implemented, immediately after the Effective Time:

(i)

initial ownership interests in the Partnership will be 65% Fund (indirectly) and 35% Teck; and

(ii)

ownership interests in the Fund will be approximately 45.5% Shareholders (including approximately 6.7% owned by OTPP); 9.1% Teck; 9.1% Westshore; 6.8% Luscar; 6.8% CONSOL and 22.7% SCPII.

I.	The board of directors or trustees, as the case may be, of each of Fording, Teck, Westshore, Sherritt and OTPP has determined to consummate the Transaction and has agreed to co-operate in the manner set out herein with a view to consummating the Transaction.

THEREFORE, the parties agree as follows:

ARTICLE 1

DEFINITIONS AND PRINCIPLES OF INTERPRETATION

1.1

Definitions

In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the following meanings respectively:

“Acquisition Proposal” means any proposal or offer with respect to any merger, amalgamation, arrangement, business combination, liquidation, dissolution, recapitalization, take-over bid, tender offer, purchase of any assets representing greater than 20% of the fair market value of the Transaction, or purchase of more than 20% of the equity (or rights thereto) of Fording or similar transactions or series of transactions involving Fording, excluding the arrangement contemplated by the F/T/W Plan of Arrangement;

“Affiliate” and “Associate” (regardless of case) each has the meaning ascribed to it under the Securities Act;

“Agreement” means this agreement, including all schedules, and all amendments or restatements as permitted, and references to “Article” or “Section” mean the specified Article or Section of this agreement;

- 3 -

“Amended Arrangement” means the arrangement under Section 192 of the CBCA contemplated by the Amended Plan;

“Amended Plan” means the Plan of Arrangement as amended to give effect to the Transaction contemplated by this Agreement substantially in the form attached as Schedule 2.1;

“Arrangement Resolution” means the special resolution of the Securityholders authorizing the Amended Plan to be considered and voted upon by the Securityholders at the Fording Meeting;

“Articles of Arrangement” means the articles of arrangement of Fording contemplated by the Amended Plan that, pursuant to the provisions of Section 192(6) of the CBCA, must be filed with the Director after the Final Order has been granted in order for the Amended Arrangement to become effective;

“Board of Directors” means the board of directors of Fording;

“Break Fee” has the meaning ascribed to it in Section 6.3(b);

“Business Day” means a day, which is not a Saturday, Sunday or statutory holiday in the Province of Alberta, the Province of British Columbia or the Province of Ontario, on which the principal commercial banks in downtown Calgary, Vancouver and Toronto are generally open for the transaction of commercial banking business;

“Canadian Securities Regulatory Authorities” means the applicable Canadian, provincial and territorial securities commissions and regulatory authorities;

“Canadian Tax Act” means the Income Tax Act, R.S.C. 1985 c. 1 (5th Supp.);

“Cash Option” has the meaning ascribed to it in the Recitals to this Agreement;

“CBCA” means the Canada Business Corporations Act, R.S.C. 1985, c. C-44;

“CCRA” means the Canada Customs and Revenue Agency;

“Certificate of Arrangement” means the certificate or proof of filing of the Articles of Arrangement to be issued by the Director pursuant to Section 192(7) of the CBCA;

“Closing Time” has the meaning ascribed to it in Section 2.8;

“Common Share” means a common share in the capital of Fording;

“Confidentiality Agreements” means the Confidentiality Agreements between Fording and each of Teck and Westshore dated November 29, 2002 and between Fording and each of OTPP and Sherritt dated January 10, 2003, and the Confidentiality Agreements between each of Teck and Sherritt and between Westshore and Sherritt dated January 10, 2003;

- 4 -

“CONSOL” means CONSOL Energy Inc.;

“contracts” means a contract, lease, instrument, note, bond, debenture, mortgage, agreement, arrangement or understanding to which a Party, or any of its subsidiaries, is a party to or under which a Party or any of its subsidiaries is bound, has unfulfilled obligations or contingent liabilities or is owed unfulfilled obligations, whether known or unknown, whether asserted or not;

“Court” means the Court of Queen’s Bench of Alberta;

“CP Arrangement Agreement” means the arrangement agreement entered into by CPL and certain of its subsidiaries dated as of July 30, 2001 setting forth the terms on which the parties would undertake a plan of arrangement pursuant to which the operating subsidiaries of CPL would be spun off into separate public companies;

“CPL” means Canadian Pacific Limited;

“CPR Agreement” means the agreement between FCL and Canadian Pacific Railway Company dated April 1, 2001;

“Director” means the Director appointed under Section 260 of the CBCA;

“Effective Date” means the date shown on the Certificate of Arrangement to be issued by the Director giving effect to the Amended Arrangement, which date shall be determined in accordance with Section 2.8;

“Effective Time” means the first moment in time on the Effective Date;

“Elkview Mine” means the coal mine owned by Teck and located in southeastern British Columbia, covering a surface area of approximately 23,000 hectares;

“Environmental Law” means any and all applicable Laws relating to the protection of human health and safety or the environment, or relating to hazardous or toxic substances or wastes, pollutants or contaminants;

“Exchange Options” means options to purchase Units, and any accompanying unit appreciation rights, issued under the Exchange Option Plan;

“Exchange Option Plan” means the Unit option plan of the Fund proposed to be created as part of the Amended Arrangement pursuant to which options to acquire Units and any accompanying unit appreciation rights will be granted to existing Optionholders in exchange ultimately for existing Options and any existing share appreciation rights in the manner contemplated by the Amended Plan;

“FCL” means Fording Coal Limited/Les Charbons Fording, Limitée, a corporation existing under the CBCA;

- 5 -

“FCL Amalco” means the corporation resulting from the amalgamation of Fording and FCL;

“F/T/W Combination Agreement” means the combination agreement dated December 4, 2002 among Fording, Teck and Westshore;

“F/T/W Plan of Arrangement” means the plan of arrangement set forth as Schedule “B” to the supplement dated December 8, 2002 to the Information Circular;

“FX Acknowledgements” means the acknowledgements proposed to be obtained by Fording from certain counterparties with whom Fording has entered into certain foreign exchange forward contracts stating that the consummation of the Transaction will not result in any early termination or the occurrence of an event of default under such contracts;

“Final Order” means the order of the Court approving the Amended Arrangement;

“Fording Annual Information Form” means the annual information form of Fording, dated May 16, 2002, for the year ended December 31, 2001;

“Fording Benefit Plans” means all plans, arrangements, agreements, programs, policies, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, registered or unregistered to which Fording or its subsidiaries is a party to or bound by or under which Fording or its subsidiaries have, or will have, any liability or contingent liability, relating to: pension plans, insurance plans (whether insured or self-insured) or compensation plans with respect to any of its employees or former employees (or any spouses, dependants, survivors or beneficiaries of any such employees or former employees), directors or officers, individuals working on contract with Fording or its subsidiaries or other individuals providing services to it of a kind normally provided by employees or eligible dependants of such Person other than the Fording Prairie Benefit Plans;

“Fording Contributed Assets” means the assets of Fording other than (i) its Industrial Minerals Operations, (ii) Fording’s rights and obligations in connection with its interests in a former mining operation located at the Mount Washington mine site, and (iii) the Prairie Operations. The Fording Contributed Assets are described in the Fording Contribution Term Sheet attached as Schedule 2.3(e);

“Fording Disclosure Letter” means the disclosure letter of Fording delivered to the other Parties prior to the execution of this Agreement;

“Fording Disclosure Record” has the meaning ascribed to it in Section 3.1(e);

“Fording Financial Statements” means the audited financial statements of Fording for the fiscal year ended December 31, 2001, consisting of a consolidated balance sheet as at December 31, 2001, and the consolidated statements of income and retained earnings and cash flows for the fiscal year ended December 31, 2001, and all notes thereto and the interim unaudited financial statements of Fording for the nine month period ended September 30, 2002;

- 6 -

“Fording Meeting” means the special meeting of Securityholders to be held on or before February 19, 2003 and any adjournment(s) or postponement(s) thereof made in accordance with the notice of meeting that forms part of the Information Circular, to consider and to vote on, among other things, the Resolutions;

“Fording Prairie Benefit Plans” means all plans, arrangements, agreements, programs, policies, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, registered or unregistered to which Fording or its subsidiaries is a party to or bound by or under which Fording or its subsidiaries has, or will have, any liability or contingent liability, relating to: pension plans, insurance plans (whether insured or self-insured) or compensation plans with respect to any employees or former employees (or any spouses, dependants, survivors or beneficiaries of any such employees or former employees) employed in connection with the Prairie Operations, directors or officers, individuals working on contract with Fording or its subsidiaries or other individuals providing services to it of a kind normally provided by employees or eligible dependants of such Person, in each case, in connection with the Prairie Operations;

“Fording Subsidiary” has the meaning ascribed to it in Section 3.1(a);

“Fund” has the meaning ascribed to it in the Recitals to this Agreement;

“Further Supplement” means the amendment and supplement to the Information Circular prepared in respect of the Amended Arrangement in form and content acceptable to the Parties acting reasonably;

“Genesee Agreements” means, collectively, the Genesee Coal Mine Operating Agreement between the City of Edmonton and FCL made as of August 7, 1980, the Genesee Coal Mine Joint Venture Agreement between the City of Edmonton and FCL made as of August 7, 1980, the Genesee Coal Mine Dedication and Unitization Agreement between the City of Edmonton, FCL and the City of Edmonton and FCL as joint venturers made as of August 7, 1980, the Genesee Coal Mine Purchase and Sale Agreement between the City of Edmonton and FCL as joint venturers and the City of Edmonton made as of August 7, 1980 and the Construction Agreement between the City of Edmonton and FCL as joint venturers and FCL dated August 7, 1980, as the same have been assigned;

“Governance Agreement” means the agreement regarding the governance of the Fund on the terms attached as Schedule 2.4;

“Governmental Authority” means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) Canadian Securities Regulatory Authority, self-regulatory organization or stock exchange including without limitation the NYSE and the TSX, (c) any subdivision, agent, commission, board, or authority of any of the foregoing, or (d) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

- 7 -

“Holders” means, when used with reference to securities of Fording or the Fund, the holders thereof shown from time to time on the register maintained by or on behalf of Fording or the Fund, as the case may be, in respect of such securities;

“Industrial Minerals Operations” means the NYCO Minerals, Inc. operations at Willsboro, New York, the Minera NYCO S.A. de C.V. operations located near Hermosillo in the northwestern state of Sonora, Mexico and the American Tripoli, Inc. operations located near Seneca, Missouri;

“Information Circular” means the notice of the Fording Meeting and the management information circular dated November 20, 2002, including all accompanying appendices thereto, sent to Securityholders in connection with the Fording Meeting as amended or supplemented to the date hereof;

“Interim Order” means the order of the Court confirming, among other things, the calling and holding of the Fording Meeting and voting thereon, as such order has been and may be amended or varied;

“Laws” means all applicable laws (including common law), statutes, regulations, statutory rules, orders, ordinances, and the terms and conditions of any approvals, licences, permits, judgments or other requirements of any applicable published notes and policies of any Governmental Authority, and the term “applicable”, with respect to such Laws and in the context that refers to one or more Persons, means such Laws that apply to such Person or Persons or its or their business, undertaking, property or securities and that emanate from a Governmental Authority having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities;

“Luscar” has the meaning ascribed to it in the Recitals to this Agreement;

“Luscar/CONSOL Joint Ventures” has the meaning ascribed to it in the Recitals to this Agreement;

“Luscar Contributed Assets” means the assets of the Luscar/CONSOL Joint Ventures described in the Luscar Contribution Term Sheet, delivered to the Parties on the date hereof, which, pursuant to the Amended Plan, will ultimately be contributed to the Partnership and includes the Line Creek Mine, Cheviot, the Luscar Mine and a 46.4% interest in the Neptune Terminal and associated terminal contracts;

“Luscar Disclosure Letter” means the disclosure letter in respect of the Luscar Contributed Assets delivered by Sherritt and OTPP to the other Parties prior to the execution of this Agreement;

“Luscar Disclosure Record” has the meaning ascribed to it in Section 3.7(d);

- 8 -

“Luscar Benefit Plans” means all plans, arrangements, agreements, programs, policies, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, registered or unregistered to which Luscar or the Luscar/CONSOL Joint Ventures is a party to or bound by or under which Luscar or the Luscar/CONSOL Joint Ventures has, or will have, any liability or contingent liability, relating to: pension plans, insurance plans (whether insured or self-insured) or compensation plans with respect to any of its employees or former employees (or any spouses, dependants, survivors or beneficiaries of any such employees or former employees), directors or officers, individuals working on contract with Luscar or the Luscar/CONSOL Joint Ventures or other individuals providing services to it of a kind normally provided by employees or eligible dependants of such Person, in each case, in connection with the Luscar Contributed Assets;

“Luscar Employees” means the persons currently employed by Luscar or the Luscar/CONSOL Joint Ventures (including for this purpose, dependent contractors) required to operate the Luscar Contributed Assets, being the Persons listed in the Luscar Disclosure Letter;

“Luscar Entities” has the meaning ascribed to it in Section 3.7(a);

“Luscar Financial Statements” means the audited financial statements of Luscar Coal Income Fund and Luscar Coal Ltd. included in Appendix C to the SCAI Offer;

“Luscar New Financial Statements” means the audited financial statements for the Luscar/CONSOL Joint Ventures for the fiscal year ended December 31, 2001 consisting of a balance sheet as of December 31, 2001, and the statements of earnings, owner’s equity and cash flows for the fiscal year ended December 31, 2001, and all notes thereto and the interim unaudited financial statements for the Luscar/CONSOL Joint Ventures for the nine month period ended September 30, 2002;

“Material Adverse Change”, when used in connection with a Party or the Fording Contributed Assets, the Prairie Operations, the Teck Contributed Assets or the Luscar Contributed Assets, as the case may be, means any change, effect, event or occurrence with respect to the condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, contingent, conditional or otherwise), businesses, operations or results of operations of such Party or assets or, if applicable, those of its subsidiaries, that is, or could reasonably be expected to be, material and adverse to such Party or assets and, if applicable, its subsidiaries on a consolidated basis, other than any change, effect, event or occurrence: (i) relating to the economy, political conditions or securities markets in general; (ii) in the case of Fording, the Fording Contributed Assets, the Prairie Operations, the Teck Contributed Assets or the Luscar Contributed Assets, affecting the coal industry in general and which does not have, or could not reasonably be expected to have, a materially disproportionate impact on Fording, the Fording Contributed Assets, the Prairie Operations, the Teck Contributed Assets or the Luscar Contributed Assets, as the case may be, as compared to the other industry participants; or (iii) that is merely itself a change in the market trading price of publicly issued securities of the Party; (iv) resulting exclusively from the entering into of this Agreement; or (v) resulting from a change in the market price of metallurgical coal or thermal coal;

- 9 -

“Material Adverse Effect” when used in connection with a Party, means any effect resulting from a Material Adverse Change to a Party;

“material fact” has the meaning ascribed to it under the Securities Act;

“New Fording” means the corporation resulting from the amalgamation of Fording, FCL Amalco (which results from the amalgamation of FCL and a subsidiary of Fording) and Subco, which will occur as part of the Amended Arrangement;

“NYSE” means the New York Stock Exchange;

“Options” means the outstanding options to purchase Common Shares issued pursuant to Fording’s Directors’ Stock Option Plan and Key Employee Stock Option Plan;

“Optionholders” means Holders from time to time of Options;

“Outside Date” means, subject to Section 6.2(e), April 30, 2003 or such later date as may be mutually agreed by the Parties;

“Partnership” has the meaning ascribed to it in the Recitals to this Agreement;

“Partnership Agreement” means the agreement between Fording and Teck on the terms attached as Schedule 2.3(a);

“Party” or “Parties” means a signatory or the signatories to this Agreement, respectively;

“Person” means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, agency and where the context requires, any of the foregoing when they are acting as trustee, executor, administrator or other legal representative;

“Prairie Operations” means the Fording assets described in the Prairie Operations Term Sheet attached as Schedule 2.3(c), which, for greater certainty, excludes thermal coal that is mined in Fording’s metallurgical coal mines;

“Pre-Effective Date Period” means the period commencing on the execution and delivery of this Agreement and ending at the Closing Time, subject to the earlier termination of this Agreement in accordance with its terms;

“Proposed Agreement” has the meaning ascribed to it in Section 4.5(a);

“publicly disclosed” means disclosure by a Party in a public filing made by it with either the Canadian Securities Regulatory Authorities on the SEDAR system in Canada or with the Securities and Exchange Commission on the XXXXX system in the United States from December 31, 2001 to the date hereof;

- 10 -

“PWC Resolution” means the resolution of the Shareholders to be considered and voted upon by the Shareholders at the Fording Meeting, appointing PricewaterhouseCoopers LLP as auditor of the Fund;

“RBC” means RBC Dominion Securities Inc., a member company of RBC Capital Markets;

“RBC Fairness Opinion” has the meaning ascribed to it in Section 2.7(a);

“Registrar and Transfer Agent” means Computershare Trust Company of Canada, the registrar and transfer agent of the Common Shares and the Units;

“Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that an arrangement may only be implemented if a prescribed time lapses following the giving of notice without an objection being made) of any Governmental Authority, as set out in Schedule 4.1;

“Resolutions” means the special resolutions of the Shareholders and the Optionholders, as the case may be, authorizing the Arrangement Resolution, the Unitholder Rights Plan Resolution and the PWC Resolution, to be considered and voted upon by the Shareholders and the Optionholders, as the case may be, at the Fording Meeting;

“SCAI” means Sherritt Coal Acquisition Inc.;

“SCAI Offer” means the offer made by SCAI dated October 25, 2002 as amended December 16, 2002 and January 6, 2003, to acquire all of the issued and outstanding Common Shares;

“SCPII” has the meaning ascribed to it in the Recitals to this Agreement;

“Securities Act” means the Securities Act (Alberta), R.S.A. 2000, c. S-4, and the rules and regulations promulgated thereunder;

“Securityholders” means, collectively, the Shareholders and the Optionholders;

“Shareholders” means the Holders of Common Shares;

“Sherritt Annual Information Form” means the annual information form of Sherritt, dated March 15, 2002, for the year ended December 31, 2001;

“Special Distribution” has the meaning ascribed to it in Section 2.3(k);

“Subco” means 4123212 Canada Ltd., an indirect, wholly-owned subsidiary of Fording with no material assets or liabilities, existing under the laws of Canada;

- 11 -

“subsidiary” or “Subsidiary” means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate, and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary;

“Superior Proposal” means any bona fide written Acquisition Proposal that, in the good faith determination of the Board of Directors after consultation with its financial advisors and with outside counsel, would, if consummated in accordance with its terms and taking into account the risk of non-completion, reasonably be expected to result in a transaction more favourable to the Securityholders from a financial point of view than the Transaction;

“tax returns” means all returns, declarations, reports, information returns and statements required to be filed with the CCRA or any taxing authority relating to taxes;

“Teck Annual Information Form” means the annual information form of Teck, dated March 1, 2002, for the year ended December 31, 2001;

“Teck Contributed Assets” means the Teck assets described in the Teck Contribution Term Sheet attached as Schedule 2.3(d), which, pursuant to the Amended Plan, will be contributed to the Partnership;

“Teck Disclosure Letter” means the disclosure letter of Teck delivered to the other Parties prior to the execution of this Agreement;

“Teck Disclosure Record” has the meaning ascribed to it in Section 3.3(f);

“Teck Mine Benefit Plans” means all plans, arrangements, agreements, programs, policies, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, registered or unregistered to which Teck or its subsidiaries is a party to or bound by or under which Teck or its subsidiaries has, or will have, any liability or contingent liability, relating to: pension plans, insurance plans (whether insured or self-insured) or compensation plans with respect to any of its employees or former employees (or any spouses, dependants, survivors or beneficiaries of any such employees or former employees), directors or officers, individuals working on contract with Teck or its subsidiaries or other individuals providing services to it of a kind normally provided by employees or eligible dependants of such Person in each case, in connection with the Teck Contributed Assets;

“Teck Mine Employees” means the persons currently employed by Teck (including for this purpose, dependent contractors) required to operate the Elkview Mine, being the Persons listed in the Teck Disclosure Letter;

- 12 -

“Teck Mine Financial Statements” means the audited financial statements for the Elkview Mine for the fiscal year ended December 31, 2001 consisting of a balance sheet as of December 31, 2001, and the statements of earnings, owner’s equity and cash flows for the fiscal year ended December 31, 2001, and all notes thereto and the interim unaudited financial statements for the Elkview Mine for the nine month period ended September 30, 2002, copies of which have been initialled for identification and delivered by Teck to Fording;

“Terminal Agreement” means the agreement between New Fording, on behalf of the Partnership, and Westshore, on the terms which have been initialed for identification and delivered to Westshore and Fording, respectively;

“Transaction” has the meaning ascribed to it in the Recitals to this Agreement;

“Transaction Agreement” means each of the agreements listed in or contemplated by Section 1.4;

“Trustees” means the trustees of the Fund from time to time;

“TSX” means the Toronto Stock Exchange;

“Unit” means a trust unit of the Fund;

“Unit Option” has the meaning ascribed to it in the Recitals to this Agreement;

“Unitholder Rights Plan Resolution” means the resolution of the Shareholders authorizing the implementation of the Unitholder Rights Plan to be considered and voted upon by the Shareholders at the Fording Meeting;

“Unitholders” means the Holders from time to time of the Units;

“U.S. Tax Code” means the United States Internal Revenue Code of 1986; and

“Westshore Disclosure Letter” means the disclosure letter of Westshore delivered to the other Parties prior to the execution of this Agreement.

1.2

Certain Rules of Interpretation

In this Agreement:

(a)

Consent - Whenever a provision of this Agreement requires an approval or consent and such approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.

(b)

Currency - Unless otherwise specified, all references to money amounts are to lawful currency of Canada.

- 13 -

(c)

Governing Law - This Agreement is a contract made under and shall be governed by and construed in accordance with the Laws of the Province of Alberta and the federal Laws of Canada applicable in the Province of Alberta. Each Party hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of Alberta in respect of all matters arising under or in relation to this Agreement.

(d)

Headings - Headings of Articles and Sections are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

(e)

Including - Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.

(f)

No Strict Construction - 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 any Party.

(g)

Number and Gender - Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

(h)

Statutory references - A reference to a statute includes all rules and regulations made pursuant to such statute and, unless otherwise specified, the provisions of any statute or regulation or rule which amends, supplements or supersedes any such statute or any such regulation or rule.

(i)

Subsidiaries - To the extent any representations, warranties, covenants or agreements contained herein relate, directly or indirectly, to a Subsidiary of any Party, each such provision shall be construed as a covenant by such Party to cause (to the fullest extent to which it is legally capable) such Subsidiary to perform the required action. To the extent any covenants or agreements contained herein relate, directly or indirectly, to SCPII, Luscar, the Luscar/CONSOL Joint Ventures or the Luscar Energy Partnership, each such provision shall be construed as a joint and several covenant by OTPP and Sherritt to cause (to the fullest extent to which it is legally capable) such entity to perform the required action.

(j)

Time - Time is of the essence in the performance of the Parties’ respective obligations.

(k)

Time Periods - Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day.

- 14 -

1.3

Entire Agreement

This Agreement, together with the Confidentiality Agreements and the agreements and documents required to be delivered pursuant to this Agreement, constitute the entire agreement between the Parties and set out all the covenants, promises, warranties, representations, conditions, understandings and agreements between the Parties pertaining to the subject matter of this Agreement and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written. For greater certainty, this Agreement supersedes and replaces the F/T/W Combination Agreement, and the term sheet among the Parties of January 10, 2003, which are terminated without liability between the parties. No reliance has been made upon, and there are no covenants, promises, warranties, representations, conditions, understandings or other agreements, oral or written, express, implied or collateral between the Parties in connection with the subject matter of this Agreement except as specifically set forth in this Agreement and any document required to be delivered pursuant to this Agreement.

There shall be no liability, either in tort or in contract or otherwise, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, not reduced to writing as part of this Agreement. Each of the Parties agrees that the other Parties will have no remedy in respect of any untrue statement made to it and upon which it relied in entering into this Agreement and that, absent fraud, its only remedy can be for breach of contract under this Agreement.

1.4

Schedules

The schedules to this Agreement, as listed below, are an integral part of this Agreement:

Schedule	Description
Schedule 2.1	Amended Plan
Schedule 2.3(a)	Partnership Term Sheet
Schedule 2.3(c)	Prairie Operations Term Sheet
Schedule 2.3(d)	Teck Contribution Term Sheet
Schedule 2.3(e)	Fording Contribution Term Sheet
Schedule 2.3(n)	Non-Competition Term Sheet
Schedule 2.4	Governance Term Sheet
Schedule 2.4	Working Capital Term Sheet
Schedule 2.4	Trust Indenture Term Sheet
Schedule 2.5	Form of Press Release
Schedule 4.1	Regulatory Approvals

The Luscar Contribution Term Sheet has also been delivered to the Parties on the date hereof.

- 15 -

1.5

Accounting Matters

Unless otherwise stated, all accounting terms used in this Agreement in respect of any Party shall have the meanings attributable thereto under generally accepted accounting principles applicable to such Party’s published financial statements and all determinations of an accounting nature in respect of any Party required to be made shall be made in a manner consistent with Canadian generally accepted accounting principles applicable to such Party’s published financial statements and past practice.

1.6

Knowledge

Any reference to the knowledge of any Party shall mean, unless otherwise specified, to the best of the knowledge, information and belief of such Party after reviewing all relevant records and making reasonable inquiries regarding the relevant matter of all relevant directors, officers and employees of the Party.

ARTICLE 2

THE COMBINATION

2.1

The Arrangement

(a)

The Amended Plan will be substantially in the form set out in Schedule 2.1, provided the Parties will cooperate to amend such plan to achieve the objectives set out herein (provided further that such amendments are not prejudicial to the Parties).

(b)

The Amended Plan will give Shareholders the option to elect the Cash Option, the Unit Option or a combination of both, subject to maximum available cash of $1,050 million for the Cash Option and maximum available Units for the Unit Option equal to the number of outstanding Common Shares at the Effective Time less 30,000,000.

(c)

The Amended Plan will contemplate the completion of the transactions referenced in Sections 2.2 and 2.3.

(d)

The Amended Plan may be amended from the form set out in Schedule 2.1 including without limitation, the reordering of certain steps or replacing certain amalgamations with windings up provided such amendment does not create a material disadvantage to any of the Parties to this Agreement.

2.2

Funding of the Cash Option

(a)

The Cash Option will be funded from several sources:

(i)

Teck will contribute $125 million to the Partnership in addition to the Teck Contributed Assets and will receive in consideration therefor an interest in the Partnership having the rights described in Schedule 2.3(a), which together with the Partnership interest to be acquired pursuant to Section 2.3(d), will represent a 35% interest in the Partnership and those funds will be paid by the Partnership to New Fording as part of the consideration for the Fording Contributed Assets;

- 16 -

(ii)

Teck and Westshore will each make the following subscriptions for Units set opposite their name:

Teck	$150 million
Westshore	$150 million;

(iii)

OTPP and Sherritt will cause SCPII or other Affiliates of OTPP or Sherritt to subscribe for $375 million in Units;

(iv)

Subco will draw down approximately $336 million from its new credit facilities and make a portion of such funds available to the Fund to refinance Fording’s existing debt or pay Fording’s expenses or pay for working capital included in the Luscar Contributed Assets and, if necessary, fund the Cash Option; and

(v)

Fording will receive $225 million from the sale of the Prairie Operations to SCPII (or an affiliated entity) and will make such funds available for the payment of the Cash Option to the extent not used to fund the other obligations specified hereunder,

so that an aggregate of $1,050 million will be available to fund the Cash Option and approximately $311 million will be available to pay the Special Distribution, to settle the debt obligations of Fording, and to pay the expenses of the Parties as contemplated herein.

(b)

The entire $1,050 million will be paid to Shareholders pursuant to the Cash Option.

(c)

The expense payments in Section 2.3(p) will be sourced out of the funds referred to in paragraphs 2.2(a)(i) or (v).

2.3

Agreements of the Parties with respect to the Transaction

(a)

Fording and Teck each agree that prior to the Effective Time, they will enter (and in the case of Teck, also cause Teck-Bullmoose Coal Inc. and Quintette Coal Partnership to enter) into the Partnership Agreement and form the Partnership.

(b)

Fording agrees that it will purchase or cause to be purchased, and Sherritt and OTPP agree to cause the Luscar/CONSOL Joint Ventures to sell the Luscar Contributed Assets on the terms set out in the Luscar Contribution Term Sheet delivered to the Parties on the date hereof. Luscar and CONSOL will be issued shares or debt and shares of Fording or an Affiliate in partial payment for the Luscar Contributed Assets which will be immediately indirectly exchanged for 6.4 million freely tradeable Units (as to 50% of such Units each).

- 17 -

(c)

Fording agrees that it will sell or cause the sale of the Prairie Operations on the terms set out in Schedule 2.3(c) and Sherritt and OTPP agree that they will cause SCPII or an affiliated entity of OTPP or Sherritt to purchase the Prairie Operations for $225 million, subject to adjustments in accordance with Schedule 2.3(a). The Parties will cooperate in structuring this transaction to ensure that no current taxes will be payable by Fording in respect of such transactions to the extent reasonably possible.

(d)

Teck agrees that, as at the Effective Time, it will contribute or cause to be contributed the Teck Contributed Assets to the Partnership in exchange for an interest in the Partnership having the rights described in Schedule 2.3(a), which together with the Partnership interest to be acquired pursuant to Section 2.3(f), will represent a 35% interest in the Partnership, on the terms set out in Schedule 2.3(d).

(e)

Fording agrees that, as at the Effective Time, it will contribute the Fording Contributed Assets on the terms set out in Schedule 2.3(e), and the Luscar Contributed Assets acquired from the Luscar/CONSOL Joint Ventures as contemplated in Section 2.3(b) above, to the Partnership in exchange for an interest in the Partnership having the rights described in Schedule 2.3(a), which will represent a 65% interest in the Partnership.

(f)

Teck agrees that, as at the Effective Time, it will contribute $125 million to the Partnership in exchange for an interest in the Partnership having the rights described in Schedule 2.3(a), which together with the Partnership interest to be acquired pursuant to Section 2.3(d), will represent a 35% interest in the Partnership.

(g)

Each of Teck and Westshore severally (and not jointly nor jointly and severally) agrees that, as of the Effective Time, in accordance with the Amended Plan, each will subscribe for and purchase Units in the aggregate amounts specified below at a purchase price of $35.00 per Unit:

Teck	assume just $150 million
Westshore	$150 million

(h)

Sherritt and OTPP agree that, as of the Effective Time, they will subscribe for and purchase or will cause SCPII or other Affiliates of OTPP or Sherritt to subscribe for and purchase $375 million in Units at a purchase price of $35.00 per Unit.

(i)

Subco and New Fording will borrow an amount under its new credit facilities, which together with other funds payable to Fording hereunder, will enable it to satisfy the Cash Option, and to pay the Special Distribution, the expenses referred to in Section 2.3(p), its expenses, to refinance its existing indebtedness and fulfill its other obligations hereunder.

- 18 -

(j)

Fording agrees to cause the Fund to issue, as required under the Amended Plan, to Shareholders, Units up to an amount equal to the outstanding Common Shares at the Effective Date less 30 million.

(k)

Each of the Parties agrees that the Fund will make a distribution (the “Special Distribution”) of an aggregate of $70 million to all Unitholders as to $35 million at the end of the quarter in which the Effective Date occurs and as to $35 million at the end of the quarter after the quarter in which the Effective Date occurs.

(l)

OTPP agrees that it will elect to receive Units for all of its Common Shares under the Amended Arrangement and will not exercise any dissent or appraisal rights under the Amended Arrangement.

(m)

OTPP and Sherritt will withdraw and terminate the SCAI Offer and publicly announce such withdrawal and termination as part of the press release contemplated by this Agreement and return any Common Shares that are tendered to the SCAI Offer. They shall also cease soliciting proxies under their dissident proxy circular in respect of the Fording Meeting.

(n)

The Luscar Entities and New Fording will enter into a non-competition agreement consistent with Schedule 2.3(n) providing that Luscar will not compete in respect of metallurgical coal operations in Canada for five years.

(o)

The Partnership and the Fund will enter into a non-competition agreement consistent with Schedule 2.3(n) providing that the Partnership, New Fording and the Fund (but not Teck or any of its other Affiliates) will not compete in respect of thermal coal operations in Canada for five years.

(p)

Fording on its own behalf and on behalf of New Fording (its successor by amalgamation or liquidation) agrees that it shall bear its own expenses in respect of the Transaction and that upon completion of the Amended Arrangement, as at the Closing Time, directly or indirectly it will pay the following amount as a reimbursement of and as a contribution to expenses and costs of the Parties:

Teck and Westshore (or their designees)	$25 million
OTPP and Sherritt (or their designees)	$50 million

Fording and New Fording shall be obligated to make the payments in the amounts stated, and no Party is required to itemize or prove the particular expenses reimbursed or costs contributed to in order to be entitled to the payment stipulated. Fording and New Fording shall not be obligated to pay any more than the amount stipulated regardless of the expenses and costs actually incurred by a Party. The manner of payment shall be structured to maximize tax efficiency for Fording without prejudice for the other Parties.

- 19 -

The Parties agree that the transactions set forth in items (b) through (h) and item (j) above will be undertaken in accordance with the Amended Arrangement.

2.4

Related Agreements

At the Closing Time:

(a)

Each of the Parties will enter into and deliver or cause its respective Affiliates or associates, as appropriate, to enter and deliver, one to the others, the Transaction Agreement to which it or its Affiliates or associates is a Party;

(b)

New Fording, on behalf of the Partnership, and Westshore will enter into, and deliver, one to the other, the Terminal Agreement; and

(c)

If not previously formed, the Fund will be formed pursuant to a trust indenture in accordance with the Trust Indenture Term Sheet attached to this Agreement as Schedule 2.4.

2.5

Public Announcement

Immediately upon signing of this Agreement, the Parties shall jointly issue for public dissemination the press release attached to this Agreement as Schedule 2.5 and shall file such press release with the TSX and in prescribed form with the U.S. Securities and Exchange Commission and each Party (other than OTPP) shall file, as required, on a timely basis, a material change report in prescribed form with the Canadian Securities Regulatory Authorities.

2.6

Implementation Steps for Fording

Fording shall, except to the extent that the Board of Directors has changed its recommendation in respect of the Transaction, do the following:

(a)

mail the Further Supplement to Securityholders in accordance with the Interim Order and applicable Laws;

(b)

subject to the Interim Order, hold the Fording Meeting in a timely fashion for the purpose of considering the Resolutions, and for any other proper purpose as may be set out in the notice for such meeting and conduct such meeting in accordance with the Interim Order, applicable Laws and Fording’s by-laws;

(c)

use commercially reasonable efforts to solicit from the Securityholders proxies in favour of the approval of the Resolutions, as applicable, and take all other action that is necessary or desirable to secure the approval of the Resolutions by the Securityholders, as applicable;

(d)

subject to obtaining the approvals as are required by the Interim Order, apply to the Court for the Final Order and diligently pursue its issuance; and

- 20 -

(e)

subject to obtaining the Final Order and the satisfaction or waiver of the other conditions herein contained in favour of each Party, on the date contemplated in Section 2.8, send to the Director, for endorsement and filing by the Director, the Articles of Arrangement and such other documents as may be required in connection therewith under the CBCA to give effect to the Transaction and diligently pursue such endorsement and filing.

2.7

Support of Transaction

Fording represents and warrants to Teck, Westshore, Sherritt and OTPP that:

(a)

it has received the oral opinion of RBC (the “RBC Fairness Opinion”) that, as of the date hereof, the consideration to Shareholders under the Amended Arrangement is fair from a financial point of view to Shareholders;

(b)

subject to the provisions of Section 4.4 relating to the existence of a Superior Proposal and provided that RBC has delivered and not withdrawn the RBC Fairness Opinion, each director of Fording has advised that he intends to vote all Common Shares held by him in favour of the Amended Arrangement and will so represent in the Further Supplement;

(c)

subject to the provisions of Section 4.4 relating to the existence of a Superior Proposal and provided that RBC has delivered and not withdrawn the RBC Fairness Opinion, the Board of Directors (i) has advised that they will unanimously recommend acceptance of the Amended Arrangement to Securityholders and will so represent in the Further Supplement; and (ii) will include a statement in the Further Supplement that the Amended Arrangement is fair to Securityholders and is in the best interests of Fording.

2.8

Effective Date Matters

The Effective Date shall be not more than the 5th Business Day following the later of the date of issuance of the Final Order (unless appealed, in which case, the Effective Date shall be the date such appeal is dismissed or withdrawn) and the date upon which the last Regulatory Approval is obtained, or on such other date as the Parties agree. Closing shall take place at the offices of Osler, Xxxxxx & Harcourt LLP in Calgary at 7:00 a.m. (Mountain Standard Time) on the Effective Date or at such other place, date and time as the Parties shall agree (the “Closing Time”). Each Party shall deliver, at the closing of the Transaction, such customary certificates, resolutions and other customary closing documents as may be required by the other Parties, acting reasonably.

2.9

Preparation of Filings, etc.

(a)

Each Party shall furnish to the other Parties all information that may be required (i) under applicable Laws for inclusion in or filing with the Further Supplement or (ii) subject to any contractual confidentiality restrictions which the Party has been unable to obtain a waiver with respect thereto in order to implement the other actions described in Article 2. Each Party covenants with and represents and warrants to the other Parties that information to be furnished by it (to the best of its knowledge in the case of information concerning its securityholders and Affiliates) in connection with such Further Supplement, actions or otherwise in connection with the consummation of the Transaction will not contain any untrue statement of a material fact or omit to state a material fact required to be stated in any such document or which is necessary in order to make any information so furnished for use in any such document not misleading in the light of the circumstances in which it is furnished. In particular, Teck shall provide Fording with the Teck Mine Financial Statements and, if required, the consent of its auditor in respect thereof for inclusion in the Further Supplement, and Sherritt and OTPP shall provide Fording with the Luscar New Financial Statements and the consents of the auditors in respect thereof for inclusion in the Further Supplement if Fording receives advice from its auditor and counsel that such financial statements and consent are required to be included in the Further Supplement.

- 21 -

(b)

Each Party shall promptly notify the others if, at any time before the Closing Time, it becomes aware that the Further Supplement, an application for an order or any other document described herein contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or which is necessary to make the statements contained therein not misleading in the light of the circumstances in which they are made, or that otherwise requires an amendment or further supplement to the Information Circular or such application or other document. In any such event, each Party shall cooperate in the preparation of any such supplement or amendment to the Information Circular or such application or other document, as required and as the case may be, and, if required, shall cause the same to be distributed to Securityholders and/or filed with the relevant Governmental Authorities.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of Fording - General

Fording represents and warrants to and in favour of the other Parties as follows and acknowledges that the other Parties are relying upon same in connection with the transactions contemplated herein:

(a)

Fording is a corporation incorporated and validly existing under the Laws of Canada and has the corporate power to own or lease its property, to carry on its business as now being conducted and enter into this Agreement; each material subsidiary of Fording, being for purposes hereof, each subsidiary whose total assets constitute more than 10% of the consolidated assets of Fording or whose total revenues constitute more than 10% of the consolidated revenues of Fording, in each case as determined by reference to the Fording Financial Statements (a “Fording Subsidiary”), is a corporation incorporated and validly existing under the Laws of its jurisdiction of incorporation and such subsidiary has the corporate power to own or lease its property and to carry on its business as now being conducted by it;

- 22 -

(b)

Fording has all necessary corporate power and capacity to enter into this Agreement and to carry out its obligations hereunder, subject to Shareholder approval, the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of Fording;

(c)

this Agreement is a legal, valid and binding obligation of Fording, enforceable against Fording in accordance with its terms, subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought;

(d)

the approval, execution and delivery of this Agreement by Fording, the performance by it of its obligations under such agreement and the completion of the Transaction, will not:

(i)

result (with or without notice or the passage of time) in a violation or breach of, require any consent to be obtained under or give rise to any termination, purchase or sale rights or payment obligation under any provision of:

(A)

its certificate of incorporation, articles, by-laws or other charter documents;

(B)

any Laws (subject to obtaining the Regulatory Approvals), except to the extent that the violation or breach of, or failure to obtain any consent under, any Laws would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on Fording; or

(C)

subject to obtaining the consents required by the CP Arrangement Agreement, the Genesee Agreements, the CPR Agreement, the FX Acknowledgments and the documents disclosed as requiring consent in the Fording Disclosure Letter, any contract, license, permit or government grant to which Fording or any Fording Subsidiary is a party or by which it is bound or subject or is the beneficiary, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on Fording;

(ii)

result in the imposition of any encumbrance, charge or lien upon any of its assets or the assets of any Fording Subsidiary except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on Fording; or

- 23 -

(iii)

restrict, hinder, impair or limit the ability of Fording or any Fording Subsidiary to carry on business in the manner in which it is currently being carried on, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on Fording;

(e)

Fording has prepared and filed all documents required to be filed by it with the Alberta Securities Commission in connection with its status as a “reporting issuer” under the Securities Act and other applicable Laws, and with those other jurisdictions where it is a reporting issuer or the equivalent as required to be filed by it in connection with such status (collectively the “Fording Disclosure Record”), and such documents, as of the date they were filed, complied in all material respects with applicable Laws and did not fail to state a material fact required to be stated in order to make the statements contained therein not misleading in light of the circumstances in which they were made. No Material Adverse Change has occurred in relation to Fording that is not disclosed in the Fording Disclosure Record and Fording has not filed any confidential material change reports as part of the Fording Disclosure Record that continue to be confidential;

(f)

except as has been disclosed in the Fording Disclosure Record, no Person has any agreement, option, right or privilege (whether by Law, pre-emptive or contractual) capable of becoming an agreement, including convertible securities, options, warrants or convertible obligations of any nature, for the purchase, subscription, allotment or issuance of any unissued shares or other securities of Fording or of any Fording Subsidiary except for individuals granted Options prior to December 4, 2002 under Fording’s stock option plans and by virtue of this Agreement;

(g)

the Fording Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods, present fairly in all material respects the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of Fording, on a consolidated basis, as at the date thereof and the revenues, earnings, and results of operations of Fording, on a consolidated basis, for the periods presented;

(h)

since December 31, 2001, and other than as disclosed in the Fording Disclosure Letter, the Fording Disclosure Record or the press release dated January 6, 2003 disclosed in the Westshore Disclosure Letter, there has not been any Material Adverse Change in the condition (financial or otherwise), assets, liabilities, operations, earnings or business of Fording, on a consolidated basis;

(i)

except as has been disclosed in the Fording Disclosure Letter, there is no suit, action or proceeding pending, or to the knowledge of Fording, threatened against Fording or any Fording Subsidiary that would materially impede Fording’s ability to complete the Transaction or that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Fording, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over Fording or any Fording Subsidiary outstanding against Fording or any Fording Subsidiary causing, or which in so far as can reasonably be foreseen, in the future would materially impede Fording’s ability to complete the Transaction or that would cause a Material Adverse Effect on Fording;

- 24 -

(j)

except as disclosed in the Fording Disclosure Letter, there is no environmental liability, nor factors likely to give rise to any environmental liability, affecting any of the properties of Fording or any Fording Subsidiary that individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Fording taken as a whole and neither Fording nor any Fording Subsidiary has violated or infringed any Environmental Law now in effect except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Fording; except as disclosed in the Fording Disclosure Letter neither Fording nor any Fording Subsidiary has violated or infringed any then current Environmental Law as applied at that time, other than such violations or infringements that, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on Fording;

(k)

except as disclosed in the Fording Disclosure Letter, each of Fording and each Fording Subsidiary has good and marketable (and in the case of equipment valid as opposed to marketable) title, applying customary standards in the mining industry, to its operating properties, equipment and mineral reserves and resources (other than property as to which Fording or a Fording Subsidiary is a lessee, in which case it has a valid leasehold interest), except for such defects in title that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Fording;

(l)

the reserves and resources of Fording as set forth in the Fording Annual Information Form, were prepared in accordance with accepted engineering practices and were, at such date, in compliance in all material respects with the requirements applicable to the presentation of such reserves and resources in documents filed with the Alberta Securities Commission, including without limitation, the provisions of National Instrument 43-101;

(m)

each of Fording and each Fording Subsidiary has all permits, licences, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, applicable Governmental Authorities that are required in order to permit it to carry on its business as presently conducted, except for such permits, licences, certificates, orders, filings, applications and registrations, the failure to have or make, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on Fording;

- 25 -

(n)

each of Fording and each Fording Subsidiary has its assets insured against loss or damage as is appropriate to its business and assets, in such amounts and against such risks as are customarily carried and insured against by owners of comparable businesses and assets, and such insurance coverages will be continued in full force and effect to and including the Effective Date, other than those insurance coverages in respect of which the failure to continue in full force and effect could not reasonably be expected to have a Material Adverse Effect on Fording;

(o)

each of Fording and each Fording Subsidiary has duly filed on a timely basis all material tax returns required to be filed by it and has paid all taxes which are due and payable and has paid all assessments and reassessments, and all other taxes, governmental charges, penalties, interest and fines due and payable on or before the date hereof, in each case, of a material nature, and adequate provision has been made for taxes payable for the current period for which tax returns are not yet required to be filed; except as has been disclosed in the Fording Disclosure Letter, there are no material actions, suits, or claims asserted or assessed against Fording or any Fording Subsidiary in respect of taxes, governmental charges or assessments, nor any material matters under discussion with the CCRA or any Governmental Authority relating to taxes, governmental charges or assessments asserted by such Governmental Authority;

(p)

except as discussed in the Fording Disclosure Letter, the business of Fording and the business of each Fording Subsidiary is being and has been conducted in all material respects in compliance with all applicable Laws, regulations and ordinances of all Governmental Authorities having jurisdiction, except where the failure to comply has not been and would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on Fording; neither Fording nor any Fording Subsidiary has been notified by any Governmental Authority of any investigation with respect to it that is pending or threatened, nor has any Governmental Authority notified Fording or any such subsidiary of such Governmental Authority’s intention to commence or to conduct any investigation that would be reasonably likely to have a Material Adverse Effect on Fording;

(q)

other than as set forth in the Fording Disclosure Letter and other than as contemplated herein, neither Fording nor any of its Affiliates is a party to or bound or affected by any commitment, agreement or document containing any covenant expressly limiting its freedom to compete in any line of business, other than such restrictive covenants, which individually or in the aggregate, directly or indirectly, have not had or could not reasonably be expected to have a Material Adverse Effect on Fording;

(r)

except as disclosed in the Fording Disclosure Letter, the Fording Contributed Assets are being and have been operated in all material respects in compliance with all applicable Laws, regulations and ordinances of all authorities having jurisdiction, except where the failure to comply has not been and would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on Fording or the Fording Contributed Assets; Fording has not been notified by any Governmental Authority of any investigation relating to the Fording Contributed Assets that is pending or threatened, nor has any Governmental Authority notified Fording of such Governmental Authority’s intention to commence or to conduct any investigation relating to the Fording Contributed Assets;

- 26 -

(s)

except as set out in the Fording Disclosure Letter or for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on Fording:

(i)

the Fording Benefit Plans comply in all respects with all applicable Laws and such plans have been administered in compliance with applicable Laws and their terms;

(ii)

none of the Fording Benefit Plans, other than plans which provide only monetary retirement payments in accordance with the terms of such plans, provides benefits beyond retirement or other termination of service to Fording employees or former Fording employees or to the beneficiaries or dependants of such employees;

(iii)

all benefits accrued under the Fording Benefit Plans have been properly accrued on the Fording Financial Statements in accordance with generally accepted accounting principles;

(iv)

no event has occurred and no condition or circumstance exists that has resulted in or could reasonably be expected to result in any Fording Benefit Plan being ordered, or required to be, terminated or wound up in whole or in part, having its registration under applicable Laws refused or revoked, being placed under the administration of any trustee or receiver or Governmental Authority or being required to pay any material taxes, penalties, payments or levies under applicable Laws;

(t)

except as disclosed in the Fording Disclosure Letter or for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on Fording, to the knowledge of Fording there are in respect of any of Fording’s employees who will be made available to the Partnership on an agency basis:

(i)

no legal proceedings involving governmental tribunals;

(ii)

no collective agreements currently under negotiation; and

(iii)

no labour disputes, grievances, strikes or lockouts, pending or threatened;

(u)

the assets set forth under the heading “Purchased Assets” in Schedule 2.3(e) are all the assets comprising the Fording Contributed Assets; and

- 27 -

(v)

except as set out in the Fording Disclosure Letter, Fording is up to date in respect of all of its reclamation bonding requirements in all material respects.

3.2

Representations and Warranties of Fording - Prairie Operations

Fording represents and warrants to and in favour of OTPP and Sherritt as follows and acknowledges that OTPP and Sherritt are relying upon same in connection with the transactions contemplated herein:

(a)

except as disclosed in the Fording Disclosure Letter, there is no environmental liability, nor factors likely to give rise to any environmental liability, affecting the Prairie Operations of Fording that individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Prairie Operations and neither Fording nor any Fording Subsidiary has violated or infringed, in respect of the Prairie Operations, any Environmental Law now in effect except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Prairie Operations; except as disclosed in the Fording Disclosure Letter neither Fording nor any Fording Subsidiary has violated or infringed, in respect of the Prairie Operations, any then current Environmental Law as applied at that time, other than such violations or infringements that, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on the Prairie Operations;

(b)

except as disclosed in the Fording Disclosure Letter, each of Fording and each Fording Subsidiary has good and marketable (and in the case of equipment valid as opposed to marketable) title, applying customary standards in the mining industry, to its operating properties and equipment and mineral reserves and resources included in the Prairie Operations (other than property as to which Fording or a Fording Subsidiary is a lessee, in which case it has a valid leasehold interest), except for such defects in title that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Prairie Operations;

(c)

the reserves and resources of Fording included in the Prairie Operations as set forth in the Fording Annual Information Form were prepared in accordance with accepted engineering practices and were, at such date, in compliance in all material respects with the requirements applicable to the presentation of such reserves and resources in documents filed with the Alberta Securities Commission, including without limitation, the provisions of National Instrument 43-101;

(d)

each of Fording and each Fording Subsidiary has all permits, licences, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, applicable Governmental Authorities that are required in order to permit it to carry on its business as presently conducted with respect to its Prairie Operations, except for such permits, licences, certificates, orders, filings, applications and registrations, the failure to have or make, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on the Prairie Operations;

- 28 -

(e)

each of Fording and each Fording subsidiary has its assets included in the Prairie Operations insured against loss or damage as is appropriate to its business and assets, in such amounts and against such risks as are customarily carried and insured against by owners of comparable businesses and assets, and such insurance coverages will be continued in full force and effect to and including the Effective Date, other than those insurance coverages in respect of which the failure to continue in full force and effect could not reasonably be expected to have a Material Adverse Effect on the Prairie Operations;

(f)

except as has been disclosed in the Fording Disclosure Letter, there is no suit, action or proceeding pending, or to the knowledge of Fording, threatened against Fording or any Subsidiary of Fording that would impede Fording’s ability to complete the Transaction or that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Prairie Operations, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over Fording or any Subsidiary outstanding against Fording or any subsidiary causing, or which in so far as can reasonably be foreseen, in the future would materially impede Fording’s ability to complete the Transaction or that would cause, a Material Adverse Effect on Fording or the Prairie Operations;

(g)

with respect to its Prairie Operations, other than as set forth in the Fording Disclosure Letter and other than as contemplated herein, neither Fording nor any of its Affiliates is a party to or bound or affected by any commitment, agreement or document containing any covenant expressly limiting its freedom to compete in any line of business, other than such restrictive covenants, which individually or in the aggregate, directly or indirectly, have not had or could not reasonably be expected to have a Material Adverse Effect on the Prairie Operations;

(h)

except as disclosed in the Fording Disclosure Letter, the Prairie Operations are being and have been operated in all material respects in compliance with all applicable Laws, regulations and ordinances of all authorities having jurisdiction, except where the failure to comply has not been and would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Prairie Operations; Fording has not been notified by any Governmental Authority of any investigation relating to the Prairie Operations that is pending or threatened, nor has any Governmental Authority notified Fording of such Governmental Authority’s intention to commence or to conduct any investigation relating to the Prairie Operations;

(i)

except as set out in the Fording Disclosure Letter or for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Prairie Operations in so far as they apply to the Prairie Operations:

- 29 -

(i)

the Fording Prairie Benefit Plans comply in all respects with all applicable Laws and such plans have been administered in compliance with applicable Laws and their terms;

(ii)

none of the Fording Prairie Benefit Plans, other than plans which provide only monetary retirement payments in accordance with the terms of such plans, provides benefits beyond retirement or other termination of service to Fording employees or former Fording employees or to the beneficiaries or dependants of such employees;

(iii)

all benefits accrued under the Fording Prairie Benefit Plans have been properly accrued on the Fording Financial Statements in accordance with generally accepted accounting principles;

(iv)

no event has occurred and no condition or circumstance exists that has resulted in or could reasonably be expected to result in any Fording Prairie Benefit Plan being ordered, or required to be, terminated or wound up in whole or in part, having its registration under applicable Laws refused or revoked, being placed under the administration of any trustee or receiver or Governmental Authority or being required to pay any material taxes, penalties, payments or levies under applicable Laws;

(v)

all of the Fording Prairie Benefit Plans are either (A) fully insured or (B) fully funded in accordance with applicable Laws on a going concern solvency basis and winding-up solvency basis;

(j)

except as disclosed in the Fording Disclosure Letter or for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Prairie Operations, to the knowledge of Fording there are in respect of any of Fording’s employees employed in connection with the Prairie Operations:

(i)

no legal proceedings involving governmental tribunals;

(ii)

no collective agreements currently under negotiation; and

(iii)

no labour disputes, grievances, strikes or lockouts, pending or threatened.

(k)

the assets set forth under the heading “Purchased Assets” in Schedule 2.3(c) are all the assets comprising Fording’s Prairie Operations; and

(l)

since December 31, 2001, and other than as disclosed in the Fording Disclosure Letter or the Fording Disclosure Record, there has not been any Material Adverse Change in the condition (financial or otherwise), assets, liabilities, operations, earnings on business of the Prairie Operations, on a consolidated basis.

- 30 -

3.3

Representations and Warranties of Teck

Teck represents and warrants to and in favour of the other Parties as follows and acknowledges that the other Parties are relying upon same in connection with the transactions contemplated herein:

(a)

Teck is a corporation incorporated and validly existing under the Laws of Canada and has the corporate power to own or lease its property, to carry on its business as now being conducted;

(b)

Teck has all necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of Teck; without limiting the generality of the foregoing, Teck has the necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder, on a basis which does not require Teck to seek the prior approval of its shareholders;

(c)

this Agreement is a legal, valid and binding obligation of Teck, enforceable against Teck in accordance with its terms, subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought;

(d)

the approval, execution and delivery of this Agreement by Teck, the performance by it of its obligations under such agreement and the completion of the Transaction, will not:

(i)

(A)

its certificate of incorporation, articles, by-laws or other charter documents;

(B)

- 31 -

(C)

any contract, license, permit or government grant to which Teck is a party or by which it is bound or subject or is the beneficiary, except as disclosed in the Teck Disclosure Letter or as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on the Teck Contributed Assets;

(ii)

result in the imposition of any encumbrance, charge or lien upon any of its assets except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on the Teck Contributed Assets; or

(iii)

restrict, hinder, impair or limit the ability of any Teck Contributed Assets to be operated in the manner in which they are currently being operated, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on the Teck Contributed Assets.

(e)

the Teck Mine Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods, present fairly in all material respects the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of the Teck Contributed Assets as at the date thereof and the revenues, earnings, and results of operations of the Teck Contributed Assets for the periods presented;

(f)

no Material Adverse Change has occurred in relation to the Teck Contributed Assets that is not disclosed in documents required to be filed by Teck with the British Columbia Securities Commission in connection with its status as a “reporting issuer” under the British Columbia Securities Act and other applicable Laws, and with those other jurisdictions where it is a reporting issuer or the equivalent as required to be filed by it in connection with such status (collectively the “Teck Disclosure Record”), and Teck has, in respect of all disclosure relating to the Teck Contributed Assets complied in all material respects with applicable Laws and has not failed to state a material fact required to be stated in order to make the statements contained therein not misleading in light of the circumstances in which they were made. Teck has not filed any confidential material change reports relating in any way to the Teck Contributed Assets as part of the Teck Disclosure Record that continue to be confidential;

(g)

since December 31, 2001, and other than as disclosed in the Teck Disclosure Letter or the Teck Disclosure Record, there has not been any Material Adverse Change in the condition (financial or otherwise), assets, liabilities, operations, earnings or business of Teck or the Teck Contributed Assets;

(h)

there is no suit, action or proceeding pending, or to the knowledge of Teck, threatened against Teck or any subsidiary of Teck that would impede Teck’s ability to complete the Transaction or that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Teck Contributed Assets, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over Teck or any subsidiary outstanding against Teck or any subsidiary causing, or which in so far as can reasonably be foreseen, in the future would materially impede Teck’s ability to complete the Transaction or that would cause, a Material Adverse Effect on Teck or the Teck Contributed Assets;

- 32 -

(i)

except as disclosed in the Teck Disclosure Letter, there is no environmental liability, nor factors likely to give rise to any environmental liability, affecting the Teck Contributed Assets that individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Teck or the Teck Contributed Assets, and the operation of the Teck Contributed Assets by Teck has not violated or infringed any Environmental Law now in effect except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Teck or the Teck Contributed Assets; the operation of the Teck Contributed Assets by Teck has not violated or infringed any then current Environmental Law as applied at that time, other than such violations or infringements that, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on Teck or the Teck Contributed Assets;

(j)

except as disclosed in the Teck Disclosure Letter, Teck has good and marketable (and in the case of equipment valid as opposed to marketable) title to the Teck Contributed Assets, applying customary standards in the mining industry, including its operating properties, equipment and mineral reserves and resources (other than leasehold property as to which Elkview is a lessee, in respect of which Elkview has a valid leasehold interest), except for such defects in title that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Teck or the Teck Contributed Assets; other than the Bullmoose assets, which are owned in a joint venture, Teck is exclusively entitled to possess and dispose of the Teck Contributed Assets;

(k)

the reserves and resources of the Teck Contributed Assets as set forth in the Teck Annual Information Form were prepared in accordance with accepted engineering practices and were, at such date, in compliance in all material respects with the requirements applicable to the presentation of such reserves and resources in documents filed with the British Columbia Securities Commission, including without limitation, the provisions of National Instrument 43-101;

(l)

except as disclosed in the Teck Disclosure Letter, Teck has all permits, licences, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, applicable Governmental Authorities that are required in order to permit it to carry on its business in respect of the Teck Contributed Assets as presently conducted, except for such permits, licences, certificates, orders, filings, applications and registrations, the failure to have or make, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on Teck or the Teck Contributed Assets;

- 33 -

(m)

each of Teck and each subsidiary of Teck has duly filed on a timely basis all material tax returns required to be filed by it and has paid all taxes which are due and payable and has paid all assessments and reassessments, and all other taxes, governmental charges, penalties, interest and fines due and payable on or before the date hereof, in each case, of a material nature, and adequate provision has been made for taxes payable for the current period for which tax returns are not yet required to be filed; there are no material actions, suits, or claims asserted or assessed against Teck or any subsidiary of Teck in respect of taxes, governmental charges or assessments, nor any material matters under discussion with the CCRA or any Governmental Authority relating to taxes, governmental charges or assessments asserted by such Governmental Authority except as would not, individually or in the aggregate, reasonably be expected to impede Teck’s ability to consummate the Transaction or to create a lien or encumbrance on the Teck Contributed Assets;

(n)

the Teck Contributed Assets are being and have been operated in all material respects in compliance with all applicable Laws, regulations and ordinances of all authorities having jurisdiction, except where the failure to comply has not been and would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on Teck or the Teck Contributed Assets; Teck has not been notified by any Governmental Authority of any investigation relating to the Teck Contributed Assets that is pending or threatened, nor has any Governmental Authority notified Teck of such Governmental Authority’s intention to commence or to conduct any investigation relating to the Teck Contributed Assets;

(o)

except as set out in the Teck Disclosure Letter or for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on Teck or the Teck Contributed Assets:

(i)

the Teck Mine Benefit Plans comply in all respects with all applicable Laws and such plans have been administered in compliance with applicable Laws and their terms;

(ii)

none of the Teck Mine Benefit Plans, other than plans which provide only monetary retirement payments in accordance with the terms of such plans, provides benefits beyond retirement or other termination of service to Teck Mine Employees or former Teck Mine Employees or to the beneficiaries or dependants of such employees;

(iii)

all benefits accrued under the Teck Mine Benefit Plans have been properly accrued on the Teck Mine Financial Statements in accordance with generally accepted accounting principles; and

- 34 -

(iv)

no event has occurred and no condition or circumstance exists that has resulted in or could reasonably be expected to result in any Teck Mine Benefit Plan being ordered, or required to be, terminated or wound up in whole or in part, having its registration under applicable Laws refused or revoked, being placed under the administration of any trustee or receiver or Governmental Authority or being required to pay any material taxes, penalties, payments or levies under applicable Laws;

(p)

with respect to Teck Mine Employees:

(i)

the Teck Disclosure Letter sets forth as of December 3, 2002 a list of all Teck Mine Employees, together with the titles and material terms of employment, including service date, current wages, salaries or hourly rate of pay of, and bonus (whether monetary or otherwise) paid or payable to each such Teck Mine Employee and the date upon which such wage, salary, rate or bonus became effective, and there has been no material change in respect of such matters;

(ii)

the Teck Disclosure Letter sets forth a complete list of all collective agreements to which any of the Teck Mine Employees are subject;

(iii)

except as set forth at item (ii) above and except for those written or oral employment contracts with salaried Teck Mine Employees identified in the Teck Disclosure Letter, there are no written or oral contracts of employment entered into with any employees that will be binding upon the Partnership upon completion of the Transaction and that are not terminable on the giving of reasonable notice in accordance with applicable Laws;

(iv)

except for the Teck Mine Benefits Plans, there are no pension or benefit plans covering the Teck Mine Employees and no employment policies or plans, including policies or plans regarding incentive compensation, stock options, severance pay or terms or conditions upon which Teck Mine Employees may be terminated, which will be binding upon the Partnership or FCL following completion of the Transaction;

(v)

the amount of salaries, bonuses, and other remuneration including vacation pay and unpaid earned wages of the Teck Mine Employees as of the Effective Date will have been paid in full, and there is not currently and will not at the Effective Time be any outstanding assessment, order, certificate, lien or judgment under any employment standards, health and safety or other employment legislation;

(vi)

the records maintained by Teck and which will be delivered to Fording at the Closing Time relating to the Teck Mine Employees accurately set out all banked vacation entitlement, regular and supplementary vacation pay, banked and deferred overtime compensation, time-off entitlement, accumulated time-off entitlement, severance and retirement benefits and any other emoluments or benefits due or accruing; and

- 35 -

(vii)

except for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Teck Contributed Assets, to the knowledge of Teck, there are in respect of the Teck Mine Employees:

(A)

no legal proceedings involving governmental tribunals;

(B)

no collective agreements currently under negotiation; and

(C)

no labour disputes, grievances, strikes or lockouts, pending or threatened.

(q)

Teck has available to it sufficient cash resources or committed credit facilities in order to allow it to complete its obligations hereunder;

(r)

except as herein contemplated, Teck has not entered into any agreement or understanding with any Person regarding the manner in which it will exercise the rights to any Units of the Fund which it will hold;

(s)

other than as contemplated herein, neither Teck nor any of its Affiliates is a party to or bound or affected by any commitment, agreement or document containing any covenant expressly limiting its freedom to compete in any line of business other than such restrictive covenants which individually or in the aggregate, directly or indirectly, have not had or could not reasonably be expected to have a Material Adverse Effect on the Teck Contributed Assets;

(t)

the Teck Contributed Assets are insured against loss or damage as is appropriate to such assets, in such amounts and against such risks as are customarily carried and insured against by owners of comparable businesses and assets, and such insurance coverages will be continued in full force and effect to and including the Effective Date, other than those insurance coverages in respect of which the failure to continue in full force and effect could not reasonably be expected to have a Material Adverse Effect on the Teck Contributed Assets;

(u)

the Teck Contributed Assets (other than those owned by Quintette Coal Partnership and Teck-Bullmoose Coal Inc.) comprise all assets used by Teck to carry on the business conducted by Teck at the Elkview Mine; and

(v)

except as set out in the Teck Disclosure Letter, Teck is up to date in all of its reclamation bonding in all material respects.

- 36 -

3.4

Representations and Warranties of Westshore

Westshore represents and warrants to and in favour of the other Parties as follows and acknowledges that the other Parties are relying upon same in connection with the transactions contemplated herein:

(a)

Westshore is a trust validly existing under the Laws of British Columbia and has the power to own or lease its property, to carry on its business as now being conducted;

(b)

Westshore has all necessary power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary action on the part of Westshore; without limiting the generality of the foregoing, Westshore has the necessary power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder, on a basis which does not require Westshore to seek the prior approval of its securityholders;

(c)

this Agreement is a legal, valid and binding obligation of Westshore, enforceable against Westshore in accordance with its terms subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought;

(d)

the approval, execution and delivery of this Agreement by Westshore, the performance by it of its obligations under such agreement and the completion of the Transaction, will not:

(i)

(A)

its declaration of trust or other charter documents;

(B)

(C)

any contract, license, permit or government grant to which Westshore is party or by which it is bound or subject or is the beneficiary, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction;

- 37 -

(ii)

(iii)

restrict, hinder, impair or limit the ability of Westshore to carry on business as and where it is now being carried on, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction;

(e)

except as disclosed in the Westshore Disclosure Letter, there is no suit, action or proceeding pending, or to the knowledge of Westshore, threatened against Westshore that would materially impede Westshore’s ability to complete the Transaction, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over Westshore outstanding against Westshore causing, or which in so far as can reasonably be foreseen, in the future would materially impede Westshore’s ability to complete the Transaction;

(f)

Westshore has available to it sufficient cash resources or committed credit facilities in order to allow it to complete its obligations hereunder; and

(g)

except as contemplated herein, Westshore has not entered into any agreement or understanding with any Person regarding the manner in which it will exercise the rights to any Units of the Fund which it will hold.

3.5

Representations and Warranties of OTPP

OTPP represents and warrants to and in favour of the other Parties as follows and acknowledges that the other Parties are relying upon same in connection with the transactions contemplated herein:

(a)

OTPP is a non-share capital corporation validly existing under the Laws of Ontario and has the power to own or lease its property, and to carry on its business as now being conducted;

(b)

OTPP has all necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of OTPP; without limiting the generality of the foregoing, OTPP has the necessary power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder, on a basis which does not require OTPP to seek the prior approval of its members;

(c)

this Agreement is a legal, valid and binding obligation of OTPP, enforceable against OTPP in accordance with its terms subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought;

- 38 -

(d)

the approval, execution and delivery of this Agreement by OTPP, the performance by it of its obligations under such agreement and the completion of the Transaction, will not:

(i)

result (with or without notice or the passage of time) in a violation or breach of or require any consent to be obtained under or give rise to any termination, purchase or sale rights or payment obligation under any provision of:

(A)

its certificate of incorporation, articles, by-laws or other charter documents;

(B)

(C)

any contract, license, permit or government grant to which OTPP is party or by which it is bound or subject or is the beneficiary, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction;

(ii)

(iii)

restrict, hinder, impair or limit the ability of OTPP to carry on business as and where it is now being carried on, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction;

(e)

there is no suit, action or proceeding pending, or to the knowledge of OTPP, threatened against OTPP that would materially impede OTPP’s ability to complete the Transaction, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over OTPP outstanding against OTPP causing, or which in so far as can reasonably be foreseen, in the future would materially impede OTPP’s ability to complete the Transaction;

(f)

OTPP has available to it sufficient cash resources or committed credit facilities in order to allow it to complete its obligations hereunder; and

- 39 -

(g)

except as contemplated herein, OTPP has not entered into any agreement or understanding with any Person regarding the manner in which it will exercise the rights to any Units of the Fund which it will hold.

3.6

Representations and Warranties of Xxxxxxxx

Xxxxxxxx represents and warrants to and in favour of the other Parties as follows and acknowledges that the other Parties are relying upon same in connection with the transactions contemplated herein:

(a)

Sherritt is a corporation validly existing under the Laws of New Brunswick and has the power to own or lease its property, to carry on its business as now being conducted;

(b)

Sherritt has all necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder; the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of Sherritt; without limiting the generality of the foregoing, Sherritt has the necessary power, authority and capacity to enter into this Agreement and to carry out its obligations hereunder, on a basis which does not require Sherritt to seek the prior approval of its securityholders;

(c)

this Agreement is a legal, valid and binding obligation of Sherritt, enforceable against Sherritt in accordance with its terms subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought;

(d)

the approval, execution and delivery of this Agreement by Sherritt, the performance by it of its obligations under such agreement and the completion of the Transaction, will not:

(i)

(A)

its certificate of incorporation, articles, by-laws or other charter documents;

(B)

- 40 -

(C)

any contract, license, permit, government grant to which Sherritt is party or by which it is bound or subject or is the beneficiary, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction;

(ii)

(iii)

restrict, hinder, impair or limit the ability of Sherritt to carry on business as and where it is now being carried on, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction;

(e)

there is no suit, action or proceeding pending, or to the knowledge of Sherritt, threatened against Sherritt that would materially impede Sherritt’s ability to complete the Transaction, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over Sherritt outstanding against Sherritt causing, or which in so far as can reasonably be foreseen, in the future would materially impede Sherritt’s ability to complete the Transaction;

(f)

Sherritt has available to it sufficient cash resources or committed credit facilities in order to allow it to complete its obligations hereunder; and

(g)

except as contemplated herein, Sherritt has not entered into any agreement or understanding with any Person regarding the manner in which it will exercise the rights to any Units of the Fund which it will hold.

3.7

Representations and Warranties of OTPP and Sherritt Regarding Luscar Contributed Assets

OTPP and Sherritt, jointly and severally, represent and warrant to and in favour of the other Parties as follows and acknowledge that the other Parties are relying upon same in connection with the transactions contemplated herein:

(a)

each entity that is controlled by Sherritt and OTPP which is a seller of the Luscar Contributed Assets and each entity which owns or has an interest in any part of the Luscar Contributed Assets (the “Luscar Entities”) is duly incorporated or created, as applicable, organized and validly existing under the Laws of the jurisdiction in which it is organized and each such entity has the power to own or lease its property, to carry on its business as now being conducted, to effect the terms of this Agreement and to perform its obligations hereunder;

(b)

the approval, execution and delivery of this Agreement by each of OTPP and Sherritt, the performance by them of their obligations hereunder and the completion of the Transaction, will not:

- 41 -

(i)

(A)

the constating documents of the Luscar Entities or the Luscar/CONSOL Joint Ventures;

(B)

(C)

any contract, license, permit, government grant to which a Luscar Entity or the Luscar/CONSOL Joint Ventures is a party or by which it is bound or subject or is the beneficiary, as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on the Luscar Contributed Assets;

(ii)

result in the imposition of any encumbrance, charge or lien upon any of the Luscar Contributed Assets except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on the Luscar Contributed Assets; or

(iii)

restrict, hinder, impair or limit the ability of any Luscar Contributed Assets to be operated in the manner in which they are currently being operated, except as would not, individually or in the aggregate, reasonably be expected to prevent or delay the Transaction or have a Material Adverse Effect on the Luscar Contributed Assets.

(c)

the Luscar Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods, present fairly in all material respects the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of the business disclosed therein which includes the Luscar Contributed Assets, on a consolidated basis, as at the date thereof and the revenues, earnings, and results of operations of the business disclosed therein, which includes Luscar’s share of the Luscar Contributed Assets, for the periods presented; the Luscar New Financial Statements will be prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods, will present fairly in all material respects the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of the Luscar Contributed Assets, on a combined basis, as at the date thereof and the revenues, earnings and results of operations of the Luscar Contributed Assets for the periods presented;

- 42 -

(d)

no Material Adverse Change has occurred in relation to the Luscar Contributed Assets that is not disclosed in documents filed by SCAI or required to be filed by any Luscar Entity or Sherritt with any securities regulatory authorities in connection with its status as a “reporting issuer” under applicable Laws, including U.S. securities laws, and with those other jurisdictions where any Luscar Entity or Sherritt is a reporting issuer or the equivalent as required to be filed by it in connection with such status (collectively the “Luscar Disclosure Record”), and OTPP, Sherritt and Luscar have, in respect of all disclosure relating to the Luscar Contributed Assets and OTPP and Sherritt in respect of the SCAI Offer in so far as it refers to the Luscar Contributed Assets complied in all material respects with applicable Laws and has not failed to state a material fact required to be stated in order to make the statements contained therein not misleading in light of the circumstances in which they were made. Sherritt and Luscar have not filed any confidential material change reports relating in any way to the Luscar Contributed Assets as part of the Luscar Disclosure Record that continue to be confidential;

(e)

since December 31, 2001, and other than as disclosed in the Luscar Disclosure Letter, there has not been any Material Adverse Change in the condition (financial or otherwise), assets, liabilities, operations, earnings or business of the Luscar/CONSOL Joint Ventures, the Luscar Entities or the Luscar Contributed Assets as a whole;

(f)

except as has been disclosed in the Luscar Disclosure Letter, there is no suit, action or proceeding pending, or to the knowledge of OTPP or Sherritt, threatened against OTPP, Sherritt, the Luscar/CONSOL Joint Ventures and any Luscar Entity that would impede OTPP, Sherritt and any Luscar Entity’s ability to complete the Transaction or that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Luscar Contributed Assets, and there is no judgment, decree, injunction, rule or order of any Governmental Authority with jurisdiction over any of OTPP, Sherritt, the Luscar/CONSOL Joint Ventures and any Luscar Entity outstanding against any of OTPP, Sherritt, the Luscar/CONSOL Joint Ventures and any Luscar Entity causing, or which in so far as can reasonably be foreseen, in the future would materially impede the completion of the Transaction or that would cause, a Material Adverse Effect on the Luscar Contributed Assets;

(g)

except as disclosed in the Luscar Disclosure Letter, there is no environmental liability, nor factors likely to give rise to any environmental liability, affecting the Luscar Contributed Assets that individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Luscar Contributed Assets, and the operation of the Luscar Contributed Assets by the Luscar/CONSOL Joint Ventures has not violated or infringed any Environmental Law now in effect except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Luscar Contributed Assets; the operation of the Luscar Contributed Assets by the Luscar/CONSOL Joint Ventures has not violated or infringed any then current Environmental Law as applied at that time, other than such violations or infringements that, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on the Luscar Contributed Assets;

- 43 -

(h)

except as disclosed in the Luscar Disclosure Letter, the Luscar/CONSOL Joint Ventures and/or the Luscar Entities, as applicable, have good and marketable (and in the case of equipment valid as opposed to marketable) title to the Luscar Contributed Assets, applying customary standards in the mining industry, including its operating properties, equipment and mineral reserves and resources (other than leasehold property as to which such entity is a lessee, in respect of which Luscar (or an Affiliate) has a valid leasehold interest), except for such defects in title that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Luscar Contributed Assets; OTPP and Sherritt are entitled to dispose of their share of the Luscar Contributed Assets under the Agreement, either in their own right or through their Affiliates;

(i)

the reserves and resources relating to the Luscar Contributed Assets as set forth in the Sherritt Annual Information Form were prepared in accordance with accepted engineering practices and were, at such date, in compliance in all material respects with the requirements applicable to the presentation of such reserves and resources in documents filed with the Ontario Securities Commission, including without limitation, the provisions of National Instrument 43-101;

(j)

except as disclosed in the Luscar Disclosure Letter, each of the Luscar/CONSOL Joint Ventures and the Luscar Entities has all permits, licences, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, applicable Governmental Authorities that are required in order to permit each to carry on its business in respect of the Luscar Contributed Assets as presently conducted, except for such permits, licences, certificates, orders, filings, applications and registrations, the failure to have or make, individually or in the aggregate, have not had and could not reasonably be expected to have, a Material Adverse Effect on the Luscar Contributed Assets;

(k)

each of the Luscar/CONSOL Joint Ventures and the Luscar Entities has duly filed on a timely basis all material tax returns required to be filed by each of them and has paid all taxes which are due and payable and has paid all assessments and reassessments, and all other taxes, governmental charges, penalties, interest and fines due and payable on or before the date hereof, in each case, of a material nature, and adequate provision has been made for taxes payable for the current period for which tax returns are not yet required to be filed; there are no material actions, suits, or claims asserted or assessed against any Luscar Entity or any of their respective subsidiaries in respect of taxes, governmental charges or assessments, nor any material matters under discussion with the CCRA or any Governmental Authority relating to taxes, governmental charges or assessments asserted by such Governmental Authority except as would not, individually or in the aggregate, reasonably be expected to impede OTPP’s and Sherritt’s ability to consummate the Transaction or to create a lien or encumbrance on any Luscar Entity’s (other than a selling entity) interest in the Luscar Contributed Assets;

- 44 -

(l)

unless otherwise agreed by Fording, Luscar and CONSOL the allocation of purchase price with respect the Luscar Contributed Assets will result in the creation of $150,754,000 of Canadian development expenses as defined for purposes of the Income Tax Act (Canada) (the “Tax Act”) and $71,446,000 of undepreciated capital cost as defined in the Tax Act of assets described in class 41 of Schedule II to the Regulations to the Tax Act;

(m)

the Luscar Contributed Assets are being and have been operated in all material respects in compliance with all applicable Laws, regulations and ordinances of all authorities having jurisdiction, except where the failure to comply has not been and would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on any Luscar Entity or the Luscar Contributed Assets; OTPP, Sherritt or any Luscar Entity have not been notified by any Governmental Authority of any investigation relating to the Luscar Contributed Assets that is pending or threatened, nor has any Governmental Authority notified OTPP, Sherritt or any Luscar Entity of such Governmental Authority’s intention to commence or to conduct any investigation relating to the Luscar Contributed Assets;

(n)

except as set out in the Luscar Disclosure Letter or for exceptions that could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Luscar Contributed Assets:

(i)

the Luscar Benefit Plans comply in all respects with all applicable Laws and such plans have been administered in compliance with applicable Laws and their terms;

(ii)

none of the Luscar Benefit Plans, other than plans which provide only monetary retirement payments in accordance with the terms of such plans, provides benefits beyond retirement or other termination of service to Luscar Employees or former Luscar Employees or to the beneficiaries or dependants of such employees;

(iii)

all benefits accrued under the Luscar Benefit Plans have been properly accrued on the Luscar Financial Statements in accordance with generally accepted accounting principles;

(iv)

no event has occurred and no condition or circumstance exists that has resulted in or could reasonably be expected to result in any Luscar Benefit Plan being ordered, or required to be, terminated or wound up in whole or in part, having its registration under applicable Laws refused or revoked, being placed under the administration of any trustee or receiver or Governmental Authority or being required to pay any material taxes, penalties, payments or levies under applicable Laws; and

- 45 -

(v)

all of the Luscar Benefit Plans are either (A) fully insured or (B) fully funded in accordance with applicable Laws on a going concern solvency basis and winding-up solvency basis;

(o)

with respect to Luscar Employees except for exceptions that could not, individually or in the aggregate, be expected to have a Material Adverse Effect on the Luscar Contributed Assets, to the knowledge of each of OTPP, Sherritt and Luscar there are in respect of the Luscar Employees:

(i)

no legal proceedings involving governmental tribunals;

(ii)

no collective agreements currently under negotiation; and

(iii)

no labour disputes, grievances, strikes or lockouts, pending or threatened.

(p)

other than as contemplated herein, no Luscar Entity is a party to or bound or affected by any commitment, agreement or document containing any covenant expressly limiting its freedom to compete in any line of business other than such restrictive covenants which individually or in the aggregate, directly or indirectly, have not had or could not reasonably be expected to have a Material Adverse Effect on the Luscar Contributed Assets;

(q)

the Luscar Contributed Assets comprise all assets necessary to carry on the metallurgical coal business carried on by the Luscar/CONSOL Joint Ventures;

(r)

OTPP and Sherritt have no reason to believe that the conditions precedent to the completion of the transactions contemplated by the Luscar Contribution Term Sheet will not be satisfied; and

(s)

except as set out in the Luscar Disclosure Letter, the Luscar Entities are up to date in respect of all of their reclamation bonding requirements in all material respects.

3.8

Nature and Survival

(a)

Subject to Sections 3.8(b), 3.8(c) and 3.8(d), all representations, warranties and covenants contained in this Agreement on the part of each of the Parties shall survive the consummation of the Transaction.

(b)

Representations and warranties concerning tax matters contained in this Agreement shall survive for a period of 90 days after the relevant authorities shall no longer be entitled to assess liability for tax against the representing Party for any particular taxation year ended on or prior to the Effective Date, having regard without limitation, to any waivers given by the Party in respect of any taxation year.

(c)

The representations and warranties set forth at Sections 3.1(k), 3.2(b), 3.3(j) and 3.7(h) of this Agreement shall survive for a period of ten years following the Effective Date.

- 46 -

(d)

All other representations and warranties shall only survive for a period of two years following the Effective Date; however any claim which is based on intentional misrepresentation or fraud may be brought at any time.

If no claim shall have been made under this Agreement against a Party for any incorrectness in or breach of any representation or warranty made in this Agreement prior to the expiry of the survival periods set forth above, such Party shall have no further liability under this Agreement with respect to such representations or warranties.

ARTICLE 4

COVENANTS

4.1

Covenants of Fording

Except to the extent that the Board of Directors has withdrawn, modified or qualified its recommendation to Securityholders with respect to the Transaction, Fording will and will cause its subsidiaries to perform all obligations required, necessary or desirable to be performed by Fording or any of its subsidiaries under this Agreement, co-operate with the other Parties in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the Transaction and, without limiting the generality of the foregoing, Fording shall and where necessary and appropriate shall cause its subsidiaries to:

(a)

use commercially reasonable efforts to obtain the requisite approvals of the Securityholders to the Amended Arrangement in accordance with the terms of this Agreement;

(b)

apply for and use commercially reasonable efforts to obtain all Regulatory Approvals relating to Fording or any of its subsidiaries and, in doing so, to keep the other Parties informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including, but not limited to, providing the other Parties with copies of all related applications and notifications (in draft form, except that commercially confidential information of Fording may be expurgated in the other Parties’ copies) in order for such Party to provide its reasonable comments and providing the other Parties with copies of all material correspondence;

(c)

use commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Authorities from Fording or any of its subsidiaries relating to the Amended Arrangement;

(d)

use commercially reasonable efforts to obtain all necessary waivers, consents and approvals required to be obtained by Fording or a subsidiary in connection with the Amended Arrangement from other parties to any loan agreements, material leases or other material contracts or hold such agreements, leases or contracts in trust pending receipt of such waiver, consent or approval;

- 47 -

(e)

carry out the terms of the Interim Order and the Final Order applicable to it and use commercially reasonable efforts to comply promptly with all requirements which applicable Laws may impose on Fording or its subsidiaries with respect to the transactions contemplated by this Agreement;

(f)

not take any action, refrain from taking any action or permit any action to be taken or not taken, inconsistent with this Agreement and which would reasonably be expected to significantly impede the consummation of the Amended Arrangement;

(g)

except as provided for in the Amended Plan, not make any distribution by way of dividend, distribution of property or assets, return of capital or otherwise to or for the benefit of Shareholders, except in each case, in the ordinary and usual course consistent with past practice;

(h)

continue to carry on business in the ordinary course consistent with past practice and, to use commercially reasonable efforts to preserve intact its present business organization, and its relationship with those having business dealings with it, to the end that its goodwill and business shall not be impaired in a manner that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Fording;

(i)

execute and deliver for the benefit of RBC certificates of senior officers of Fording confirming such matters as RBC may reasonably request in order to enable it to issue and deliver the RBC Fairness Opinion; and

(j)

allow representatives of the Parties to attend the Fording Meeting.

4.2

Covenants of Other Parties

Each of the Parties, other than Fording, hereby covenants and agrees to perform or cause their respective Affiliates to perform all obligations required or desirable to be performed by it or them under this Agreement, to co-operate with Fording in connection therewith, and to do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, each such Party shall and where necessary and applicable shall cause its Affiliates to:

(a)

apply for and use commercially reasonable efforts to obtain all Regulatory Approvals relating to it or its Affiliates and, in doing so, to keep Fording informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including, but not limited to, providing Fording with copies of all related applications and notifications, in draft form (except that commercially confidential information of such Party may be expurgated in Fording’s copy) in order for Fording to provide its reasonable comments and providing Fording with copies of all material correspondence;

- 48 -

(b)

effect all necessary registrations, filings and submissions of information required by Governmental Authorities from such Party or their respective Affiliates relating to the Transaction;

(c)

vote the Common Shares held by them, and cause their Affiliates and, to the extent possible, all of their respective directors and officers to vote the Common Shares held by them, in favour of the Resolutions at the Fording Meeting;

(d)

use commercially reasonable efforts to obtain all necessary waivers, consents and approvals required to be obtained by it or a subsidiary or associate in connection with the Amended Arrangement from other parties to any loan agreements, material leases or other material contracts;

(e)

subject to applicable Law, not take any action to alter or amend any rights to indemnification or exculpation existing in favour of directors or officers of Fording or Fording Subsidiaries or otherwise diminish directors or officers liability insurance currently maintained by Fording in a manner that could be prejudicial to such Persons for a period of six years from the Effective Date;

(f)

(g)

until the third anniversary of the Effective Date, not take any action to alter or amend any Fording compensation arrangement other than as contemplated in the Information Circular, without substituting therefore compensation arrangements that are, in the opinion of the continuing directors, no less favourable, in the aggregate, than those arrangements currently in existence; and

(h)

cause Fording to honour all contractual severance arrangements disclosed in the Fording Disclosure Record or Fording Disclosure Letter.

4.3

Ordinary Course Covenants

(a)

Subject to the effects of the wind storm damage at Westshore’s coal terminal at Xxxxxxx Bank, British Columbia, as described in Westshore’s press release dated January 6, 2003, Teck covenants and agrees to continue to carry on its metallurgical coal business in the ordinary course consistent with past practice and to use commercially reasonable efforts to preserve intact its present business organization and its relationship with those having business dealings with it, to the end that its goodwill and business shall not be impaired in a manner that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Teck Contributed Assets.

(b)

Subject to the effects of the wind storm damage at Westshore’s coal terminal at Xxxxxxx Bank, British Columbia, as described in Westshore’s press release dated January 6, 2003, OTPP and Sherritt, jointly and severally, covenant and agree to cause the Luscar/CONSOL Joint Ventures and Luscar Entities to continue to carry on and cause the Luscar Contributed Assets business to be carried on in the ordinary course consistent with past practice and to use commercially reasonable efforts to preserve intact its present business organization and its relationship with those having business dealings with it, to the end that its goodwill and business shall not be impaired in a manner that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Luscar Contributed Assets.

- 49 -

4.4

Fording Covenants Regarding Non-Solicitation

(a)

Fording shall, and shall cause the officers, directors, employees, representatives and agents of Fording and its subsidiaries to cease all current discussions and negotiations regarding any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal, and request and enforce the return or destruction of all confidential information provided in connection therewith.

(b)

Subject to Section 4.4(e), Fording shall not, directly or indirectly, through any officer or director of Fording, or any of its subsidiaries, (i) solicit, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing information or entering into any form of agreement, arrangement or understanding) the initiation of any inquiries or proposals regarding an Acquisition Proposal, (ii) participate in any discussions or negotiations regarding, or provide any confidential information with respect to, any Acquisition Proposal, (iii) approve or recommend, or publicly propose to approve or recommend, any Acquisition Proposal; or (iv) accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement, arrangement or understanding related to any Acquisition Proposal.

(c)

Notwithstanding Section 4.4(b) and any other provision of this Agreement, nothing shall prevent the Board of Directors from (i) complying with Fording’s disclosure obligations under applicable Laws with regard to an Acquisition Proposal, (ii) taking any other action to the extent ordered or otherwise mandated by any court of competent jurisdiction, (iii) considering, participating in any discussions or negotiations, or entering into a confidentiality agreement and providing information pursuant to Section 4.4(e), or (iv) withdrawing, modifying or qualifying (or publicly proposing to withdraw, modify or qualify), in any manner adverse to the other Parties, the approval or recommendation of the Amended Arrangement by the Board of Directors if and only to the extent that, in any such case referred to in clause (iii) or this clause (iv), (A) the Fording Meeting shall not have occurred, (B) Fording has complied with this Section 4.4 and (C) the Board of Directors concludes in good faith in the case of clauses (iii) and (iv), after consultation with its outside legal and financial advisors, (x) that any required financing of such Acquisition Proposal is reasonably likely to be obtained; (y) in the case of clause (iii) that, after taking the steps contemplated in clause (iii), it is reasonably likely that the Board of Directors could determine that such Acquisition Proposal is a Superior Proposal; and (z) in the case of clause (iv) that the Acquisition Proposal constitutes a Superior Proposal.

- 50 -

(d)

Fording shall forthwith notify the other Parties of any Acquisition Proposal and any inquiry of which a director or a senior officer of Fording or Fording’s financial advisor is made aware that could lead to an Acquisition Proposal, or any amendments to the foregoing, or any request for non-public information relating to Fording or any Fording Subsidiary in connection with an Acquisition Proposal or for access to the properties, books or records of Fording or any Fording Subsidiary by any Person. Such notice shall include a description of the material terms and conditions of any proposal, the identity of the Person making the first mentioned proposal, inquiry or contact and provide such other details of the proposal, inquiry or contact as the other Parties may reasonably request. Fording shall keep the other Parties informed of the status, including any change to the material terms, of any such Acquisition Proposal or inquiry in a timely manner, on at least a next day basis.

(e)

If Fording receives a request for material non-public information from a Person who has made an unsolicited bona fide written Acquisition Proposal and Fording is permitted, subject to and as contemplated under Section 4.4(c), to negotiate the terms of such Acquisition Proposal, then, and only in such case, the Board of Directors may, subject to the execution by such Person of a confidentiality agreement containing employee non-solicitation and standstill provisions substantially similar to those contained in the Confidentiality Agreements provide such Person with access to information regarding Fording; provided, however, that the Person making the Acquisition Proposal shall not be precluded under such confidentiality agreement from making an Acquisition Proposal for consideration for each Common Share that is equal to or superior to that contained in such Acquisition Proposal at the time of entry into such confidentiality agreement in accordance with this Agreement, and provided further that Fording sends a copy of any such confidentiality agreement to the other Parties promptly upon its execution and the other Parties are each provided with a list of, and copies of, the information provided to such Person and is also provided upon request with access to similar information to which such Person was provided on a timely basis.

(f)

Fording shall ensure that its officers, directors and employees and its subsidiaries and their officers, directors and employees and any financial advisors or other advisors or representatives retained by it or its subsidiaries are aware of the provisions of this Section 4.4, and Fording shall be responsible for any breach of this Section 4.4 by its and its subsidiaries’ officers, directors, employees, representatives or agents.

4.5

Right of First Refusal

(a)

Fording will not enter into any agreement, arrangement or understanding regarding a Superior Proposal (a “Proposed Agreement”) without providing the other Parties with an opportunity to amend this Agreement to provide for consideration and financial terms which are, in the Board of Directors’ sole discretion, financially equal or superior to those contained in the Proposed Agreement, with the result that the Superior Proposal would cease to be a Superior Proposal. Fording will provide the other Parties with a copy of any Proposed Agreement, as executed by the Person making the proposal, as soon as possible and in any event not less than four Business Days prior to its proposed execution by Fording. In the event the other Parties or any combination thereof agree to amend the Agreement so that it would be financially equal or superior to the Proposed Agreement, Fording covenants to not enter into the Proposed Agreement and shall agree to work with such other Parties to amend this Agreement and no fee shall be payable under Section 6.3 in respect of the Proposed Agreement.

- 51 -

(b)

Subject to Section 4.1(a), nothing contained in this Section 4.5 shall limit in any way the obligation of Fording to convene and hold the Fording Meeting.

4.6

Access to Information

(a)

Subject to Section 4.6(c) and applicable Laws, upon reasonable notice Fording shall arrange to afford Sherritt’s officers, employees, counsel, accountants and other authorized representatives and advisors access, during normal business hours from the date hereof and until the earlier of the Effective Date or the termination of this Agreement, to its and its subsidiaries’ properties, books, contracts and records in respect to the Prairie Operations as well as to its financial management personnel without materially interfering with their other responsibilities, and, during such period, Fording shall (and shall cause each of its subsidiaries to) furnish promptly to Sherritt information concerning the Prairie Operations as Sherritt may reasonably request, subject to Fording confidentiality obligations. Subject to Section 4.6(b) and applicable Laws, upon reasonable notice, Sherritt shall arrange to afford Fording’s officers, employees, counsel, accountants and other authorized representatives and advisors access, during normal business hours from the date hereof and until the earlier of the Effective Date or the termination of this Agreement, to its and its subsidiaries’ properties, books, contracts and records in respect to the Luscar Contributed Assets as well as to its financial management personnel without materially interfering with their other responsibilities, and, during such period, Sherritt shall (and shall cause each of its subsidiaries to) furnish promptly to Fording information concerning the Luscar Contributed Assets as Fording may reasonably request, subject to Sherritt confidentiality obligations. Any costs shall be at the expense of the Party seeking access.

(b)

The Parties acknowledge that, notwithstanding Section 4.6(a), information may be competitively sensitive and that disclosure thereof shall be limited to that which is reasonably necessary for the purpose of (i) preparing submissions or applications in order to obtain the Regulatory Approvals, (ii) fulfilling legal obligations in connection with public disclosure requirements under Law, including in connection with the Further Supplement information circular or a prospectus filing, and (iii) the advancement of the Transaction; and such information shall be provided only to those persons who need to know such information for the foregoing purposes.

- 52 -

(c)

Each of Sherritt and Fording acknowledges that information provided to it under Section 4.6(a) above will be non-public and/or proprietary in nature and will be subject to the terms of the Confidentiality Agreements and Section 4.6(a). For greater certainty, the provisions of the Confidentiality Agreements shall survive the termination of this Agreement.

4.7

Completion of Transaction

The Parties shall co-operate with each other to solicit and encourage Shareholders to vote for the Arrangement Resolution (for greater certainty, this shall not include the payment of expenses incurred by the other Parties, except as otherwise contemplated herein). Each Party shall take all necessary action to complete the transactions contemplated by this Agreement, including those contemplated by the attached Term Sheets

ARTICLE 5

CONDITIONS

5.1

Mutual Conditions Precedent

The respective obligations of each Party to complete the Transaction shall be subject to the satisfaction, on or before the Closing Time, of the following conditions precedent, each of which may only be waived by the mutual consent of the Parties:

(a)

the Arrangement Resolution shall have been approved at the Fording Meeting in accordance with the Interim Order;

(b)

the Final Order shall have been granted in form and substance satisfactory to the Parties, each acting reasonably, and shall not have been set aside or modified in a manner unacceptable to the Parties, each acting reasonably, on appeal or otherwise;

(c)

Fording and/or the Partnership shall have in place credit facilities in the aggregate of $540 million;

(d)

the Articles of Arrangement and all necessary related documents filed with the Director in accordance with the Amended Arrangement shall be in form and substance satisfactory to each of the Parties, acting reasonably, and shall have been accepted for filing by the Director together with the Final Order in accordance with subsection 192(6) of the CBCA;

(e)

there shall be no action taken under any existing applicable Law or regulation, nor any statute, rule, regulation or order, which is enacted, enforced, promulgated or issued by any court, department, commission, board, regulatory body, government or Governmental Authority or similar agency, domestic or foreign, nor shall there be in force any order or decree of any such entity that:

- 53 -

(i)

makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the Transaction or any of the other transactions contemplated herein;

(ii)

results in any judgment or assessment of material damages directly or indirectly relating to the transactions contemplated herein; or

(iii)

imposes or confirms material limitations on the ability of the Fund to issue Units or effectively exercise full rights of ownership of the securities of New Fording, including, without limitation, the right to vote any such securities;

(f)

the Regulatory Approvals and the third party approvals required under the CP Arrangement Agreement, the Genesee Agreements and the CPR Agreement as well as the FX Acknowledgements shall have been obtained or satisfied on terms and conditions satisfactory to the Parties acting reasonably;

(g)

other than the Regulatory Approvals, all consents, waivers, permits, orders and approvals of any Governmental Authority, and the expiry of any waiting periods, in connection with, or required to permit, the consummation of the Amended Arrangement, the failure of which to obtain or the non-expiry of which would constitute a criminal offence or would have a Material Adverse Effect on such Party shall have been obtained or satisfied on terms that could not reasonably be expected to have a Material Adverse Effect on such Party;

(h)

there shall not have occurred any actual change or amendment to, or any proposal by the Minister of Finance (Canada) or Internal Revenue Service to change or amend, the Canadian Tax Act, or U.S. Tax Code, as applicable or to any applicable provincial tax legislation or the regulations thereunder or any publicly stated administrative position or practice in relation thereto which individually or in the aggregate, directly or indirectly, has or could reasonably be expected to have any material adverse effect on the benefits anticipated to be enjoyed by Securityholders upon consummation of the Transaction;

(i)

the approval of the TSX to the conditional substitutional listing of the Units to be issued pursuant to the Amended Arrangement shall have been obtained, subject only to the filing of required documents and such Units shall also have been listed by the NYSE, subject to official notice of issuance; and

(j)

this Agreement shall not have been terminated pursuant to Article 6.

- 54 -

5.2

Additional Conditions Precedent to the Obligations of Teck and Westshore

The respective obligations of Teck and Westshore to complete the Transaction shall also be subject to the fulfilment of each of the following conditions precedent (each of which is for Teck and Westshore’s exclusive benefit and may be waived only by Teck and Westshore acting jointly):

(a)

all covenants of Fording, OTPP and Sherritt under this Agreement to be performed on or before the Effective Time shall have been duly performed by Fording, OTPP and Sherritt in all material respects and Teck and Westshore shall have received a certificate of each of Fording, OTPP and Sherritt, respectively, addressed to Teck and Westshore respectively and dated the Effective Date, signed on behalf of Fording, OTPP and Sherritt, respectively, by two senior executive officers of each such Party (on each such Party’s behalf and without personal liability), confirming the same as at the Effective Date;

(b)

the representations and warranties of each of Fording, OTPP and Sherritt in this Agreement shall have been true and correct on the date of this Agreement as follows: (i) the representations and warranties of Fording, OTPP and Sherritt that are qualified by references to materiality shall be true and correct; (ii) the representations and warranties of Fording, OTPP and Sherritt not so qualified (except Sections 3.1(g) and 3.7(c)) shall be true and correct (except for the failure of such representation to be true and correct, individually or in the aggregate, which has not had and could not reasonably be expected to have a Material Adverse Effect on Fording, OTPP or Sherritt, respectively, or prevent or delay the Transaction); and (iii) the representations in Sections 3.1(g) and 3.7(c) shall be true and correct in all material respects, in each case as of the Closing Time as if made on and as of such time (except to the extent such representations and warranties speak solely as of an earlier date, in which event such representations and warranties shall be true and correct to such extent as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement), and Teck and Westshore shall have received a certificate of each of Fording, OTPP and Sherritt, respectively addressed to Teck and Westshore and dated the Effective Date, signed on behalf of Fording, OTPP and Sherritt, respectively, by two senior executive officers of each such Party (on each such Party’s behalf and without personal liability), confirming the same as at the Effective Date;

(c)

the board of directors of Fording shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by Fording and the subsidiaries to permit the consummation of the Amended Arrangement;

(d)

during the Pre-Effective Date Period, there shall not have occurred or have been disclosed to the public if previously undisclosed to the public and the other Parties, a Material Adverse Change to Fording as it will be constituted including the Luscar Contributed Assets; and

- 55 -

(e)

the Transaction Agreements and the Terminal Agreement shall have been executed and delivered to the other Parties, as applicable, by Fording, the Fund, OTPP and Sherritt.

5.3

Effect of Breach

Teck and Westshore may not rely on the failure of another Party to satisfy any of the conditions precedent set forth in Section 5.1 or Section 5.2 if the condition precedent would have been satisfied but for a material default by either Teck or Westshore in complying with its respective obligations in this Agreement.

5.4

Additional Conditions Precedent to the Obligations of Fording

The obligations of Fording to complete the Transaction shall also be subject to the following conditions precedent (each of which is for the exclusive benefit of Fording and may be waived by Fording):

(a)

all covenants of Teck, Westshore, OTPP and Sherritt under this Agreement to be performed on or before the Closing Time shall have been duly performed by Teck, Westshore, OTPP and Sherritt, as the case may be, in all material respects, and Fording shall have received a certificate of each of Teck, Westshore, OTPP and Sherritt addressed to Fording and dated the Effective Date, signed on behalf of Teck, Westshore, OTPP and Sherritt, respectively, by two senior executive officers of each of Teck, OTPP and Sherritt, and one trustee in the case of Westshore (on each such Party’s behalf and without personal liability), confirming the same as at the Effective Date;

(b)

all representations and warranties of each of Teck, Westshore, OTPP and Sherritt in this Agreement shall have been true and correct on the date hereof as follows: (i) the representations and warranties of Teck, Westshore, OTPP and Sherritt that are qualified by references to materiality shall be true and correct; (ii) the representations and warranties of Teck, Westshore, OTPP and Sherritt not so qualified (except Section 3.3(e) and 3.7(c)) shall be true and correct (except for the failure of such representation to be true and correct, individually or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect on any of the Teck Contributed Assets, the Luscar Contributed Assets or Westshore, as the case may be, and that could not reasonably be expected to prevent or delay the Transaction); (iii) the representations in Section 3.3(e) and 3.7(c) shall be true and correct in all material respects, in each case as of the Closing Time as if made on and as of such time (except to the extent such representations and warranties speak solely as of an earlier date, in which event such representations and warranties shall be true and correct to such extent as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement), and Fording shall have received a certificate of each of Teck, Westshore, OTPP and Sherritt addressed to Fording, and dated the Effective Date, signed on behalf of each of Teck, Westshore, OTPP and Sherritt, respectively, by two senior executive officers of each such Party (or one trustee in the case of Westshore) (in each case on each such Party’s behalf and without personal liability), confirming the same as at the Effective Date;

- 56 -

(c)

each Party shall have deposited, prior to the prescribed time for payment under the Amended Plan, the aggregate cash amounts payable by that Party pursuant to Section 2.2 and 2.3 to a trust account maintained by the Registrar and Transfer Agent of Fording to facilitate payment to Securityholders in accordance with the Amended Plan;

(d)

the Unitholder Rights Plan Resolution shall have been approved at the Fording Meeting by not less than a simple majority of the votes cast by the Shareholders in accordance with any applicable Laws;

(e)

arrangements satisfactory to Fording shall have been entered into to ensure that all outstanding Options shall have been exchanged, ultimately, for Exchange Options issued under the Exchange Option Plan; and

(f)

Fording’s credit and foreign exchange facilities shall have been reformulated to the satisfaction of the Board of Directors, acting reasonably.

5.5

Effect of Breach

Fording may not rely on the failure of another Party to satisfy any of the conditions precedent in Section 5.1 or Section 5.4 if the condition precedent would have been satisfied but for a material default by Fording in complying with its obligations in this Agreement.

5.6

Additional Conditions Precedent to the Obligations of OTPP and Sherritt

The respective obligations of each of OTPP and Sherritt to complete the Transaction shall also be subject to the fulfilment of each of the following conditions precedent (each of which is for OTPP and Sherritt’s exclusive benefit and may be waived by OTPP and Sherritt, acting jointly):

(a)

all covenants of Fording, Teck and Westshore under this Agreement to be performed on or before the Effective Time shall have been duly performed by Fording, Teck and Westshore in all material respects and OTPP and Sherritt shall have received a certificate of each of Fording, Teck and Westshore addressed to them and dated the Effective Date, signed on behalf of each of Fording and Teck by two senior executive officers and on behalf of Westshore by one trustee of Westshore (in each case on each such Party’s behalf and without personal liability), confirming the same as at the Effective Date;

(b)

the representations and warranties of each of Fording, Teck and Westshore in this Agreement shall have been true and correct on the date of this Agreement as follows: (i) the representations and warranties of Fording, Teck and Westshore that are qualified by references to materiality shall be true and correct; (ii) the representations and warranties of Fording, Teck and Westshore not so qualified (except Section 3.1(g) and 3.3(e) shall be true and correct (except for the failure of such representation to be true and correct, individually or in the aggregate, which has not had and could not reasonably be expected to have a Material Adverse Effect on Fording, Teck or Westshore, as applicable, or prevent or delay the Transaction); (iii) the representations in Section 3.1(g) and 3.3(e) shall be true and correct in all material respects, in each case as of the Closing Time as if made on and as of such time (except to the extent such representations and warranties speak solely as of an earlier date, in which event such representations and warranties shall be true and correct to such extent as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement), and OTPP and Sherritt shall have received a certificate of each of Fording, Teck and Westshore, respectively, addressed to OTPP and Sherritt and dated the Effective Date, signed on behalf of Fording and Teck by two senior executive officers of each such Party and on behalf of Westshore by one trustee of Westshore (in each case on each such Party’s behalf and without personal liability), confirming the same as at the Effective Date;

- 57 -

(c)

(d)

5.7

Effect of Breach

OTPP and Sherritt may not rely on the failure of another Party to satisfy any of these conditions precedent in Section 5.1 or Section 5.6 if the condition precedent would have been satisfied but for a material default by either OTPP or Sherritt in complying with their respective obligations in this Agreement.

5.8

Notice and Cure Provisions

(a)

The Parties will give prompt notice to each other of the occurrence, or failure to occur, at any time during the Pre-Effective Date Period of any event or state of facts which occurrence or failure would, or would be likely to:

(i)

cause any of the representations or warranties of that Party contained herein to be untrue or inaccurate on the date hereof or on the Effective Time such that the conditions set forth in any of Sections 5.1, 5.2, 5.4 or 5.6 would not be satisfied as of the Effective Time; or

(ii)

result in the failure in any material respect to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by the other hereunder prior to the Effective Time such that the conditions set forth in any of Sections 5.1, 5.2, 5.4 or 5.6, as applicable, would not be satisfied as of the Effective Time.

- 58 -

(b)

A Party may not seek to rely upon any conditions precedent contained in Sections 5.1, 5.2, 5.4 or 5.6, nor exercise any termination right arising therefrom, unless forthwith and in any event prior to the filing of the Articles of Arrangement for acceptance by the Director, a Party, as the case may be, has delivered a written notice to the other Parties specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which such Party is asserting as the basis for the non-fulfilment of the applicable condition precedent or the exercise of the termination right, as the case may be. If any such notice is delivered, provided that the breaching Party receiving such notice is proceeding diligently to cure such matter, if such matter is susceptible to being cured (for greater certainty, except by way of disclosure in the case of representations and warranties), the other Parties may not terminate this Agreement as a result thereof until four Business Days from such date on which such notice is delivered. If such notice has been delivered prior to the date of the Fording Meeting, such meeting shall, unless the Parties agree otherwise, be postponed or adjourned until the expiry of such period. If such notice has been delivered prior to the making of the application for the Final Order or the filing of the Articles of Arrangement with the Director, such application or filing, as the case may be, shall be postponed until the expiry of such period. For greater certainty, in the event that such matter is cured within the time period referred to herein without a Material Adverse Effect on the Party in breach, this Agreement may not be terminated as a result of the cured breach.

5.9

Satisfaction of Conditions

The conditions precedent set out in Sections 5.1, 5.2, 5.4 and 5.6 shall be conclusively deemed to have been satisfied, waived or released when a Certificate of Arrangement in respect of the Amended Arrangement is issued by the Director, it being understood, that such issuance will not extinguish liability arising from a breach of any covenant, representation or warranty.

ARTICLE 6

AMENDMENT AND TERMINATION

6.1

Amendment

Subject to applicable Laws, this Agreement may, at any time and from time to time before or after the holding of the Fording Meeting but not later than the Effective Date, be amended by mutual written agreement of the Parties.

6.2

Termination

(a)

If any condition contained in Sections 5.1 or 5.2 is not satisfied at or before the Closing Time, then Teck and Westshore, acting jointly, may, subject to Section 5.3 and to Section 5.8 by notice to the other Parties terminate this Agreement and the obligations of the Parties hereunder (except as otherwise herein provided, including under Section 6.3), but without detracting from the rights of Teck and Westshore arising from any breach by another Party but for which the condition would have been satisfied.

- 59 -

(b)

If any condition contained in Sections 5.1 or 5.4 is not satisfied at or before the Closing Time, then Fording may, subject to Section 5.5 and to Section 5.8, by notice to the other Parties terminate this Agreement and the obligations of the Parties hereunder (except as otherwise herein provided, including under Section 6.3), but without detracting from the rights of Fording arising from any breach by another Party but for which the condition would have been satisfied.

(c)

If any condition contained in Section 5.1 or 5.6 is not satisfied at or before the Closing time, then OTPP and Sherritt, acting jointly, may, subject to Section 5.7 and Section 5.8, by notice to the other Parties terminate the Agreement and the obligations of the Parties hereunder (except as otherwise herein provided, including under Section 6.3), but without detracting from the rights of OTPP and Sherritt arising from any breach by another Party but for which the condition would have been satisfied.

(d)

This Agreement may:

(i)

be terminated by the mutual agreement of the Parties, (and for greater certainty, without further action on the part of the Securityholders if terminated after the holding of the Fording Meeting);

(ii)

be terminated by any Party if there shall be passed any Law that makes consummation of the Amended Arrangement illegal or otherwise prohibited;

(iii)

be terminated by a Party other than Fording, if

(A)

the Board of Directors shall have failed to recommend or shall have withdrawn, modified or changed its approval or recommendation of the Arrangement Resolution, or

(B)

the Board of Directors shall have approved or recommended any Acquisition Proposal other than the Amended Arrangement;

(iv)

be terminated by Fording, provided that Fording is not then in material breach or default of any of its obligations hereunder, upon any determination by the Board of Directors at the conclusion of the process set out in Section 4.4 that an Acquisition Proposal constitutes a Superior Proposal and that the Parties’ rights under Section 4.5 have expired unexercised by them; or

(v)

be terminated by any Party if the approval of the Arrangement Resolution by the Securityholders, in the manner set out in the Interim Order, shall not have been obtained at the Fording Meeting, or if a court as a matter of final determination that is not subject to appeal declines to grant the Final Order in a form consistent with this Agreement;

- 60 -

in each case, prior to the Effective Time.

(e)

If the Effective Date has not occurred on or prior to the Outside Date, then, unless otherwise agreed in writing by the Parties, this Agreement shall terminate provided that in the event that the conditions set forth in Section 5.1(f) above shall not have been satisfied by that date, a Party may unilaterally extend the Outside Date until May 31, 2003 upon written notice to the other Parties, in which case the Outside Date shall be deemed for all purposes to be May 31, 2003, provided that the right to terminate this Agreement pursuant to this Section 6.2(e) shall not be available to the Party seeking to terminate if any action of such Party or its Affiliates or the failure of such Party or its Affiliates to perform any of its obligations under this Agreement required to be performed at or prior to the Effective Time shall have resulted in the conditions contained in Sections 5.1, 5.2, 5.4 or 5.6 (as applicable) not having been satisfied prior to the Outside Date.

(f)

If this Agreement is terminated in accordance with the foregoing provisions of this Section 6.2, no Party shall have any further liability to perform its obligations under this Agreement except as provided in Section 6.3 and as otherwise expressly contemplated by this Agreement, and provided that neither the termination of this Agreement nor anything contained in this Section 6.2(f) shall relieve any Party from any liability for any breach by it of this Agreement, including from any inaccuracy in its representations and warranties and any non-performance by it of its covenants made herein.

6.3

Break Fee

(a)

If:

(i)

either Teck or Westshore shall terminate this Agreement pursuant to Section 6.2(d)(iii) or Fording shall terminate this Agreement pursuant to Section 6.2(d)(iv) in circumstances where Teck and Westshore are not in material breach of their obligations under this Agreement;

(ii)

either Fording, Teck or Westshore shall terminate this Agreement pursuant to Section 6.2(d)(v) and the Board of Directors, within six months following the date of the Fording Meeting, approves or recommends an Acquisition Proposal that was publicly made, publicly announced or otherwise publicly disclosed by any Person other than Teck prior to the Fording Meeting but subsequent to the date hereof or such an Acquisition Proposal is actually consummated within six months following the date of the Fording Meeting; or

(iii)

after OTPP and Sherritt withdraws the SCAI Offer pursuant to Section 2.3(m) of this Agreement, OTPP and/or Sherritt or any of their respective Affiliates makes a new Acquisition Proposal after the date of this Agreement on terms substantially similar or superior to those in the SCAI Offer as it existed on December 16, 2002 and the Board of Directors, within six months following the date hereof, approves or recommends such Acquisition Proposal or such Acquisition Proposal is actually consummated within six months following the date of the Fording Meeting,

- 61 -

then in any such case Fording shall pay to Teck and Westshore together the Break Fee in immediately available funds to an account designated by Teck and Westshore. Such payment shall be due (A) in the case of a termination specified in clause (i), within one Business Day after written notice of termination by Teck or Westshore or (B) in the case of a termination specified in clause (ii) or (iii) above, one Business Day after the approval, recommendation or consummation of an Acquisition Proposal as described in Section 6.3(a)(ii) or (iii).

(b)

Break fee means $51 million (the “Break Fee”).

(c)

Fording’s obligations under this Section 6.3 survive termination or expiry of this Agreement. Fording shall not be obligated to make more than one payment pursuant to this Section 6.3.

For greater certainty, the Break Fee is payable only in the circumstances set out in this Section 6.3 and the Break Fee is not payable solely because Shareholders do not approve the Arrangement Resolution.

6.4

Remedies

The Parties hereto acknowledge and agree that an award of money damages would be inadequate for any breach of this Agreement by any Party or its representatives and any such breach would cause the non-breaching Party irreparable harm. Accordingly, the Parties hereto agree that, in the event of any breach or threatened breach of this Agreement by one of the Parties, the non-breaching Party will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. Such remedies will not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at Law or equity to each of the Parties.

ARTICLE 7

GENERAL

7.1

Notices

Any notice, consent or approval required or permitted to be given in connection with this Agreement (in this Section referred to as a “Notice”) shall be in writing and shall be sufficiently given if delivered (whether in person, by courier service or other personal method of delivery), or if transmitted by facsimile, with or without copies by e-mail (provided it is understood that e-mail shall not be a form of delivery):

- 62 -

(a)	If to Fording at:
		Xxxxx 0000
		000 Xxxxx Xxxxxx X.X.
		Xxxxxxx XX X0X 0X0
		Attention:	Xxx Xxxxx
		Telecopier No.:	(000) 000-0000
		Email:	xxx_xxxxx@xxxxxxx.xx
	with a copy to:
		Xxxxx Xxxxxx & Harcourt LLP
		0000, 000 - 0^xx Xxxxxx XX
		Xxxxxxx XX X0X 0X0
		Attention:	Xxxxx X. Xxxxxx
		Telecopier No.:	(000) 000-0000
		Email:	xxxxxxx@xxxxx.xxx
(b)	If to Teck at:
		Xxxxx 000
		000 Xxxxxxx Xxxxxx
		Xxxxxxxxx XX X0X 0X0
		Attention:	Xxxxx Rozee
		Telecopier No.:	(000) 000-0000
		Email:	xxxxx.xxxxx@xxxxxxxxxxx.xxx
	with a copy to:
		Lang Xxxxxxxx
		BCE Place, XX Xxx 000
		Xxxxx 0000, 000 Xxx Xxxxxx
		Xxxxxxx XX X0X 0X0
		Attention:	Xxxxxxx Xxxxx
		Telecopier No.:	(000) 000-0000
		Email:	xxxxxx@xxxxxxxxxxxx.xx
(c)	If to Westshore at:
		Westshore Terminals Income Fund
		Suite 1600
		0000 Xxxx Xxxxxxxx Xxxxxx
		Xxxxxxxxx XX X0X 0X0
		Attention:	X.X. Xxxxxxxxx / X. Xxxxxxxxx
		Telecopier No.:	(000) 000-0000
		Email:	xxxxxxx_xxxxxxxxx@xx-xxxxx.xxx
			xxxx_xxxxxxxxx@xx-xxxxx.xxx
(d)	If to OTPP at:
		0000 Xxxxx Xxxxxx
		Xxxxxxx, XX X0X 0X0
		Attention:	Senior Vice-President, Global Active Equities
		Telecopier No.:	(000) 000-0000
		Email:	Xxxxx_Xxxxxx@xxxx.xxx
	With a copy to OTPP:
		0000 Xxxxx Xxxxxx
		Xxxxxxx, XX X0X 0X0
		Attention:	General Counsel
(e)	If to Sherritt at:
		0000 Xxxxx Xxxxxx
		Xxxxxxx, XX X0X 0X0
		Attention:	Xxxxxx X. Xxxxxx
		Telecopier No.:	(000) 000-0000
		Email:	xxxxxxx@Xxxxxxxx.xxx
:	With a copy to Torys LLP
		Suite 3000, Maritime Life Tower,
		TD Centre
		Xxxxxxx, XX X0X 0X0
		Attention:	Xxxxx Xxxxxxxxx
		Telecopier No.:	(000) 000-0000
		Email:	xxxxxxxxxx@xxxxx.xxx

- 63 -

Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given and received on the day it is delivered or transmitted, provided that it is delivered or transmitted on a Business Day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not a Business Day then the Notice shall be deemed to have been given and received on the next Business Day.

- 64 -

Any Party may, from time to time, change its address by giving Notice to the other Parties in accordance with the provisions of this Section.

7.2

Assignment

Except as otherwise permitted hereunder, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by any Party without the prior written consent of each of the other Parties. Subject thereto, provided that no assignment shall relieve a Party of its obligations, this Agreement shall enure to the benefit of and be binding upon the Parties and their respective successors (including any successor by reason of amalgamation of any Party) and permitted assigns. No third party shall have any rights hereunder unless expressly stated to the contrary.

7.3

Co-Operation and Further Assurances

The Parties shall with reasonable diligence do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated by this Agreement, and each Party shall provide such further documents or instruments required by any other Party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions. Without limitation and subject to the terms of this Agreement, the Parties shall co-operate with each other in furtherance of completing the Transaction contemplated by this Agreement.

7.4

Effect on Westshore Trustee

The trustee of Westshore (on behalf of the trustees of Westshore) has entered into this Agreement solely in his capacity as trustee on behalf of Westshore and the obligations of Westshore hereunder shall not be personally binding upon the trustee or upon any of the unitholders of Westshore or any annuitant under a plan of which a unitholder is a trustee or carrier (“annuitant”). Any recourse against Westshore, the trustee or any unitholder or annuitant in any manner in respect of any indebtedness, obligation or liability of Westshore arising hereunder or arising in connection herewith or from the matters to which this Agreement relates, if any, including, without limitation, claims based on negligence or otherwise tortious behaviour, shall be limited to, and satisfied only out of Westshore’s assets, without recourse to the personal assets of any of the foregoing Persons.

7.5

Expenses

Subject to Section 2.3 and 6.3, the Parties agree that all costs and expenses of the Parties relating to the Transaction and the transactions contemplated hereby, including legal fees, accounting fees, financial advisory fees, regulatory filing fees, stock exchange fees, all disbursements of advisors and printing and mailing costs, shall be paid by the Party incurring such expenses.

- 65 -

7.6

Execution and Delivery

This Agreement may be executed by the Parties in counterparts and may be executed and delivered by facsimile and all such counterparts and facsimiles shall together constitute one and the same agreement.

7.7

Transfer Tax Elections

The Parties shall co-operate in good faith to file any relevant elections in order to minimize taxes payable under Part IX of the Excise Tax Act (Canada), the Quebec Sales Tax Act and any other provincial or territorial legislation imposing taxes on the sale or transfer of the Fording Contributed Assets, Teck Contributed Assets, Luscar Contributed Assets and Prairie Operations.

7.8

Assignment of Tax Pools

The Luscar Entities shall elect to assign the benefit of their British Columbia mining tax pools related to the Luscar Contributed Assets to New Fording.

- 66 -

IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the date first written above.

FORDING INC.
By:	/s/ Xxxxx X. Xxxxxxxx
	Name:	Xxxxx X. Xxxxxxxx
	Title:	President and Chief Executive Officer

TECK COMINCO LIMITED
By:	/s/ Xxxxx Xxxxxxxx
	Name:	Xxxxx Xxxxxxxx
	Title:	Deputy Chairman and Chief Executive Officer

WESTSHORE TERMINALS INCOME FUND by its trustees
For and on behalf of the trustees
By:	/s/ Xxxxxxx Xxxxxxxxx
	Name:	Xxxxxxx Xxxxxxxxx
	Title:	Trustee

ONTARIO TEACHERS’ PENSION PLAN BOARD
By:	/s/ Xxxxx X. Xxxxxx
	Name:	Xxxxx X. Xxxxxx
	Title:	Senior Vice-President, Global Active Equities

SHERRITT INTERNATIONAL CORPORATION
By:	/s/ Xxx X. Xxxxxxx
	Name:	Xxx X. Xxxxxxx
	Title:	Chairman

- 67 -

SCHEDULE 2.1

PLAN OF ARRANGEMENT MADE PURSUANT TO SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT

ARTICLE 1	INTERPRETATION	1
1.1	Definitions	1
1.2	Certain Rules of Interpretation	7
1.3	Schedules	8
ARTICLE 2	PURPOSE AND EFFECT OF THE ARRANGEMENT	8
2.1	Arrangement	8
2.2	Effectiveness	8
ARTICLE 3	ARRANGEMENT	9
3.1	Commencing at the Effective Time, each of the events set out below shall occur and shall be deemed to occur, except as otherwise noted, one minute apart and in the following order without any further act or formality:	9
3.2	Adjustments to Cash Option and Unit Option Elections	13
3.3	Manner of Making Elections	14
ARTICLE 4	STATED CAPITAL ADDITIONS	14
4.1	Additions to Stated Capital	14
4.2	Stated Capital Accounts of New Fording	15
ARTICLE 5	NOTE AND PREFERRED SHARE DETERMINATION	15
5.1	Subordinated Notes and Preferred Shares	15
ARTICLE 6	DISSENTING SHAREHOLDERS	16
6.1	Rights of Dissent	16
6.2	Recognition of Dissenting Shareholders	16
ARTICLE 7	OUTSTANDING CERTIFICATES	16
7.1	Outstanding Certificates	16
7.2	Provision of Consideration	16
7.3	Depository	17
7.4	No Entitlement to Interest	17
7.5	Certificates	17
ARTICLE 8	AMENDMENTS	17
8.1	Amendments	17
8.2	Proposed Amendments	18
8.3	Effectiveness of Amendments	18
SCHEDULE “A”
FORDING CANADIAN COAL TRUST EXCHANGE OPTION PLAN
ARTICLE 1	PURPOSE OF THE PLAN	2
1.1	Purpose	2
ARTICLE 2	DEFINITIONS AND INTERPRETATION	2
2.1	Definitions	2
2.2	Interpretation	6
2.3	Effectiveness	6
ARTICLE 3	GENERAL PROVISIONS OF THE PLAN	6
3.1	Administration	6
3.2	Units Reserved	6
3.3	Limits with respect to Insiders	6
3.4	Non-Exclusivity	7
3.5	Amendment or Termination of Plan and Exchange Options	7
3.6	Compliance with Laws and Stock Exchange Rules	7
3.7	Participation in the Plan	8
3.8	CP Optionholders	8
ARTICLE 4	EXCHANGE OF OPTIONS	8
4.1	Exchange of Options	8
4.2	Option Agreement	9
4.3	Early Expiry	9
4.4	Limited Assignment	10
4.5	No Rights as Unitholder or to Remain an Eligible Person; Status of Consultants	11
4.6	Adjustments	11
ARTICLE 5	EXERCISE OF OPTIONS	12
5.1	Manner of Exercise	12
5.2	Delivery of Unit Certificate	12
5.3	Cashless Exercise	13
5.4	Withholding	13
5.5	Indemnification	13
5.6	Effect on Trustees	14
SCHEDULE “A - NOTICE OF EXERCISE
FORDING CANADIAN COAL TRUST EXCHANGE OPTION PLAN
SCHEDULE “B” - FORM OF OPTION AGREEMENT
FORDING CANADIAN COAL TRUST EXCHANGE OPTION PLAN OPTION AGREEMENT
SCHEDULE “C” — CASHLESS EXERCISE INSTRUCTION FORM
FORDING CANADIAN COAL TRUST EXCHANGE OPTION PLAN
SCHEDULE “B” - FORDING CANADIAN COAL TRUST NOTE
SCHEDULE “C”
SCHEDULE “D” - 4123212 CANADA LTD. COMMON SHARES
SCHEDULE “E” - 4123212 CANADA LTD. NOMINAL NOTE
SCHEDULE “F” - 4123212 CANADA LTD. PREFERRED SHARES
SCHEDULE “G” - 4123212 CANADA LTD. PROMISSORY NOTE
SCHEDULE “H” - FCL AMALCO AMALGAMATION PROVISIONS
SCHEDULE “I” - NEW FORDING AMALGAMATION PROVISIONS
APPENDIX 1 TO SCHEDULE “I”
APPENDIX J - LUSCAR/CONSOL NOTE

ARTICLE 1

INTERPRETATION

1.1

Definitions

In this Plan of Arrangement, the following terms have the following respective meanings:

(a)

“Arrangement” means the arrangement under Section 192 of the CBCA described in this Plan of Arrangement involving the Corporation, FCL, Subco, the Fund, Teck, Westshore, TBCI, QCP, Luscar, CONSOL and SCPII;

(b)

“Business Day” means a day, which is not a Saturday, Sunday or statutory holiday in the Provinces of Alberta, British Columbia and Ontario, on which the principal commercial banks in downtown Calgary, Vancouver and Toronto are generally open for the transaction of commercial banking business;

(c)

“Canadian Tax Act” means the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), as amended;

(d)

“Cash Option” means the election available to Participating Shareholders pursuant to the Arrangement to ultimately receive $35.00 in cash for each Common Share in respect of which an election is made, subject to pro-ration, which election is given effect under this Plan by such Participating Shareholder receiving a Fund Note instead of a Unit for the exchanges described herein;

(e)

“CBCA” means the Canada Business Corporations Act, R.S.C. 1985, C.c-44, as amended, including the regulations promulgated thereunder;

(f)

“Combination Agreement” means the combination agreement dated January 13, 2003 between the Corporation, Teck, Westshore, OTPP and Sherritt International Corporation, as the same may be amended in accordance with its terms;

(g)

“Common Shares” means the common shares in the capital of the Corporation;

(h)

“Common Share Trading Price” means the weighted average trading price of the Common Shares on the TSX for the five trading days immediately preceding the Effective Date;

(i)

“CONSOL” means CONSOL Energy Inc., a corporation existing under the laws of l;

(j)

“Corporation” or “Fording” means Fording Inc., a corporation existing under the laws of Canada;

(k)

“CP Transaction” means the transaction completed on October 1, 2001 pursuant to which Fording became a publicly traded corporation, a predecessor to Fording having previously been indirectly owned by a single shareholder, Canadian Pacific Limited;

(l)

“CP Optionholders” means the former Canadian Pacific Limited optionholders who held options and accompanying share appreciation rights under the key employee stock option plan of Canadian Pacific Limited which options and stock appreciation rights were replaced, in part, by options and accompanying share appreciation rights issued under Fording’s key employee stock option plan pursuant to a plan of arrangement setting forth the steps comprising the CP Transaction;

(m)

“Depository” means Computershare Trust Company of Canada as the registrar and transfer agent of the Units;

(n)

“Director” means the Director appointed under Section 260 of the CBCA;

(o)

“Dissenting Shareholder” means a registered Shareholder who has duly exercised, and who does not, prior to the time at which the resolution of Securityholders authorizing the Arrangement is approved, withdraw or otherwise relinquish the dissent rights available to it in connection with the Arrangement;

(p)

“Effective Date” means the date shown on the Certificate of Arrangement to be issued by the Director giving effect to the Arrangement;

(q)

“Effective Time” means the first moment in time on the Effective Date;

(r)

“Elected Cash Amount” has the meaning set out in Section 3.2(b)(i);

(s)

“Elected Unit Amount” means the aggregate number of Common Shares in respect of which holders of Common Shares have elected or are deemed to have elected to receive ultimately Units in respect of their Common Shares, prior to any pro-ration hereunder;

(t)

“Election Form” means the election form for use by Participating Shareholders in the form provided to them;

(u)

“Exchange Option Plan” means the Unit option plan of the Fund created as part of the Arrangement pursuant to which Options will ultimately be exchanged for Exchange Options in the form attached to this Plan as Schedule “A”;

(v)

“Exchange Options” means options to purchase Units, and any accompanying unit appreciation rights, issued under the Exchange Option Plan;

(w)

“Excluded Assets” means all of the outstanding shares and debt of NYCO Minerals Inc. and 627066 Alberta Ltd., the Initial Unit and Fording’s rights and obligations in connection with its interests in a former mining operation located at Mount Washington;

(x)

“Existing Option Plans” means, collectively, the Corporation’s Directors’ Stock Option Plan and its Key Employee Stock Option Plan;

- 2 -

(y)

“FCL” means Fording Coal Limited, a corporation existing under the laws of Canada;

(z)

“FCL Amalco” means the corporation resulting from the amalgamation of the Corporation and FCL which forms part of this Plan of Arrangement;

(aa)

“FCL Amalco Common Shares” means the common shares in the capital of FCL Amalco;

(bb)

“Fund” means the Fording Canadian Coal Trust, a trust to be established under the laws of Alberta pursuant to a declaration of trust;

(cc)

“Fund Notes” means the demand non-interest bearing notes of the Fund, each with a principal amount of $35.00, issuable pursuant to the Plan of Arrangement, substantially in the form attached as Schedule “B”;

(dd)

“Initial Unit” means the Unit to be issued to FCL in consideration of the contribution of all of the issued and outstanding common shares of Subco upon the formation and settlement of the Fund;

(ee)

“Information Circular” means the Notice of Meeting, Notice of Petition and Information Circular of the Corporation dated November 20, 2002 and the supplement thereto dated December 8, 2002;

(ff)

“Long-Term Holder” means a Shareholder who:

(i)

owned, or was deemed by the Canadian Tax Act to own, shares of Canadian Pacific Limited (“CPL”) on January 1, 1972, had a cost in such shares on January 1, 1972 that was less than $13.88, continued to hold such shares until October 1, 2001, being the date on which the CP Transaction occurred, and continues to hold the Common Shares received in exchange for such shares of CPL through to the Effective Date; or

(ii)

is an individual (other than a trust) resident in Canada who owned shares of CPL on February 22, 1994, continued to hold such shares until October 1, 2001, being the date on which the CP Transaction occurred, and continues to hold the Common Shares received in exchange for such shares of CPL through to the Effective Date;

(gg)

“Luscar” means Luscar Coal Limited, a corporation existing under the laws of l;

(hh)

“Luscar Assets” means the Line Creek mine, the Cheviot mine, the Luscar mine and the collective interest of Luscar and CONSOL in the Neptune terminal including any net working capital related to these assets;

(ii)

“Luscar Asset Obligations” means, in connection with: (a) all of the Luscar Assets other than the Luscar mine, the ordinary course of business liabilities and obligations of Luscar and CONSOL related to the transferred assets; and (b) in the case of the Luscar mine, all of the ordinary course of business liabilities and obligations of Luscar and CONSOL in connection with such assets other than third party debt, pre-existing reclamation liabilities, any underfunding or accrued pension liabilities and severance in respect of transferred employees of the Luscar mine;

- 3 -

(jj)

“Luscar/CONSOL Note” means the demand non-interest bearing notes of FCL substantially in the form attached as Schedule J;

(kk)

“Maximum Cash Amount” means $1,050 million;

(ll)

“Maximum Unit Amount” means the number of Common Shares outstanding at the Effective Time less 30,000,000 (representing the total number of Common Shares which will be purchased for cash under the Arrangement) and less the number of Common Shares held by Small Non-Board Lot Holders and Dissenting Shareholders;

(mm)

“Meeting” means the special meeting of Securityholders to be held on January 22, 2003, including any adjournment(s) or postponement(s) thereof, to consider and to vote upon, among other things, the Arrangement Resolution, the Unitholder Rights Plan Resolution and the PWC Resolution (as such terms are defined in the Information Circular as modified by the third supplement thereto expected to be dated January l, 2003);

(nn)

“New Fording” means the corporation resulting from the amalgamation of FCL Amalco and Subco which forms part of this Plan of Arrangement;

(oo)

“New Non-Voting Shares” means the New Non-Voting Shares in the capital of FCL Amalco having the rights, privileges, conditions and restrictions specified in Schedule “C”;

(pp)

“New Options” means options to purchase New Non-Voting Shares issued by FCL Amalco, pursuant to the Arrangement in exchange for Options;

(qq)

“New Voting Shares” means the New Voting Preference Shares in the capital of FCL Amalco having the rights, privileges, conditions and restrictions specified in Schedule “C”;

(rr)

“Note Indenture” means the trust indenture providing for issuance of the Subordinated Notes to be dated the Effective Date and made between New Fording and Computershare Trust Company of Canada as Trustee;

(ss)

“OTPP” means the Ontario Teachers’ Pension Plan Board, a non-share capital corporation established under the laws of the Province of Ontario;

(tt)

“OTPP Unit Amount” means the number of Common Shares held directly or indirectly by OTPP;

(uu)

“Options” means the outstanding options to purchase Common Shares issued pursuant to the Existing Option Plans;

- 4 -

(vv)

“Participating Shareholders” means at the Effective Time, holders of Common Shares other than Small Non-Board Lot Holders and Dissenting Shareholders;

(ww)

“Partnership” means the Fording Canadian Coal Partnership, the general partnership formed under the laws of Alberta the initial partners of which will be FCL and Teck;

(xx)

“Plan of Arrangement” or “Plan” means this plan of arrangement and any amendment or variation made in accordance with the terms hereof;

(yy)

“Prairie Operations” means Fording’s thermal coal operations including its operations at Genessee, Whitewood and Highvale, Alberta, its undeveloped resource properties, and the royalties collected from third parties mining at Fording’s mineral properties at locations in Alberta and Saskatchewan and including any net working capital related to these assets;

(zz)

“Proceeds Date” means the third trading day on the TSX following the Effective Date or such other date as the Trustees may select;

(aaa)

“QCP” means Quintette Coal Partnership, a partnership existing under the laws of British Columbia, having as its partners, Teck and TBCI;

(bbb)

“QCP Mobile Equipment” means all mobile equipment owned by QCP other than mobile equipment owned by QCP and leased to Teck as at January l, 2003;

(ccc)

“Royalty” means the participation right granted to [FCL] to receive a percentage, not to exceed 5%, of the gross revenue realized from production from lands forming part of the Prairie Operations beyond current levels, excluding for this purpose the planned 2005 Genesee expansion;

(ddd)

“SCPII” means Sherritt Coal Partnership II a [general] partnership existing under the la

Document Metadata

Table of Contents

COMBINATION AGREEMENT between FORDING INC. - and - TECK COMINCO LIMITED - and - WESTSHORE TERMINALS INCOME FUND - and - ONTARIO TEACHERS’ PENSION PLAN BOARD - and - SHERRITT INTERNATIONAL CORPORATION January 12, 2003 OSLER, HOSKIN & HARCOURT LLP