Whereas pursuant to section 6 of the Department of Regional Economic Expansion Act, the Governor in Council, after consultation with the Province of Newfoundland, has by Order in Council P.C. 1982-2952 of the 22nd of September, 1982Footnote 1 designated, for the period August 1, 1982 to March 31, 1987, the area in the Province of Newfoundland described in Schedule “A” hereto, as a Special Area requiring special measures to facilitate the reactivation of the asbestos mine at Baie Verte;
Therefore, the parties hereto covenant and agree each with the other as follows:
1 In this Agreement:
(a) approved levels means, with respect to section 6.1 (b), the level of employment as approved from time to time by the Monitoring Committee;
(b) approved plans means, with respect to section 6.1 (a), the plan of operation as approved from time to time by the Monitoring Committee;
(e) federal financial authority insofar as it relates to the disbursement of operating funds, means the “Minister”;
(k) pre-tax profits of the Company means the net income for such period from all sources before charging or making provision for taxes on income and capital gains of the Company computed in accordance with generally accepted accounting principles but without including as an expense any amount of interest payable to Canada under this Agreement;
(l) program means a series of specific and related activities, as referred to in Schedule “B”
2.3 The Company shall indemnify and save harmless Canada, its officers, servants, and agents, against all claims and demands of third parties in any way arising out of the implementation of the program, except as such claims or demands relate to the act or negligence of any officer, employee or agent of Canada.
4.1 As the Company performs its obligations under this Agreement and subject to section 4.4, it shall receive from Canada, in the form of loans as provided for herein, a sum not to exceed thirteen million dollars ($13,000,000).
4.2 Where financing by Canada of the program is wholly or partly on a loan basis, the Company will repay the loan to Canada with interest as follows:
(a) Simple interest with respect to all payments made by Canada shall be calculated from the date of each payment at the Bank of Canada rate plus one per cent (1%). The rate set at the beginning of each quarter will apply during that quarter. Interest accrued to March 1, 1987, shall be capitalized as at said date and shall be added to the principal amount of each payment and the total amount shall be deemed to be principal for the purposes of paragraphs (b) and (c). The principal amounts of each payment, including the accrued interest, shall be treated as a single sum and simple interest shall be charged on such single sum at a rate computed as a weighted average of all the rates borne by each of the payments comprising such single sum
(b) On March 1, 1987, and March 1 in each year thereafter, until the principal amount of the loan and interest thereon calculated as set out in paragraph (a) shall have been paid in full, the Company shall make a payment equal to thirty per cent (30%) of the pre-tax profits of the Company for the last fiscal year of the Company completed prior to such payment date provided that the last such payment shall be limited to an amount necessary to repay, in full, the then outstanding balance of the principal amount of the loan plus accrued unpaid interest thereon to the date of payment. Each such payment made by the Company shall be applied firstly to payment of accrued unpaid interest on the outstanding principal amount of the loan to the date of payment and secondly to repayment of the outstanding principal amount of the loan;
4.3 If, in the opinion of the Minister, as a result of an annual assessment or at any other appropriate time, the operation is no longer viable, no further contributions shall be made except for contributions previously approved by the Monitoring Committee and the Agreement shall be terminated. In any event, this Agreement shall terminate on March 31, 1987, and Canada shall make no payments after March 31, 1985.
4.4 Canada agrees to provide financing in the form of loans to the Company in the following manner:
(b) for the fiscal year ending March 31, 1985, a determination will be made by the federal financial authority as to whether any additional amount not to exceed four million dollars ($4,000,000) will be advanced
5.1 Canada, in consultation with the Government of Newfoundland and Labrador, will designate a Monitoring Committee as the body whose function it is to administer this Agreement on behalf of Canada. The officials comprising the Monitoring Committee shall oversee the development and implementation of the Company’s expenditure program and shall recommend to the federal financial authority the amount and timing of fund disbursement.
5.3 The Minister shall require monthly progress reports, as well as audited statements and reports, certificates of completion, or such other evidence as is deemed appropriate to confirm that the Company has expended monies in accordance with the terms of this Agreement.
5.4 During the period commencing on the date of this Agreement and ending on the expiration of the control period, the Company shall submit to the Monitoring Committee as a part of each progress claim submitted, a status report providing the information set forth in Schedule “E” attached hereto and forming part of this Agreement, against which compliance with the Company’s obligations under this Agreement can be assessed.
5.6 In respect of the period commencing on the date of this Agreement and ending at the expiration of the control period, the Company will, within 120 days of its fiscal year end, provide to the Monitoring Committee, a copy of its audited annual financial statement together with a report of the Company’s external auditors certifying that the auditors are familiar with the covenants of the Company contained in Section II of this Agreement, and that no breach of covenants came to their attention in the course of their review of the accounting records of the Company except as set out in their report. Within 120 days of the expiration of the program, the Company’s external auditors shall provide the Monitoring Committee with a report providing the information set forth in Schedule “F” attached hereto.
5.7 The Company agrees to provide the Monitoring Committee with such access to the Baie Verte facility as the Committee requires.
The Special Area is defined as that region of Newfoundland which is comprised of an area of the Baie Verte Peninsula, shown on Statistics Canada Map 4 — Northeastern Part, Newfoundland, 1981 more particularly known as the Census Subdivision of Baie Verte.
1 operating the mine according to a mining plan as approved from time to time by the Monitoring Committee;
1 It is acknowledged that income earned by the Company will constitute consolidated adjusted pre-tax profits of Transpacific Asbestos Inc. (“Transpacific”) and must be taken into account in determining Transpacific’s obligation to pay interest on its 11% Debenture due March 31, 1987. The Company shall be permitted to pay to Transpacific each year from the company’s net income, after making or providing for the payment referred to in paragraph (b) of section 4.2, sufficient funds to enable Transpacific to make payments of interest on such Debentures which arise from the Company’s pro rata involvement in the consolidated adjusted pre-tax profits of Transpacific. Transpacific shall be entitled to reimbursement from the Company for those initial expenditures made on behalf of the Company which are eligible expenditures under this Agreement. Except as provided in this paragraph 1 and in paragraph 2, until all monies owing to Canada, and interest thereon have been paid in full, funds supplied to or generated by the Company will be used for the Company’s operations and will not be transferred to Transpacific or any other company in which Transpacific has an interest
4 Canada may, at its option, appoint representatives to act as observers or Directors on the Company’s Board of Directors.
6 Should operations cease for any reason, Canada would be entitled to participate in the proceeds of the disposition of assets as follows:
7 Under this Agreement, Canadian material, machinery and equipment, consulting and other professional services shall be used to the extent to which these items are procurable and consistent with the economy and efficiency, as agreed upon by the Monitoring Committee.
8 The Company agrees to observe the 6%-5% guidelines as a maximum increase for wages and salaries in respect to its management and its non-unionized and unionized employees.
As part of each progress claim submitted, the Company is to supply to the Monitoring Committee a status report summarizing results achieved by the program
3) an estimate of the person-hours dedicated to each of the programs as noted in 1) above;
4) sufficient information in regard to estimated and actual costs so as to permit evaluation in regard to program effectiveness and efficiency.
Her Excellency the Governor General in Council, on the recommendation of the Minister of Regional Industrial Expansion and the Treasury Board, pursuant to Industry, Trade and Commerce Vote 1a of Appropriation Act No. 1, 1980-81Footnote *, as extended by Industry, Trade and Commerce Vote 1e of Appropriation Act No. 4, 1981-82Footnote **, is pleased hereby to make the annexed Regulations respecting insurance of loans made to Baie Verte Mines Inc.
4 An application for insurance referred to in section 3 shall be made to the Minister and shall contain such information and documents relating to the application as the Minister may require.
1 These Regulations may be cited as the Baie Verte Mines Inc. Regulations, 1985.
5 Application for loans and insurance for loans referred to in sections 3 and 4 shall be made to the Minister of Industry, Trade and Commerce and shall contain such information and documents relating to the application as the Minister may require.