Fording Canadian Coal Trust Exchange Option Plan



 





EXHIBIT 4.5



FORDING CANADIAN COAL TRUST



EXCHANGE OPTION PLAN



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TABLE OF CONTENTS



	 	 	 	 	 	 
					Page
					

	
    ARTICLE 1 — PURPOSE OF THE PLAN
    	 	
    3
    
	 	
    
    1.1
    

    	 	
    Purpose
    	 	
    3
    
	
    ARTICLE 2 — DEFINITIONS AND
    INTERPRETATION
    	 	
    3
    
	 	
    
    2.1
    

    	 	
    Definitions
    	 	
    3
    
	 	
    
    2.2
    

    	 	
    Interpretation
    	 	
    6
    
	 	
    
    6
    

    	 	
    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
    	 	
    7
    
	 	
    
    3.8
    

    	 	
    CP Optionholders
    	 	
    7
    
	
    ARTICLE 4 — EXCHANGE OF OPTIONS
    	 	
    8
    
	 	
    
    4.1
    

    	 	
    Exchange of Options
    	 	
    8
    
	 	
    
    4.2
    

    	 	
    Option Agreement
    	 	
    8
    
	 	
    
    4.3
    

    	 	
    Early Expiry
    	 	
    8
    
	 	
    
    4.4
    

    	 	
    Limited Assignment
    	 	
    9
    
	 	
    
    4.5
    

    	 	
    No Rights as Unitholder or to Remain an Eligible
    Person; Status of Consultants
    	 	
    10
    
	 	
    
    4.6
    

    	 	
    Adjustments
    	 	
    10
    
	
    ARTICLE 5 — EXERCISE OF OPTIONS
    	 	
    11
    
	 	
    
    5.1
    

    	 	
    Manner of Exercise
    	 	
    11
    
	 	
    
    5.2
    

    	 	
    Delivery of Unit Certificate
    	 	
    11
    
	 	
    
    5.3
    

    	 	
    Cashless Exercise
    	 	
    11
    
	 	
    
    5.4
    

    	 	
    Withholding
    	 	
    11
    
	 	
    
    5.5
    

    	 	
    Indemnification
    	 	
    12
    
	 	
    
    5.6
    

    	 	
    Effect on Trustees
    	 	
    12
    
	
    EXHIBIT A — NOTICE OF EXERCISE
    	 	
    13
    
	
    EXHIBIT B — FORM OF OPTION AGREEMENT
    	 	
    14
    
	
    EXHIBIT C — CASHLESS EXERCISE INSTRUCTION
    FORM
    	 	
    15
    




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ARTICLE 1



PURPOSE OF THE PLAN




1.1 Purpose


     
The purpose of the Fording Canadian Coal Trust
Exchange Option Plan (the “Plan”) is to record and
implement the exchange ultimately, as part of the Arrangement
(as herein defined), of all outstanding options and any
accompanying share appreciation rights (collectively,
“Options”) to purchase Common Shares (as herein
defined) issued under the Corporation’s Key Employee Stock
Option Plan (the “KESOP”) and the Directors’
Stock Option Plan (the “DSOP”), for options to acquire
Units in the Fund and accompanying unit appreciation rights (the
“Exchange Options”) issued under this Plan. Exchange
Options will have attached to them terms which are substantially
similar to the terms attaching to the Options for which they are
exchanged, adjusted in accordance with the terms of the
Arrangement.




ARTICLE 2



DEFINITIONS AND INTERPRETATION




2.1 Definitions


     
For the purposes of this Plan, the following
terms will have the following meanings:




			
	 	(a)	
    “Arrangement”
    means the arrangement under
    Section 192 of the CBCA involving the Corporation, its
    securityholders, Fording Coal Limited, 4123212 Canada Ltd., Teck
    Cominco Limited, Westshore Terminals Income Fund, the Fund, Teck
    Bullmoose Coal Inc., Quintette Coal Partnership, Luscar Coal
    Limited, CONSOL Energy Inc., Ontario Teachers’ Pension
    Plan, Sherritt International Corporation and Sherritt Coal
    Partnership II;
    
	 
	 	(b)	
    “Board”
    means the board of directors of the
    Corporation;
    
	 
	 	(c)	
    “CBCA”
    means the Canada Business
    Corporations Act, R.S.C. 1985, c. C-44, as amended,
    including the regulations promulgated thereunder;
    
	 
	 	(d)	
    “Cause”
    means:
    





			
	 	(i)	
    the continued failure by the Optionholder to
    substantially perform his duties in connection with his
    employment by, or service to, the Corporation or any Subsidiary
    (other than as a result of physical or mental illness) after the
    Corporation or the Subsidiary, as the case may be, has given the
    Optionholder reasonable written notice of such failure and a
    reasonable opportunity to correct it;
    
	 
	 	(ii)	
    the engaging by the Optionholder in any act which
    is injurious to the Corporation (including any Subsidiary)
    financially, reputationally or otherwise;
    
	 
	 	(iii)	
    the engaging by the Optionholder in any act
    resulting, or intended to result, whether directly or
    indirectly, in personal gain to the Optionholder at the expense
    of the Corporation (including any Subsidiary);
    
	 
	 	(iv)	
    the conviction of the Optionholder by a court of
    competent jurisdiction on any charge involving fraud, theft or
    moral turpitude in circumstances where such charge arises in
    connection with the business of the Corporation (including any
    Subsidiary); or
    
	 
	 	(v)	
    any other conduct that constitutes cause at
    common law;
    





			
	 	(e)	
    “Combination Agreement”
    means the combination agreement and
    schedules thereto dated January 12, 2003 among the
    Corporation, Teck Cominco Limited, Westshore Terminals Income
    Fund, Ontario Teachers’ Pension Plan and Sherritt
    International Corporation as the same may be amended in
    accordance with its terms;
    
	 
	 	(f)	
    “Common Shares”
    means common shares in the capital of
    the Corporation;
    




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	 	(g)	
    “Consultant”
    means a person engaged to provide
    ongoing management or consulting services to the Fund, the
    Corporation or any Subsidiary;
    
	 
	 	(h)	
    “Corporation”
    means Fording Inc., and any successor
    corporation thereto;
    
	 
	 	(i)	
    “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 share appreciation
    rights were replaced by, in part, Options and accompanying share
    appreciation rights issued under the KESOP pursuant to a plan of
    arrangement under Section 192 of the CBCA completed in
    October 2001 that resulted in the Corporation becoming a
    publicly traded Corporation;
    
	 
	 	(j)	
    “Date of Termination”
    means, unless otherwise agreed to in
    writing by the Optionholder and the Corporation or, if
    applicable, a Subsidiary, the actual date of termination of
    employment of the Optionholder or termination of the
    Optionholder’s contract as a Consultant, excluding any
    period during which the Optionholder is in receipt of or is
    eligible to receive any statutory, contractual or common law
    notice or compensation in lieu thereof or severance or damage
    payments following the actual date of termination;
    
	 
	 	(k)	
    “DSOP” has
    the meaning ascribed to it in Section 1.1;
    
	 
	 	(l)	
    “Effective Date”
    has the meaning ascribed to it in the
    Plan of Arrangement;
    
	 
	 	(m)	
    “Eligible Person”
    means a holder of an Exchange Option
    who is:
    





			
	 	(i)	
    an officer, employee, Non-Employee Director of
    the Corporation or Consultant of the Corporation or any
    Subsidiary, and also includes a Family Trust, Personal Holding
    Corporation, Retirement Trust of any of the foregoing
    individuals; or
    
	 
	 	(ii)	
    a CP Optionholder;
    





			
	 	(n)	
    “Exchange Option”
    has the meaning ascribed to it in
    Section 1.1 hereof;
    
	 
	 	(o)	
    “Exercise Price”
    means the price per Unit at which
    Optioned Units may be subscribed for by an Optionholder pursuant
    to a particular Option Agreement;
    
	 
	 	(p)	
    “Expiry Date”
    means the date on which an Exchange
    Option expires pursuant to the Exchange Option Agreement
    relating to that Exchange Option;
    
	 
	 	(q)	
    “Family Trust”
    means a trust, of which at least one
    of the trustees is an Eligible Person and the beneficiaries of
    which are one or more of the Eligible Person and the spouse,
    minor children and minor grandchildren of the Eligible Person;
    
	 
	 	(r)	
    “Fund”
    means the Fording Canadian Coal Trust;
    
	 
	 	(s)	
    “Insider”
    means:
    





			
	 	(i)	
    an insider, as defined in the Securities
    Act (Alberta), other than a person who falls within that
    definition solely by virtue of being a director or senior
    officer of a Subsidiary; and
    
	 
	 	(ii)	
    an associate, as defined in the Securities
    Act (Alberta), of any person who is an insider by virtue of
    (i) above;
    





			
	 	(t)	
    “KESOP”
    has the meaning ascribed to it in
    Section 1.1 hereof;
    
	 
	 	(u)	
    “Non-Employee Director”
    means a person who, as of any
    applicable date, is a member of the Board and is not an officer
    or employee of the Corporation or any of its Subsidiaries;
    
	 
	 	(v)	
    “Notice of Exercise”
    means a notice, substantially in the
    form of the notice set out in Exhibit A to this Plan, from
    an Optionholder to the Fund giving notice of the exercise or
    partial exercise of an Exchange Option granted to the
    Optionholder;
    




4







 




			
	 	(w)	
    “Option Agreement”
    means an agreement, substantially in
    the form of the agreement set out in Exhibit B to this
    Plan, between the Fund and an Eligible Person setting out the
    terms of an Exchange Option granted to the Eligible Person;
    
	 
	 	(x)	
    “Optioned Units”
    means the Units that may be subscribed
    for by an Optionholder pursuant to a particular Option Agreement;
    
	 
	 	(y)	
    “Optionholder”
    means an Eligible Person who acquires
    an Exchange Option;
    
	 
	 	(z)	
    “Original Grant Date”
    means the date on which an Original
    Option was granted being the date that the Board resolved to
    grant such option, unless the Board resolved to ratify options
    to acquire Common Shares granted on an earlier date or to delay
    the grant of options to acquire Common Shares to a later date,
    in which case the Original Grant Date will be such earlier or
    later date;
    
	 
	 	(aa)	
    “Original Option”
    means an Option described in
    Section 1.1 (including for greater certainty, any related
    Share Appreciation Right) which, as an intermediate step in the
    exchange described in Section 4.1, is exchanged for an
    option to purchase a New Non-Voting Share (and, for greater
    certainty, any related share appreciation right) of Fording (as
    those terms are defined in the Plan of Arrangement);
    
	 
	 	(bb)	
    “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;
    
	 
	 	(cc)	
    “Personal Holding
    Corporation” means a corporation
    that is controlled by an Eligible Person (who is a natural
    person) and the shares of which are beneficially owned by the
    Eligible Person and the spouse, minor children or minor
    grandchildren of the Eligible Person;
    
	 
	 	(dd)	
    “Plan” has
    the meaning ascribed to it in Section 1.1;
    
	 
	 	(ee)	
    “Plan of
    Arrangement” means the plan of
    arrangement to which this Plan is attached as
    Schedule “A”;
    
	 
	 	(ff)	
    “Retirement
    Trust” means a trust governed by
    a registered retirement savings plan or a registered retirement
    income fund established by and for the benefit of an Eligible
    Person (who is a natural person);
    
	 
	 	(gg)	
    “Share Appreciation
    Rights” are the rights granted to
    the CP Optionholders in connection with the options granted
    under the key employee stock option plan of Canadian Pacific
    Limited, which options and rights were replaced by options and
    share appreciation rights under the KESOP;
    
	 
	 	(hh)	
    “Subsidiary”
    means any corporation that is a subsidiary of the Corporation as
    defined in the Securities Act (Alberta);
    
	 
	 	(ii)	
    “Trustees”
    means the trustees of the Fund from time to time;
    
	 
	 	(jj)	
    “Unit Appreciation
    Rights” means the Unit
    appreciation rights issued under the Plan forming part of the
    Exchange Options issued to CP Optionholders pursuant to the Plan
    of Arrangement;
    
	 
	 	(kk)	
    “Unit Compensation
    Arrangement” means any unit
    option plan, employee unit purchase plan or any other
    compensation or incentive mechanism involving the issuance or
    potential issuance of Units from treasury to one or more
    Eligible Persons; and
    
	 
	 	(ll)	
    “Units”
    means trust units of the Fund.
    




5







 




2.2 Interpretation



			
	 	(a)	
    Time shall be the essence of this Plan.
    





			
	 	(b)	
    Words denoting the singular number include the
    plural and vice versa and words denoting any gender include all
    genders.
    





			
	 	(c)	
    This Plan and all matters to which reference is
    made herein will be governed by and interpreted in accordance
    with the laws of the Province of Alberta and the federal laws of
    Canada applicable therein.
    





2.3 Effectiveness


     
This Plan will become effective on the Effective
Date in the manner specified by the Plan of Arrangement.




ARTICLE 3



GENERAL PROVISIONS OF THE PLAN




3.1 Administration


     
The Plan will be administered by the Trustees and
the Trustees will interpret the Plan and determine all questions
arising out of the Plan and any Exchange Option issued pursuant
to the Plan, which interpretations and determinations will be
conclusive and binding on the Corporation, the Fund, Eligible
Persons, Optionholders and all other affected Persons.




3.2 Units Reserved



			
	 	(a)	
    The maximum number of Units that may be reserved
    for issuance under the Plan is 776,034. The maximum number of
    Units will be reduced as Exchange Options are exercised and the
    Units so reserved are issued.
    





			
	 	(b)	
    The maximum number of Units that may be reserved
    for issuance to any one Eligible Person under the Plan is 5% of
    the number of Units outstanding at the time of reservation.
    





3.3 Limits with respect to
Insiders



			
	 	(a)	
    The maximum number of Units that may be reserved
    for issuance to Insiders on the exercise of Exchange Options
    issued under the Plan and under or pursuant to any other Unit
    Compensation Arrangement of the Fund is 10% of the number of
    Units outstanding.
    





			
	 	(b)	
    The maximum number of Units that may be issued to
    Insiders under the Plan and any other Unit Compensation
    Arrangement of the Fund within a one-year period is 10% of the
    number of Units outstanding.
    





			
	 	(c)	
    The maximum number of Units that may be issued to
    any one Insider (and such Insider’s associates, as defined
    in the Securities Act (Alberta)), under the Plan and any
    other Unit Compensation Arrangement of the Fund within a
    one-year period is 5% of the number of Units outstanding.
    





			
	 	(d)	
    For the purposes of (a), (b) and
    (c) above, any entitlement to acquire Units issued pursuant
    to the Plan or any other Unit Compensation Arrangement of the
    Fund prior to the grantee becoming an Insider is to be excluded.
    For the purposes of (b) and (c) above, the number of
    Units outstanding is to be determined on the basis of the number
    of Units outstanding at the time of the reservation or issuance,
    as the case may be, excluding Units issued under the Plan or
    under any other Unit Compensation Arrangement of the Fund over
    the preceding one-year period.
    




6







 




3.4 Non-Exclusivity


     
Nothing in this Plan will prevent the Trustees
from adopting other or additional Unit Compensation
Arrangements, subject to obtaining any required regulatory or
shareholder approvals.




3.5 Amendment or Termination of Plan and
Exchange Options



			
	 	(a)	
    The Trustees may amend, suspend or terminate the
    Plan at any time, provided that no such amendment, suspension or
    termination may:
    





			
	 	(i)	
    be made without obtaining any required regulatory
    or securityholder approvals; or
    
	 
	 	(ii)	
    prejudice the rights of any Optionholder under
    any Exchange Option previously granted hereunder to the
    Optionholder, without the consent or deemed consent of the
    Optionholder.
    





			
	 	(b)	
    The Trustees may amend the terms of any
    outstanding Exchange Option (including, without limitation, to
    cancel any Exchange Option(s) previously issued), provided that:
    





			
	 	(i)	
    any required regulatory and securityholder
    approvals are obtained;
    
	 
	 	(ii)	
    the Trustees would have had the authority to
    initially grant the Exchange Option under terms as so amended;
    and
    
	 
	 	(iii)	
    the consent or deemed consent of the Optionholder
    is obtained if the amendment would prejudice the rights of the
    Optionholder under the Exchange Option.
    





3.6 Compliance with Laws and Stock
Exchange Rules


     
The Plan, the issuance of Exchange Options and
the exercise of Exchange Options under the Plan and the
Fund’s obligation to issue Units on exercise of Exchange
Options will be subject to all applicable federal, provincial
and foreign laws, rules and regulations and the rules of any
stock exchange on which the Units are listed for trading. Unless
otherwise agreed to by the Fund in writing, no Exchange Option
will be issued and no Optioned Units will be issued on the
exercise of Exchange Options under the Plan where such issue
would require registration of the Plan or such Optioned Units
under the securities laws of any foreign jurisdiction. Optioned
Units issued to Optionholders pursuant to the exercise of
Exchange Options may be subject to limitations on sale or resale
under applicable securities laws.




3.7 Participation in the Plan


     
The participation of any Eligible Person in the
Plan is entirely voluntary and not obligatory and shall not be
interpreted as conferring upon such Participant any rights or
privileges other than those rights and privileges expressly
provided in the Plan. The Plan does not provide any guarantee
against any loss which may result from fluctuations in the
market value of the Units. The Fund does not assume
responsibility for the income or other tax consequences for
Eligible Persons and they are advised to consult with their own
tax advisors.




3.8 CP Optionholders


     
Each Exchange Option, including any accompanying
Unit Appreciation Right, issued to a CP Optionholder pursuant to
the Plan of Arrangement will be subject to the provisions of
this Plan, with the necessary changes, provided that none of the
provisions of this Plan will operate so as to adversely affect
the rights of the CP Optionholders as set forth in the key
employee stock option plan of Canadian Pacific Limited.



7







 




ARTICLE 4



EXCHANGE OF OPTIONS




4.1 Exchange of Options



			
	 	(a)	
    Pursuant to the Plan of Arrangement, each
    Original Option will ultimately be exchanged for an Exchange
    Option, and thereafter the Original Options will be cancelled.
    
	 
	 	(b)	
    The Exercise Price of each Exchange Option issued
    pursuant to the Plan of Arrangement will be determined pursuant
    to the Plan of Arrangement.
    
	 
	 	(c)	
    The Expiry Date of an Exchange Option will be ten
    years after the Original Grant Date of the Original Option,
    subject to:
    





			
	 	(i)	
    any determination by the Trustees at the time of
    the Original Grant Date that a particular Original Option would
    have a shorter term; and
    
	 
	 	(ii)	
    the provisions of Section 4.3 relating to
    early expiry.
    





			
	 	(d)	
    In the event of any conflict between the Plan and
    the Combination Agreement, the terms of the Combination
    Agreement will prevail.
    
	 
	 	(e)	
    After the Effective Date, no further grants of
    Exchange Options will be made under this Plan.
    





4.2 Option Agreement


     
As soon as practicable following the Effective
Date, the Fund shall deliver to the Optionholder an Option
Agreement, confirming the terms of the Exchange Option and
executed by the Fund. The Optionholder will execute the Option
Agreement and return it to the Fund.




4.3 Early Expiry


     
An Exchange Option will continue in effect until
its Expiry Date or expire before its Expiry Date, as the case
may be, in the following events and manner:




			
	 	(a)	
    if an Optionholder resigns from his employment
    (other than in the circumstances described in (c)), or an
    Optionholder’s contract as a Consultant terminates at its
    normal termination date, then the Optionholder must exercise his
    Exchange Option during the period ending on the earlier of
    (i) 60 days after the date of resignation or
    termination and (ii) the Expiry Date, after which period
    the Exchange Option will expire;
    
	 
	 	(b)	
    if an Optionholder’s employment is
    terminated by the Corporation or a Subsidiary without Cause,
    including a constructive dismissal, or an Optionholder’s
    contract as a Consultant is terminated by the Corporation or a
    Subsidiary before its normal termination date without Cause,
    then the Optionholder must exercise his Exchange Option during
    the period ending on the earlier of (i) 60 days after
    the Date of Termination and (ii) the Expiry Date, after
    which period the Exchange Option will expire;
    
	 
	 	(c)	
    if an Optionholder’s employment is
    terminated by the Corporation or a Subsidiary for Cause, or an
    Optionholder’s contract as a Consultant is terminated by
    the Corporation or a Subsidiary before its normal termination
    date for Cause, including where an Optionholder resigns from his
    employment or terminates his contract as a Consultant after
    being requested to do so by the Corporation or Subsidiary as an
    alternative to being terminated for Cause, then the Exchange
    Option will expire on the Date of Termination;
    
	 
	 	(d)	
    if an Optionholder’s contract as a
    Consultant is frustrated before its normal termination date due
    to permanent disability, then the Optionholder must exercise his
    Exchange Option during the period ending on the earlier of
    (i) six months after the date of frustration and
    (ii) the Expiry Date, after which period the Exchange
    Option will expire;
    




8







 




			
	 	(e)	
    if an Optionholder’s employment ceases due
    to permanent disability, then the Exchange Option may be
    exercised prior to the Expiry Date;
    
	 
	 	(f)	
    if an Optionholder retires upon attaining the
    mandatory or early retirement age established by the Corporation
    or a Subsidiary from time to time (other than a Non-Employee
    Director as described in (g)), then the Exchange Option may be
    exercised prior to the Expiry Date;
    
	 
	 	(g)	
    subject to paragraph (h) below, if an
    Optionholder who is a Non-Employee Director ceases to be a
    member of the Board (whether as a result of the resignation of
    the Non-Employee Director from the Board or the Non-Employee
    Director not standing for re-election or not being re-elected as
    a member of the Board by the shareholders of the Corporation at
    a meeting, or for any other reason other than as a result of
    death), then the Non-Employee Director must exercise his
    Exchange Option during the period ending on the earlier of
    (i) 36 months after the date of cessation and (ii) the
    Expiry Date, after which the Exchange Option will expire;
    
	 
	 	(h)	
    if an Optionholder who is a Non-Employee Director
    ceases to be a member of the Board in the circumstances
    described in (g) above, but immediately thereafter becomes a
    Trustee of the Fund, then the Exchange Option held by such
    Optionholder must be exercised on the earlier of
    (i) 36 months after the date the Optionholder ceases
    to be a Trustee of the Fund, and (ii) the Expiry Date,
    after which the Exchange Option will expire;
    





			
	 	(i)	
    if an Optionholder dies, then any exercise must
    be effected by a legal representative of the Optionholder’s
    estate or by a person who acquires the Optionholder’s
    rights under the Exchange Option by bequest or inheritance and
    any such exercise must be effected during the period ending on
    the earlier of (i) 12 months after the death of the
    Optionholder and (ii) the Expiry Date, after which period
    the Exchange Option will expire;
    





subject to the right of the Trustees to, after
the Original Grant Date, set shorter (with the consent of the
Optionholder) or longer periods for exercise (not later than the
Expiry Date) with respect to a particular Optionholder or group
of Optionholders. Notwithstanding the foregoing, the early
expiry provisions set out in this Section 4.3 shall not
apply to the CP Optionholders whose Exchange Options and Unit
Appreciation Rights shall continue to be governed by the terms
of the resolution of the board of directors of Canadian Pacific
Limited dated July 30, 2001, providing for the extension of
the CP Optionholders’ exercise period until the end of the
original grant period, notwithstanding any earlier termination
of employment.




4.4 Limited Assignment



			
	 	(a)	
    Unit Appreciation Rights may not be assigned
    separately from the related right to acquire Units which is the
    subject of the Option.
    
	 
	 	(b)	
    Exchange Options, including any accompanying Unit
    Appreciation Rights, may not be assigned, except to:
    





			
	 	(i)	
    an Optionholder’s Family Trust, Personal
    Holding Corporation or Retirement Trust (or between such
    entities or from either of such entities to the Optionholder); or
    
	 
	 	(ii)	
    a legal representative of the Optionholder’s
    estate or a person who acquires the Optionholder’s rights
    under the Exchange Option by bequest or inheritance on death of
    the Optionholder.
    





			
	 	(c)	
    If a Personal Holding Corporation to which an
    Exchange Option, including any accompanying Unit Appreciation
    Right, has been granted or assigned is no longer controlled by
    the related Eligible Person, or the shares of the Personal
    Holding Corporation are no longer beneficially owned by the
    Eligible Person and persons who were the spouse, minor children
    or minor grandchildren of the Eligible Person at the time of
    grant or assignment, then the Exchange Option, including any
    accompanying Unit Appreciation Right, cannot be exercised until
    it is assigned by the Personal Holding Corporation to that
    Eligible Person or another assignee permitted by
    paragraph 4.4(a).
    




9







 



 


		
	4.5	
    No Rights as Unitholder or to Remain an
    Eligible Person; Status of Consultants




			
	 	(a)	
    An Optionholder will only have rights as a
    unitholder of the Fund with respect to those of the Optioned
    Units that the Optionholder has acquired through exercise of an
    Exchange Option in accordance with its terms.
    
	 
	 	(b)	
    Nothing in this Plan or in any Option Agreement
    will confer on any Optionholder any right to remain as an
    officer, employee, Consultant, director or trustee of the Fund,
    the Corporation or any Subsidiary.
    
	 
	 	(c)	
    Nothing in this Plan or in any Option Agreement
    entered into with a Consultant will constitute the Consultant as
    an employee of the Fund, the Corporation or any Subsidiary.
    





4.6 Adjustments


     
Adjustments will be made to (i) the Exercise
Price of an Exchange Option, and (ii) the number of
Optioned Units delivered to an Optionholder upon exercise of an
Exchange Option in the following events and manner, subject to
any required regulatory approvals and the right of the Trustees
to make such other or additional adjustments, or to make no
adjustments at all, as the Trustees consider to be appropriate
in the circumstances:




			
	 	(a)	
    upon (i) a subdivision of the Units into a
    greater number of Units, (ii) a consolidation of the Units
    into a lesser number of Units, or (iii) the distribution of
    Units to the holders of Units (excluding a Unit distribution
    made in lieu of a cash distribution in the ordinary course and
    in accordance with the Fund’s distribution policy, and
    excluding a distribution of Units under another Unit
    Compensation Arrangement), the Exercise Price will be adjusted
    accordingly and the Fund will deliver upon exercise of an
    Exchange Option, in addition to or in lieu of the number of
    Optioned Units in respect of which the right to purchase is
    being exercised, such greater or lesser number of Units as
    result from the subdivision, consolidation or Unit distribution;
    
	 
	 	(b)	
    upon (i) a capital reorganization,
    reclassification or change of the Units, (ii) a
    consolidation, amalgamation, arrangement or other form of
    business combination of the Fund with another Person or
    (iii) a sale, lease or exchange of all or substantially all
    of the property of the Fund, the Exercise Price will be adjusted
    accordingly and the Fund will deliver upon exercise of an
    Exchange Option, in lieu of the Optioned Units in respect of
    which the right to purchase is being exercised, the kind and
    amount of units or other securities or property as results from
    such event;
    
	 
	 	(c)	
    upon the distribution by the Fund to holders of
    the Units of (i) units of any class (whether of the Fund or
    another fund) other than Units, (ii) rights, options or
    warrants, (iii) evidences of indebtedness or (iv) cash
    (excluding a cash distribution paid in the ordinary course and
    in accordance with the Fund’s distribution policy),
    securities or other property or assets, the Exercise Price will
    be adjusted accordingly but no adjustment will be made to the
    number of Optioned Units to be delivered upon exercise of an
    Exchange Option;
    
	 
	 	(d)	
    adjustments to the Exercise Price of an Exchange
    Option will be rounded up to the nearest one cent and
    adjustments to the number of Optioned Units delivered to an
    Optionholder upon exercise of an Exchange Option will be rounded
    down to the nearest whole Unit; and
    
	 
	 	(e)	
    an adjustment will take effect at the time of the
    event giving rise to the adjustment, and the adjustments
    provided for in this Section are cumulative.
    




     
In the event that any adjustment is made to the
Exercise Price of an Exchange Option or the number of Optioned
Units issuable on exercise of an Exchange Option, similar
changes will be made to the exercise price of a Unit
Appreciation Right so as to preserve its value.



10







 




ARTICLE 5



EXERCISE OF OPTIONS




5.1 Manner of Exercise


     
An Optionholder who wishes to exercise an
Exchange Option may do so by delivering, on or before the Expiry
Date of the Exchange Option:




			
	 	(a)	
    a completed Notice of Exercise; and
    
	 
	 	(b)	
    subject to Section 5.3, a certified cheque,
    money order or bank draft payable to the Fund for the aggregate
    Exercise Price of the Optioned Units being acquired (and any tax
    payable in accordance with Section 5.4).
    




     
If the Optionholder is deceased or mentally
disabled, the Exchange Option may be exercised by a legal
representative of the Optionholder or the Optionholder’s
estate or by a person who acquires the Optionholder’s
rights under the Exchange Option by bequest or inheritance and
who, in addition to delivering the Notice of Exercise and
(if applicable) certified cheque, money order or bank draft
described above and must also deliver evidence of their status.




5.2 Delivery of Unit
Certificate


     
Not later than five business days after receipt
pursuant to Section 5.1 of the Notice of Exercise and
payment in full for the Optioned Units being acquired, the Fund
will direct its registrar and transfer agent to issue a
certificate in the name of the Optionholder or an intermediary
on behalf of the Optionholder, (or, if deceased, his legal
representative or beneficiary) for the number of Optioned Units
purchased by the Optionholder or the intermediary (or his
legal representative or beneficiary), which will be issued as
fully paid and non-assessable Units.




5.3 Cashless Exercise


     
To the extent permitted by applicable laws as
determined in the sole discretion of the Trustees, an
Optionholder may elect to effect a “cashless” exercise
of its Exchange Options. In such case, the Optionholder will not
be required to deliver to the Fund the certified cheque, money
order or bank draft referred to in Section 5.1. Instead,
the Optionholder will complete a Cashless Exercise Instruction
Form in the form attached as Exhibit C to the Plan,
pursuant to which:




			
	 	(a)	
    the Optionholder will instruct a broker selected
    by the Optionholder to sell through the Toronto Stock Exchange
    the Optioned Units issuable on exercise of an Exchange Option,
    as soon as possible and at the then applicable bid price for the
    Units of the Fund;
    
	 
	 	(b)	
    on the settlement date for the trade, the Fund
    will direct its registrar and transfer agent to issue a
    certificate in the name of the broker (or as the broker may
    otherwise direct) for the number of Optioned Units issued on
    exercise of the Exchange Option, against payment by the broker
    to the Fund of the Exercise Price for such Optioned Units; and
    
	 
	 	(c)	
    the broker will deliver to the Optionholder the
    remaining proceeds of sale, net of brokerage commission (and any
    tax payable in accordance with Section 5.4).
    





5.4 Withholding


     
If the Fund determines that the satisfaction of
taxes, including withholding tax, or other withholding
liabilities is necessary or desirable in respect of the exercise
of any Exchange Option, including any accompanying Unit
Appreciation Right, the exercise of the Exchange Option is not
effective unless such taxes have been paid or withholdings made
to the satisfaction of the Trustees. The Fund may require an
Optionholder to pay to the Fund, in addition to the Exercise
Price for the Optioned Units, any amount that the Fund or the
Corporation is obliged to remit to the relevant taxing authority
in respect of the exercise of the



11







 




Exchange Option. Any such additional payment is
due no later than the date on which any amount with respect to
the Exchange Option exercised is required to be remitted by the
Fund or the Corporation.





5.5 Indemnification


     
Every Trustee will at all times be indemnified
and saved harmless by the Fund and from its assets from and
against all costs, charges and expenses whatsoever including any
income tax liability arising from any such indemnification, that
such Trustee may sustain or incur by reason of any action, suit
or proceeding, taken or threatened against the Trustee,
otherwise than by the Fund, for or in respect of any act done or
omitted by the Trustee in respect of this Plan, such costs,
charges and expenses to include any amount paid to settle such
action, suit or proceeding or in satisfaction of any judgement
rendered therein.




5.6 Effect on Trustees


     
The Trustees have established this Plan solely in
their capacity as Trustees on behalf of the Fund and the
obligations of the Fund hereunder shall not be personally
binding upon the Trustees or any of the Unitholders of the Fund
or any annuitant under a plan of which a Unitholder is a trustee
or carrier (“annuitant”). Any recourse against the
Fund, the Trustees or any Unitholder or annuitant in any manner
in respect of any indebtedness, obligation or liability of the
Fund arising hereunder or arising in connection herewith or from
the matters to which this Plan relates, if any, including,
without limitation, claims based on negligence or otherwise
tortious behaviour, shall be limited to, and satisfied only out
of the Fund’s assets, without recourse to the personal
assets of any of the foregoing persons.



12







 




EXHIBIT A TO THE EXCHANGE OPTION
PLAN



NOTICE OF EXERCISE



FORDING CANADIAN COAL TRUST



EXCHANGE OPTION PLAN




	 	 	 	 	 	 	 
	
    TO:
    	 	
    Solium Capital Inc.
    	 	
    FROM:
    	 	
    

	 	 	
    Geri Langley
    	 	
    (Title)
    	 	
    

	 	 	
    710, 805 8(th) Avenue SW
    	 	
    (Work
    	 	
    

	 	 	
    Calgary,
    AB,     T2P 1H7
    	 	
    Address)
    	 	
    

	 
	
    
    Phone:
    

    	 	
    (403) 515-3909
    	 	
    Phone:
    	 	
    

	
    
    Fax:
    

    	 	
    (403) 515-3919
    	 	
    Fax:
    	 	
    












I hereby elect to exercise
                                    Exchange
Options of Fording Canadian Coal Trust (the “Fund”)
granted to me under the provisions of the Exchange Option Plan
(the “Plan”) dated
                                             .
The grant ID was
                                              and
the Exercise Price of these Exchange Options was set as
$                                             
per Optioned Unit.




I have enclosed a certified cheque, bank draft or
money order in the amount of
$                                             
(number of options being exercised multiplied by the Exercise
Price) representing the cost to purchase
                                              Units
of the Fund and any tax payable in accordance with
Section 5.4 of the Plan.




I request that the certificate be registered and
delivered as follows:




Name: 





Address: 





City/Province: 





Postal
Code: 











I hereby elect to exercise
                                              Unit
Appreciation Rights (UARs) of the Fund granted to me under the
provisions of the Exchange Option Plan dated
                                             .
The grant ID
was                and
the price of these UARs are set at
$                                              per
unit.




Current Canada Customs and Revenue Agency/ Quebec
administrative practice provides that 50% of the appreciation
realized by the UAR exercise is exempt from income tax. The
remaining 50% of the appreciation will be taxed at the top
marginal rate.




	 	 	 	 	 
	
    
    Signed:
    

    	 	
    
	 	
    

	 	 	 	 	
    (Address I would like my cheque mailed to)
    
	 
	
    
    Dated:
    

    	 	
    
	 	
    

	 	 	 	 	
    (City/Province/Postal Code)
    











To be completed by Solium Capital Inc. and
faxed to the Fund:



Solium Capital Inc. confirms that
                                             
is eligible to exercise the entitlement indicated herein.




	 	 	 
	
	 	

	
    
    Solium Capital Inc.
    

    	 	
    Date
    




13







 






EXHIBIT B TO THE EXCHANGE OPTION
PLAN



FORM OF OPTION AGREEMENT



FORDING CANADIAN COAL TRUST



EXCHANGE OPTION PLAN




OPTION AGREEMENT



     
This Option Agreement is entered into between
Fording Canadian Coal Trust (the “Fund”) and the
optionholder named below (the “Optionholder”) who is a
participant in the Fording Canadian Coal Trust Exchange Option
Plan (the “Plan”), a copy of which is attached hereto.
The Optionholder hereby confirms that he or she has been granted
the options (the “Exchange Options”) set forth on the
attached Schedule “A”, that the information set
forth in such schedule is true and correct and that all such
Exchange Options are subject to the terms and conditions of the
Plan and this Agreement. The undersigned further acknowledges
that the Exchange Options have been granted in replacement for
an equal number of Original Options granted under the
Corporation’s KESOP or DSOP as the case may be.



     
By signing this agreement, the Optionholder
acknowledges that he or she has read and understands the terms
of the Plan and accepts the Exchange Option in exchange for his
or her Original Options in accordance with the terms of the Plan.



     
IN WITNESS WHEREOF the Fund and the Optionholder
have executed this Option Agreement as of
                               ,
2003.




		
	 	
    FORDING CANADIAN COAL TRUST





			
	 	By: 	




		
	 	
    

	 	
    Trustee
    
	 
	 	
    

	 	
    Name of Optionholder
    
	 
	 	
    

	 	
    Signature of Optionholder
    




14






 






EXHIBIT C TO THE EXCHANGE OPTION
PLAN



CASHLESS EXERCISE INSTRUCTION FORM



FORDING CANADIAN COAL TRUST



EXCHANGE OPTION PLAN




	 	 	 	 	 	 	 	 	 
	 	 	 	 	
	 	 
	
    TO
    	 	
    :
    	 	
      Brokerage
    Firm: 

    	 	
    FROM:
    	 	
    

	 	 	 	 	
      Broker
    Name: 

    	 	
    (Title)
    	 	
    

	 	 	 	 	
      Phone: (403)
    515-3909 

    	 	
    (Work
    	 	
    

	 	 	 	 	
      Fax: (403)
    515-3919 

    	 	
    Address)
    	 	
    

	 	 	 	 	
      A/C Number: 

    	 	 	 	 
	 	 	 	 	
	 	 




		
	 	
    FAX A COPY TO:
    
	 	
    Client Services
    
	 	
    Solium Capital Inc.
    
	 	
    710, 805 – 8th Avenue SW
    
	 	
    Calgary, AB
    
	 	
    T2P 1H7
    
	 	
    Fax: (403) 515-3919
    










I hereby authorize
                              
to sell
                    
Units of the Fund at a price of
$                    .
Concurrent with the sale of Units, I hereby elect to exercise
Grant number
                    
made to me under the provisions of the Exchange Option Plan as
of
                              
at an Exercise Price of
$                     per
Optioned Unit.




Upon the sale of
                    
Units of the Fund, I direct
                              
to deliver payment to the Fund. The aggregate amount that will
be paid to the Fund will be
$                    
(number of Optioned Units to be exercised
          
multiplied by the Exercise Price
$                    ).




Upon receipt by the Fund of
$                    ,
I hereby direct that a certificate for the Optioned Units
referred to above be issued in the name of
                              
for the account of
                              
and delivered to
          .




Upon receipt of the units, I direct
                              
Units exercised under my Option Agreement, less brokerage
commission fees as follows:




	 	 	 	 	 	 	 	 	 
	
    o
    	 	
    Mail to my address
    	 	 	 	
    o  Pick
    up from Broker
    
	
    o
    	 	
    Deposit to my bank account:
    	 	
    

	 	 	 	 	
    Bank ID #
    	 	
    Transit #
    	 	
    A/C #
    
	 





	 	 	 
	
    

    Bank Address: 

    
	 
	
    Signed: 

    	 	
    Home Address: 

    
	 
	
    Date: 

    	 	
                    

    











To be completed by Solium Capital Inc. and
faxed to Broker:



Solium Capital Inc. hereby confirms that
                    
is eligible to exercise the Exchange Option referred to herein:




	 	 	 
	
    
	 	
    

	
    Solium Capital Inc.
    	 	
    Date
    











To be completed by the Broker and faxed to
Fording Canadian Coal Trust within 3 days of
transaction:



This hereby confirms that the options referred to
above were sold at a price of
$                    
per Unit.




	 	 	 
	
    
	 	
    

	
    Broker’s Signature
    	 	
    Date
    




15