Baie Verte Mines Inc. Regulations (SOR/82-896)

• THIS AGREEMENT 

  made this  day of , 1982.
• BETWEEN: 

  THE GOVERNMENT OF CANADA, (hereinafter referred to as “Canada”) represented by the Minister of Regional Economic Expansion

OF THE FIRST PART,

• AND: 

  Baie Verte Mines Inc., a wholly owned subsidiary of Transpacific Asbestos Inc., incorporated under the Laws of Ontario, and having its registered office at the City of Toronto, in the Province of Ontario (hereinafter referred to as “the Company”)

OF THE SECOND PART.

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;

• Return to footnote ¹SOR/82-880, 1982 Canada Gazette Part II, p. 3255

And Whereas Canada and the Province have agreed that the maintenance of the economic viability of the Baie Verte region merits special attention, and have further agreed that special measures be undertaken in this regard to improve employment levels;

And Whereas Canada and the Province agree to share in measures to assist in the reactivation of the asbestos mine in Baie Verte, consistent with the objectives stated in section 3 of the General Development Agreement (GDA) made between Canada and the Province bearing the date the 1st day of February, 1974;

And Whereas the Company has agreed to implement a reactivation program in respect of the asbestos mine and milling facilities, formerly operated by Advocate Mines Limited, at Baie Verte, Newfoundland;

And Whereas Canada has agreed to issue an incentive to the Company in the form of loans for operating capital in respect to the costs incurred by the Company pertaining to the implementation of the said reactivation program;

And Whereas the Minister of Industry, Trade and Commerce has agreed to participate in the financial assistance to be provided to the Company under this Agreement.

Therefore, the parties hereto covenant and agree each with the other as follows:

SECTION 1 — DEFINITIONS

• 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;

  • (c) control period means the period commencing on May 13, 1982 and terminating on March 31, 1987;

  • (d) eligible expenditures means those expenditures approved for reimbursement by the Monitoring Committee;

  • (e) federal financial authority insofar as it relates to the disbursement of operating funds, means the “Minister”;

  • (f) incentive means a financial contribution to the private sector program identified under this Agreement;

  • (g) line of credit means funds required to finance the buildup of milled fibre inventory;

  • (h) Minister means the Minister of Regional Economic Expansion of Canada and includes anyone authorized to act on his behalf

  • (i) Monitoring Committee means the committee referred to in section 5 of this Agreement;

  • (j) operating capital means funds required to finance the cost of overburden removal and operating shortfalls;

  • (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”

  • (m) progress claim means the document requesting payment of federal funds for use in financing operations for the following month

  • (n) Special Area means the area described in Schedule “A” attached hereto.

SECTION II — UNDERTAKING OF THE COMPANY

• 2.1 The Company agrees to undertake in a diligent manner a reactivation program in respect to the asbestos mine at Baie Verte, Newfoundland, in accordance with the particulars contained in Schedule “B” attached hereto and forming part of this Agreement.

• 2.2 The Company agrees to provide Canada with assurances regarding inter and intra company financial transactions of the Baie Verte operation. In particular, the Company agrees to the conditions outlined in Schedule “C” attached hereto and forming part of this Agreement.

• 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.

SECTION III — REPRESENTATIONS AND WARRANTIES

• 3.1 The Company represents and warrants that its projections provided for the purpose of obtaining the incentive have been prepared in good faith based upon management’s best estimates of the economic considerations reflected in such projections and that the Company has no reason to believe that such projections are inaccurate in any material aspect. The Company further represents and warrants that all statements of fact contained in any documents, materials and information provided for the purpose of obtaining the incentive are true and correct in all material aspects.

• 3.2 If the Company shall be in breach of its representations and warranties contained in section 3.1, Canada may consider its obligations under this Agreement to be at an end and may require the Company or Transpacific Asbestos Inc. to repay any amount caused to be paid to the Company hereunder, and the Company agrees that such amount immediately become due and owing and to repay such amount promptly. (Schedule “D”)

SECTION IV — FINANCING

• 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;

  • (c) Notwithstanding the foregoing, the Company may, at any time and from time to time when not in default hereunder, prepay all or any part of the principal amount of the loan and interest thereon without notice or bonus provided that any such prepayment shall not be applied to principal while any accrued unpaid interest is outstanding

• 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:

  • (a) for the period ending March 31, 1984, a sum of nine million dollars ($9,000,000);

  • (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

  provided that Canada may, in its sole judgement, accelerate any payment to be made to the Company under this subsection up to the maximum of thirteen million dollars ($13,000,000).

• 4.5 Subject to subsection 4.4, payments toward operating capital requirements shall be made at the request of the Company on approval of the federal financial authority.

• 4.6 The eligible costs to be financed by Canada shall not include any costs relating to the acquisition by the Company of lands and buildings or interests in lands and buildings, or any costs arising from conditions of acquisition.

• 4.7 In addition to the thirteen million dollars ($13,000,000) in direct loans, Cabinet has also approved a federal loan guarantee of one million dollars ($1,000,000). The loan guarantee will be provided to the Royal Bank of Canada, or other authorized institutions, to the extent of twenty-five per cent (25%) of line of credit funds drawn down by the Company, but not to exceed one million dollars ($1,000,000). A separate loan guarantee agreement will be signed following the finalization of banking arrangements and the concurrence of the Minister of Finance in this regard.

SECTION V — MANAGEMENT AND ADMINISTRATION

• 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.

• 5.2 The Monitoring Committee shall during the control period:

  • (a) monitor and analyze various aspects of the Company’s operations with particular emphasis on technical, financial and marketing considerations;

  • (b) assess, on a continuous basis, the viability (short and long-term) of the operation in order to make recommendations with respect to approving the expenditure of public funds;

  • (c) evaluate monthly cash requirements and make recommendations with regard to disbursement of monthly cash advances;

  • (d) produce annual status reports and make periodic recommendations with respect to continued support for the operation;

  • (e) ensure that the Company is not acting in contravention of any of the terms and conditions of this Agreement;

  provided that the Monitoring Committee shall not interfere with the day-to-day operations of the Company

• 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.

• 5.5 The Company shall keep proper books, accounts, invoices and records relating to the Company’s obligations under this Agreement, and Canada may cause the same to be examined and audited at any time during reasonable business hours to determine if the obligations of the Company are being met. Notwithstanding anything in this section, the Monitoring Committee may request of the Company at any time reports relating to any of the Company’s obligations.

• 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.

• 5.8 The Company agrees to cooperate fully with Canada and the Province in the implementation of a public information program and hereby authorizes Canada and the Province to carry out such a program.

SECTION VI — CHANGE IN PLANS

• 6.1 If, in the opinion of the Monitoring Committee:

  • (a) the Company makes a significant change in the program or fails substantially to carry out approved plans without having obtained the prior written approval of the Monitoring Committee; or

  • (b) the Company, without having obtained the prior written approval of the Monitoring Committee, significantly decreases employment below approved levels during the control period.

  Canada may consider its obligation under this Agreement to be at an end and may require the Company to repay any amount paid to or on behalf of the Company hereunder, and in that event the Company agrees that such amount immediately becomes a debt due and owing, and agrees to repay such amount forthwith to Canada.

SECTION VII — ENVIRONMENTAL REQUIREMENTS

• 7.1 It is a condition of the incentive, or any part thereof, being paid or payable hereunder that all environmental protection measures be incorporated and utilized which meet the requirements respecting the control of pollutants established by all relevant governments or agencies thereof.

SECTION VIII — GENERAL

• 8.1 [Revoked, SOR/86-263, s. 1]

• 8.2 This Agreement shall not be assigned by the Company without the prior written consent of Canada.

• 8.3 No member of the House of Commons of Canada shall be admitted to any part or share of payments made pursuant to this Agreement or to any benefits to arise therefrom.

Executed on the day and year first written.

GOVERNMENT OF CANADA

EXECUTED by the Company by affixing its corporate seal, attested by its proper officers in that behalf and accompanied by a certified extract from the By-laws of the Company.

SCHEDULE “D”(Corporate Letterhead)

Guarantee

To the Government of Canada as Represented by the Minister of Regional Economic Expansion

Transpacific Asbestos Inc., a Company incorporated under the laws of Ontario and having its head office at the City of Toronto, in the Province of Ontario, in consideration of the Government of Canada entering into an Agreement with Baie Verte Mines Inc., pursuant to which Agreement the Government of Canada agreed to provide Baie Verte Mines Inc. with an incentive in the form of loans not to exceed $13 million for the purpose of the reactivation of the asbestos mine at Baie Verte, Newfoundland, HEREBY GUARANTEES to the Government of Canada, for a period of three years from the date of this guarantee, that in the event that any statement of fact contained in the plans, documents, materials or information provided by Baie Verte Mines Inc. or Transpacific Asbestos Inc. to the Government of Canada for the purpose of obtaining the said incentive are false or untrue in any material aspect, it will repay to the Government of Canada any amount paid to Baie Verte Mines Inc. under the aforesaid Agreement, Dated at this  day of , 1982.

TRANSPACIFIC ASBESTOS INC.

(Authorized Officer)

(Corporate Seal)

• SOR/83-83, s. 1(F)