THIS FUNDING AGREEMENT made as of March 24, 2016.

BETWEEN:

HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF NOVA

SCOTIA, as represented by the Minister of Transportation and Infrastructure
Renewal,
(hereinafter the "Province")
and

BAY FERRIES LIMITED, a body corporate under the laws of Canada,

(hereinafter "BFL")

WHEREAS:
A.

By Request for Submissions dated September 8, 2015 the Province invited qualified
parties to submit proposals to operate the Ferry Service with funding support from the
Province;

B.

BFL submitted a proposal to operate the Ferry Service that was accepted by the
Province;

C.

By agreement dated December 11, 2015 the parties entered into an agreement whereby
the Province agreed to reimburse BFL for up to $750,000.00 in start-up costs related to
the Ferry Service; and

D.

Under arrangements made regarding the Ferry Service and the Vessel and as BFL is
required to make advance commitments, it is necessary for the Province to advance to
BFL up to $6,400,000.00 US on or before March 31, 2016.

NOW THEREFORE in consideration of the mutual covenants contained herein, the parties
agree as follows:
1.0

INTERPRETATION

1.01 In this Agreement:

Agreement means this agreement and all schedules attached to this agreement together with
any amendments from time to time of either this agreement or any schedule;
Approved Budget means the budget respecting revenues, operating expenses and cash flows
agreed to by the parties pursuant to Section 7.06, subject to any adjustment under Sections
7.07 or 7.09;
Base Management Fee means the sum of S. 17(1)(d) per month or S. 17(1)(d) per Year;
Cash Deficiency means the amount, if any, by which Eligible Expenses for a Year exceed
Total Revenue for a Year;

Charter Party means the charter party for the Vessel, the initial one to be entered into between
BFL and the United States Government for the HSV Alakai;
Eligible Expenses means all proper expenses, costs and other amounts reasonably necessary
to establish and operate the Ferry Service, including:
(a) the Shared Services payment;
(b) those expenses set out in Schedule A;
(c) insurance deductibles which BFL must pay as a result of any claims that arise;
(d) payments made to compensate other parties in the event of the need to withhold tax
under from any contract payment;
(e) any other expense, cost or other amount agreed to in writing by the Province; and
(f) payments made and liabilities arising under and by virtue of the Material Contracts;
but does not include any Ineligible Expense;
Ferry Service means the seasonal ferry service to be operated between Yarmouth, Nova
Scotia and Portland, Maine as described in Article 2.0 or to another port in Maine as agreed to
in writing by the parties;
Force Majeure means an event beyond the reasonable control of BFL when claiming relief
from an obligation under this Agreement that has not been caused by its gross negligence or
wilful misconduct and which it was unable to prevent or provide against by the exercise of
reasonable diligence at a cost that was not unreasonable, but does not include an event that
results from a change in the finances or economic circumstances of BFL;
Ineligible Expenses means any expense, cost or other amount if it is not related to the
operation of the Ferry Service; or is a tax that is recoverable in whole or in part by BFL or is
based on the income of BFL; is a fine or penalty; is paid for or recoverable from any third party;
is for the purchase of land; is for depreciation; is incurred prior to the Effective Date of this
Agreement; is incurred after this Agreement is terminated (unless the Province has approved it
in writing); that arises due to the gross negligence or wilful misconduct of BFL; or that
represents any element of profit or mark-up to BFL or its affiliates;
Management Fee means the fee referred to in Article 9.0;
Material Contracts means contracts entered into by BFL which are integral to operating the
Ferry Service, including but not limited to:
(a) the Charter Party;
(b) contracts with the City of Portland for ferry terminal equipment and facilities in Portland;
(c) contracts with the Municipality of the District of Yarmouth, the Town of Yarmouth, and
the Municipality of the District of Argyle for ferry terminal equipment and facilities in
Yarmouth;
(d) contracts with shipyards and key suppliers regarding work to the Vessel;

(e) a contract with manufacturers of the Vessels main engines for continuous maintenance
thereof;
(f) a contract with Seaward Services, Inc. for crewing and certain technical support for the
Vessel; and
(g) if agreed between the Province and BFL, contracts for the forward purchase of fuel.
Operating Season means the period from June 1 to September 30 of each Year or as
otherwise agreed in writing between BFL and the Province;
Shared Services Payment" means a contribution to be made on a monthly basis to BFL as
incorporated in the Approved Budget existing from time to time which is to compensate for
general overheads incurred by BFL or Northumberland Ferries Limited for the benefit of the
Ferry Service, including:
(a) Head office personnel costs incurred by BFL specifically in respect of the Ferry
Service; and
(b) Work undertaken in respect of the Ferry Service by pre-existing employees of
BFL/Northumberland Ferries Limited.
Such payment shall not include specific contribution to salaries of senior management of
BFL/Northumberland Ferries Limited who hold any ownership interest in the companies and
shall be adjusted from time to time to fairly reflect allocation of overhead and personnel costs.
Total Revenue means total revenue generated from the operation of the Ferry Service and to
include any refunds received from other contracting parties in respect of which credit has been
received;
Vessel means HSV Alakai or any replacement or substitute vessel used on the Ferry Service
the use of which the Province has approved in writing;
Work Program means that major program of work to be managed by BFL prior to the HSV
Alakais entry into service referred to in Section 8.01; and
"Year" means the twelve month period commencing on April 1 for any year during the term of
this Agreement including any renewal.

2.0

FERRY SERVICE

2.01

BFL covenants with the Province to establish the Ferry Service and to operate and
maintain it during the term of this Agreement, by providing daily return crossings for
passengers and vehicles between Yarmouth, Nova Scotia and Portland, Maine during
the Operating Season unless otherwise agreed to in writing by the Province and BFL.

2.02

BFL may extend the period during which it offers the Ferry Service to commence earlier
or end later than the dates set out in Section 2.01, and BFL may choose the frequency
of crossings that it provides during the extended periods, provided however that such
operations shall be at the sole risk and cost of BFL, unless otherwise agreed to in writing
by the Province and BFL.

2.03

It shall not be considered a breach of any term of this Agreement:

(a)
If the Ferry Service is interrupted due to actual or anticipated weather and sea
conditions, or technical or mechanical issues which arise; or
(b)
If, after expiry or termination of the initial Charter Party of "Alakai", and despite
good faith efforts to do so, BFL is unable to identify a vessel which is acceptable to the
Province and which BFL considers appropriate for operation of the Ferry Service.

3.0
3.01

REPRESENTATIONS AND WARRANTIES

BFL represents and warrants to the Province the following:
(a)
this Agreement and all other documents or instruments to be delivered
pursuant to its terms, shall have been duly authorized and executed and when
delivered will constitute valid and binding obligations, enforceable against BFL in
accordance with their respective terms;
(b)
neither the making of this Agreement nor the compliance with its terms, will
conflict with or result in a breach of any of the terms, conditions or provisions of, or
constitute a default or require any consent under any indenture, agreement, licence
or other instrument or arrangement to which BFL is a party, or by which it is bound or
violate any of the terms or provisions of any law applicable to BFL;
(c)
to the best of the information and belief of BFL, no litigation, arbitration or
administrative proceedings are current or pending, or have been threatened and no
claim has been made, which is likely to have a material adverse effect on its
performance or compliance with the terms of this Agreement; and
(d)
it has chartered US high-speed ferry vessel Alakai on terms which have been
fully disclosed to the Province.

4.0

BFL COVENANTS

4.01

BFL covenants and agrees with the Province that during the term of this Agreement it
will operate the Ferry Service at all times in accordance with sound ship management
and commercial practice and in doing so it will:
(a)
recruit and employ or contract as necessary, qualified crew and officers
sufficient to safely and effectively carry out all aspects of vessel operations,
including but not limited to command, navigation, engineering, loading, deck
handling, and provision of all passenger service elements, in compliance with any
regulations that may apply in Canada or the United States, provided it is understood that
BFL will contract with Seaward Services, Inc. of New Albany, Indiana, for the provision of
US-based marine crew and certain technical support for the HSV Alakai;
(b)

maintain effective operation of a reservation and point of sale system;

(c)
be solely responsible for entering into agreements for and paying for all
terminal fees, other land-based service fees including those charges by border
services, customs and immigration or other security agencies and other costs related
to the operation of the Ferry Service and shall ensure compliance with all such
agreements;
(d)
ensure ongoing compliance with all safety, security, marine and other
regulatory rules, regulations, and legislative regimes covering the operations
contemplated in this Agreement, and will monitor for and adapt to changes
required by the relevant regulatory and other authorities;
(e)
remain in compliance with all Material Contracts and applicable laws
governing the operation of the Ferry Service and the Vessel including, but not limited
to all federal, provincial, state and municipal statutes, regulations, ordinances, and bylaws and any applicable international laws;
(f)
ensure the Vessel is properly maintained to a high standard of operational
capability, seaworthiness, safety, cleanliness and good repair for both passengers
and crew;
(g)
maintain all necessary marine, third party, and other appropriate insurance
related to the operation of the Ferry Service in such amount and limits as would a
prudent owner do in similar circumstances;
(h)

ensure that the Charter Party remains in good standing;

(i)
not terminate the Charter Party without providing the Province with 12 months
prior written notice, unless the parties have otherwise agreed in writing;
(j)
prepare any financial estimates or statements required under the terms of this
Agreement in good faith and with due diligence;
(k)

only use the operating subsidy for the purposes of providing the Ferry Service;

(l)
only use the Vessel for providing the Ferry Service unless the Province has
approved another use in writing in advance;
(m)
notify the Province if at any time it is of the opinion, acting in good faith, that the
actual Cash Deficiency for a Year is likely to be materially higher or lower than it had
estimated; and
(n)
not enter into any contract for the provision of goods or services for the operation
of the Ferry Service that has a term that exceeds the term of the charter for the Vessel,
without the Provinces prior written consent.
Notwithstanding Section 4.01 the Province acknowledges and agrees it is fully aware of
the terms of the Charter Party for HSV Alakai, including the termination provisions
thereof, and that BFL and the Province have extensively discussed and understand the
risks and uncertainties associated with the operation of the Ferry Service.

5.0

PRECONDITIONS ANDTERM OF AGREEMENT

5.01

This Agreement is conditional upon BFL providing evidence satisfactory to the Province,
on or before March 31, 2016, that it has secured the HSV Alakai to provide the Ferry
Service, failing which the Province may terminate this Agreement by notice in writing to
BFL. If the Province terminates this Agreement pursuant to this Section 5.01, this
Agreement will be null and void and neither party will be liable to the other for any cost,
loss, damage or delay.

5.02

Subject to earlier termination, this Agreement shall be for a term of ten (10) years from
its Effective Date.

6.0

FUNDING

6.01

During each Year of the term of this Agreement, the Province agrees to provide
payments to BFL in respect of the operation of the Ferry Service equivalent to the total
of:
(a)

the Cash Deficiency for the Year; and

(b)

the Management Fee, subject to any adjustments provided in this Agreement.

6.02 Payments shall be made quarterly in advance based on projections contained in the
Approved Budget.

7.0

DETERMINATION AND PAYMENT OF OPERATING SUBSIDY

7.01

The Province agrees to pay BFL an operating subsidy for each Year it operates the
Ferry Service in an amount equal to the Cash Deficiency for the Year. The Province
shall make periodic advances of the operating subsidy as provided in this Agreement
with an adjustment to be made each Year so that the amount ultimately paid equals the
actual Cash Deficiency for the Year. In no case will BFL be entitled to recover more than
the actual Cash Deficiency. For the first Year, the Province will pay advances to BFL on
account of the operating subsidy in the amounts and at the times set out in Schedule
B.

7.02

For subsequent Years the amount of the advances will be based upon an operating
budget and cash flow projections. BFL shall prepare an estimated annual operating
budget and cash flow projections by January 15 preceding the Operating Season. BFL
shall prepare the budget and cash flow projections in good faith using its best efforts,
however the Province acknowledges that BFL makes no other representations or
warranties concerning the accuracy of the budget and projections.

7.03

The annual operating budget must include an estimate for Total Revenue, Eligible
Expenses, and the cost of Shared Services, and include a description of all other
material assumptions used by BFL.

7.04

The budget shall be prepared based upon Canadian generally accepted accounting
principles that have been adopted by BFL which are to be applied on a consistent basis.
All costs, expenses and other amounts shall be treated as arising at the time they are
incurred.

7.05

The Province shall be allowed 30 days to review and consider the budget. If the
Province does not accept one or more element in the budget, the parties shall discuss
this with a view to reaching a consensus on the budget and the amount of the advances
for the Year in question, which the parties shall endeavour to conclude at least 60 days
before the start of the Operating Season.

7.06

When the parties have agreed to the budget and cash flow projections, for each Year
they will prepare a new schedule for the payment of the operating subsidy which will
form part of this Agreement and be included in Schedule B.

7.07

If the parties for any Year cannot agree to any item of the operating budget the matter
will be resolved under Article 18.0 (Dispute Resolution), provided however that until the
matter is resolved, the Province will make subsidy payments to BFL based upon the
amount of the agreed upon items with the amount of the disputed item equal to that last
proposed by the Province in good faith. Payments shall be adjusted within 30 days of a
final determination to reflect any ultimate resolution of the dispute including any
retroactive payments for a disputed item.

7.08

To initiate a payment of an advance, BFL shall submit a request for payment in such
form as required by the Province at least fifteen (15) days prior to the payment date set
out in Schedule B, and on approval the Province will make the payment on or before
the payment date.

7.09

If, in the opinion of the Province, it may reasonably be considered that the budget for any
Year was not made in good faith or where it appears there is a manifest error in the
budget, or where BFL has provided notice to the Province under clause 4.01(m), the
Province or BFL as the case may be, shall advise the other party and BFL and the
Province shall use reasonable efforts to prepare a revised good faith budget. The
Province and BFL shall have 30 days to revise the budget. The parties agree to make
any necessary revision to Schedule B to reflect such revisions under this Section.

7.10

Following receipt of the annual financial statements for a Year, there shall be an
adjustment of payments between the parties so that the amount of the operating subsidy
paid to BFL by the Province equals the actual Cash Deficiency incurred by BFL for the
Year. If this results in a payment due to BFL by the Province, the Province agrees to
make payment within 30 days of the determination of the adjustment. If a payment is due
by BFL to the Province, for any Year other than the final Year of term of this Agreement,
the amount will be adjusted off of the operating subsidy for the following Year. For the
final Year, BFL agrees to make payment to the Province within 30 days of the
determination.

8.0

Charter-Party Arrangements

8.01

BFL has, or will, enter into the Charter Party for the HSV Alakai, the terms of which have
been fully disclosed to, and discussed with, the Province, and include provision for the
following:
(a)
BFL will undertake the Work Program estimated to cost in the order of US $6.4
million;
(b)
the HSV Alakai is made available to BFL for up to 142 days in each of the 2016
and 2017 operating seasons, and otherwise it is BFLs obligation to maintain custody of
the HSV Alakai while it is in lay-up; and
(c)
BFL has the option to extend the Charter Party for the HSV Alakai to cover the
2018 operating season (Option Period One) and a further option to extend the Charter
Party to cover the 2019 operating season (Option Period Two).

8.02

In order to undertake the Work Program, BFL must make commitments to various
suppliers which will aggregate in the order of US $6.4 million being the total estimated
cost of the Work Program. Accordingly, the Province agrees to advance to BFL the sum
of US $6.4 million on or before March 31, 2016, to enable BFL to make the commitments
required with respect to the Work Program and other commitments required at the same
time.

8.03

Should the cost of the Work Program exceed US $6,406,800, the Province shall make
such additional advances as are required to complete the Work Program. All such
additional advances (over and above the originally advanced amount of US $6,406,800)
shall constitute a credit against charter hire to be paid for the 2018 season, if the option
for Option Period One is ultimately exercised, up to an aggregate maximum amount of
US $3,203,400.

9.0

DETERMINATION AND PAYMENT OF MANAGEMENT FEE

9.01

The Management Fee payable to BFL under this Agreement each Year shall be
S. 17(1)(d) per annum (or S. 17(1)(d) per month.

9.02

The Management Fee will be paid in the amounts and at the time set out in Schedule B
for each Year.

9.03

In lieu of any performance incentive payment to BFL under Section 9.04 for the 2016-17
Year, the Province shall pay an incentive payment of S. 17(1)(d) per month for each month
that a Management Fee payment is paid.

9.04

For any Year after 2016-17, BFL shall be entitled to earn a performance incentive. A
performance incentive shall be earned if the actual Cash Deficiency for a Year is less
than the estimated Cash Deficiency contained in the Approved Budget. The incentive
shall be equal to 33% of the difference between estimated and actual Cash Deficiency
for a Year, but shall not exceed in any Year the amount of the Base Management Fee.
For the purposes of this determination, the differential in Cash Deficiency shall be

determined without including the estimated or actual costs of fuel and vessel insurance,
and budgeted by BFL for the Year.
9.05

Any payment due to BFL under Section 9.04 will be paid within 30 days after the
Province receives the audited statements under clause 13.01(c) for the Year.

9.06

The Province will pay all applicable taxes including HST on the Management Fee and
performance incentive.

10.0

FORCE MAJEURE

10.01 The performance of BFLs obligations under this Agreement may be suspended at the
request of BFL as a result of Force Majeure. BFL shall not be relieved from performance
if the occurrence of Force Majeure does not cause an effective delay in its ability to
perform. If performance is suspended it shall be suspended for a period equivalent to the
time during which BFLs ability to perform its obligations are affected by Force Majeure.
If, however, the period of Force Majeure lasts one (1) month or longer, the Province may
terminate this Agreement by providing three (3) months written notice to BFL, and in
such a case Section 14.04 shall apply as though the Province had terminated this
Agreement without cause. Other than as provided in this Section, neither party shall be
responsible or liable to the other for cost, loss, damage or delay caused by Force
Majeure or the termination of this Agreement as a result thereof.
10.02 BFL shall not be entitled to seek Force Majeure relief under this Agreement unless within
five (5) days after becoming aware of the occurrence of Force Majeure it provides notice
to the Province of its intent to claim relief under this Article and as soon as practical
thereafter provides a report relating to the event or circumstances, including its
evaluation of the causes of the event; the consequences on performance and without
undue delay, undertakes reasonable steps to mitigate the effect of Force Majeure on
the performance of this Agreement.

11.0

BOOKS AND RECORDS

11.01 BFL shall keep or cause to be kept separate and proper books, records, accounts,
documents and other information pertaining to the Ferry Service and the funds provided
to BFL by the Province under the terms of this Agreement, at its head office in the
Province.
11.02 The books and records shall be maintained in accordance with Canadian generally
accepted accounting principles applied on a consistent basis and shall be maintained
for at least two years following the term of this Agreement.

12.0

AUDIT, EXAMINATIONS AND EVALUATIONS

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12.01 At any time following the provision of 7 days prior written notice the Province shall be
entitled, at its own expense, to commence an audit of the books, records and
information of BFL related to the Ferry Service.
12.02 BFL shall, for the purpose of an audit made in accordance with this Article,
(a)
make the books, records, accounts, documents and other information related
to the Ferry Service available at all reasonable times to any person authorized by
the Province for that purpose and shall provide the person with copies of documents
requested by the person that are reasonable for the purposes of the audit; and
(b)
make available copies of any contracts related to the Ferry Service that have
been entered into or amended during the term of this Agreement, at all reasonable
times to any person authorized by the Province for the purpose.
12.03 Where the Province is conducting an audit pursuant to this Article, BFL shall make
available to the Province such additional or other information or documentation
requested by the Province as is necessary to assess or verify the accuracy and
completeness of the information contained in the reports provided under Article 13.

13.0

REPORTING REQUIREMENTS

13.01 BFL will

(a)
upon request by the Province, make its senior representatives available to
meet with provincial officials, in-person in Halifax or Yarmouth, as deemed
necessary by the Province prior to the commencement of the Ferry Service in 2016
and throughout the term of this Agreement;
(b)
submit for each Year of this Agreement quarterly financial statements for the
Ferry Service to the Province;
(c)
provide an annual audited statement as to profit and loss to the Province in
relation to the Ferry Service for each Year of this Agreement within 90 days after the
end of each Year;
(d)
provide such other information to the Province respecting the financial or
operational status of the Ferry Service as the Province may reasonably require from time
to time; and
(e)

14.0

provide on request a copy of any Material Contract.

EVENTS OF DEFAULT AND TERMINATION

14.01 For the purposes of this Agreement the following events shall be referred to as
"Events of Default" and individually as an "Event of Default":
(a)
If BFL makes a material default in or fails to perform or observe any
covenant contained in this Agreement and such default shall not be remedied within

11

thirty (30) business days following the date of written notice being given to BFL by the
Province, provided that marine casualties and mechanical breakdowns of the Vessel
shall not be considered material defaults unless they are the result of BFLs gross
negligence or wilful misconduct;
(b)
If any representation, warranty, certificate, statement or report made in
connection with this Agreement is false;
(c)
If BFL becomes insolvent or bankrupt, or makes an assignment for the
general benefit of its creditors, or otherwise acknowledges itself insolvent; or
(d)
If BFL abandons all, or any part, of its undertaking and property and assets,
or threatens to cease to carry on its business.
14.02 The Province may terminate this Agreement at any time in the event of the
occurrence of an Event of Default.
14.03 The Province may terminate this Agreement without cause:
(a) at any time during the first three Years of the term upon payment to BFL of an
amount equal to three (3) times the Base Management Fee;
(b) at any time during the fourth to sixth Years of the term upon payment to BFL of an
amount equal to two (2) times the Base Management Fee;
(c) at any time during the seventh to ninth Years of the term upon payment to BFL of an
amount equal to the Base Management Fee; and
(d) at any time after the ninth Year of the term on the provision of 6 months prior written
notice to BFL.
14.04 If the Province terminates this Agreement under Section 14.03, it will indemnify BFL from
its costs to shut down the Ferry Service including direct and indirect costs associated
with or arising from terminating all Material Contracts and other commitments provided
they are proper expenses, costs or other amounts that were reasonably necessary for
the operation of the Ferry Service and will pay any payments under Articles 7.0 and 9.0
required to be paid up to the date of termination. Such payment will not include any cost
to the extent such cost has already been included as an Eligible Expense or any costs of
terminating any fuel hedging arrangements unless the Province had previously agreed to
such arrangements in writing.

15.0

RELATIONSHIP

15.01 Neither BFL nor any employee, servant, agent, or contractor of BFL is an agent,
employee or servant of the Province.
15.02 BFL has no authority to bind the Province to any agreement and agrees that it will not
hold itself out as having any authority within the Province or on behalf of the Province.

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16.0

LIABILITY AND INDEMNITY

16.01 BFL agrees that it shall at all times indemnify and save harmless the Province, its
Ministers, officers, employees and agents from and against all claims, demands, losses,
costs, damages, actions, suits or other proceedings of any kind based upon injury,
including death, to any person, or damage to or loss of property arising from any wilful
or negligent act, omission or delay on the part of BFL, its servants or agents in
carrying out this Agreement.

17.0

CONFIDENTIALITY

17.01 This Agreement is subject to the provisions of the Freedom of Information and Protection
of Privacy Act and the Province shall make any decision respecting release of
information in relation to this Agreement in compliance with that Act. If the Province
determines that it will release any information in relation to this Agreement under the Act
it agrees to provide reasonable notice to BFL before such information is released. It is
understood that BFL takes the position that the amount of Management Fee payable
pursuant to this Agreement is confidential, commercially sensitive information which
should not be publicly disclosed.
17.02 In their dealings related to this Agreement the parties may receive or review Confidential
Information of the other. The parties agree to accept receipt of the Confidential
Information on a confidential basis for use in accordance with the terms set out in this
Article.
17.03 For the purposes of this Article:
"Confidential Information" means any information, regardless of the form in which it is
communicated or maintained, whether oral, written, electronic or visual, and whether
prepared by a party or otherwise, which is disclosed by the one party (the Disclosing
Party) and/or its authorized representatives to the other (Receiving Party) for the
purpose of obtaining services hereunder and includes all reports, analyses, notes,
memoranda, contracts, commercial arrangements, intellectual property, trade secrets,
corporate strategies, business plans, legislative or regulatory proposals, draft legislation
or regulations, briefing notes, personal information, or other information based on, or that
contains or reflects any such Confidential Information, provided that the Disclosing Party
shall identify such information as confidential at the time of disclosure to the Receiving
Party.
17.04 The parties covenant:
(a)

to maintain the confidentiality of the Confidential Information at all times;

(b)
to use the information only for the purposes of or relating to this Agreement
and for no other purpose;
(c)
to refrain from disclosing or granting access to the Confidential Information
to any third party in any manner whatsoever; and

13

(d)
to disclose the Confidential Information only to those employees as is reasonably
necessary.
17.05 There shall be no restrictions on either party with respect to any portion of the
Confidential Information which:
(a)

is in the public domain at the time of disclosure;

(b)
comes in the public domain after it has disclosed to a Receiving Party through no
breach of the terms of this Article;
(c)
is otherwise in the legal possession of a Receiving Party on a non-confidential
basis prior to disclosure to the Receiving Party under this Article;
(d)
is obtained by a Receiving Party from a third party not known to the Receiving
Party, following due inquiry, to be obligated to keep the information confidential pursuant
to a legal, contractual or fiduciary obligation; or
(e)
the Receiving Party is required to disclose by law, by any court having jurisdiction
or by anybody constituted by law which has been authorized by law to require such
disclosure, but in each case only to the extent so required, provided that the Receiving
Party shall give the Disclosing Party prompt written notice of such requirement so that
the Disclosing Party may seek an appropriate protective order or otherwise seek to
contest, limit or protect the confidentiality of any such required disclosure, or waive, in
whole or in part, compliance with the provisions of this Article.

18.0

DISPUTE RESOLUTION

18.01 The parties will use reasonable efforts to find a satisfactory resolution to any conflict
regarding interpretation of this Agreement.
18.02 The parties will endeavor to resolve
through direct dialogue and discussion.

differences,

conflicts

or

disagreement

18.03 In the event that the parties are unable to resolve a dispute, they may submit the dispute
to mediation and, if unable to resolve the dispute, shall submit it to arbitration under the
Commercial Arbitration Act (Nova Scotia).

19.0

GENERAL

19.01 Money Currency Except where otherwise noted, all references to monetary amounts
in this Agreement or any Schedule shall be to Canadian dollars. All estimates, book and
accounts and reports shall be prepared in Canadian dollars.
19.02 Time - Time shall be of the essence in this Agreement.
19.03 Jurisdiction - This Agreement shall be governed by and construed in accordance
with the laws in force in Nova Scotia. The parties hereto submit to the jurisdiction of the
Courts of Nova Scotia.

14

19.04 Notices - Any notice, demand or request herein provided or permitted to be given
by any party to another shall be in writing and may be served by personal service
or fax, addressed as follows:
(a)

To the Province:
Attention:
Alan Grant, Executive Director
Department of Transportation Infrastructure and Renewal
1672 Granville Street
Halifax, NS B3J 3Z8
Telephone: (902) 424- 2907
Fax:
(902) 424- 0583

(b)

To BFL:
Attention:

Mark MacDonald, Chairman and Chief Executive Officer

5855 Spring Garden Road
Suite A201, Halifax, NS B3H 4S2
Telephone: (902) 423-7863
Fax:
(902) 423-7904

Any party may at any time give notice in writing to the other of any change of
address of the party giving such notice and the address therein specified shall be
deemed to be the address of such party for the purpose of giving notice hereunder.
19.05 Survival of Terms - Those provisions of this Agreement which, by their terms, are
intended to survive or which must survive in order to give effect to the continuing
obligations of the Province and BFL shall survive the termination of the Agreement.
19.06 Successors and Assignment - This Agreement shall be binding upon the parties
hereto, their respective successors and permitted assigns. BFL shall not assign this
Agreement nor any funds to be paid to it by the Province without the prior written
consent of the Province.
19.07 Whole Agreement and Amendments
(a)
This Agreement constitutes the whole Agreement unless amended in writing and
signed by both parties.
(b)
No modifications of the obligations of any party to this Agreement shall be
effective unless made in writing and signed by each of the parties to this Agreement.
19.08 Waiver and consent to breach - Either party may waive compliance with or
consent to the breach of a term of this Agreement, however, no term or provision of this
Agreement shall be deemed waived and no breach excused, unless the waiver or
consent to the breach is in writing, signed by the party making the waiver or giving the
consent. Any consent by a party or waiver of a breach by the other, whether expressed
or implied, shall not constitute to, waiver of, or excuse for any different or subsequent
breach or continuation of the same breach, unless expressly stated.

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19.09 Invalidity - If any term or provision of this Agreement shall be found to be illegal or
unenforceable, this Agreement shall otherwise remain in full force and effect, and such
term or provision shall be deemed removed from the Agreement.
19.10 Authorized Representatives - Where anything is required to be done by the
Province pursuant to this Agreement, it may be done by anyone duly authorized by the
Province to act on its behalf.
19.11 Authority to sign - The signatories to this Agreement hereby personally warrant that
they have the full power and authority to enter in this Agreement on behalf of their
respective parties and that the person signing this Agreement on behalf of each has
been properly authorized and empowered.
19.12 Further Assurances - BFL shall promptly and duly execute and deliver to the
Province such further documents and assurances and take such further action as
the Province may reasonably request in order to more effectively carry out the intent
and purposes of this Agreement.

IN WITNESS WHEREOF the parties hereto have executed this Agreement to be effective as of
the day and year first above written.
SIGNED, SEALED AND DELIVERED
In the presence of:

_________________________________
Witness

_________________________________
Witness

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HER MAJESTY THE QUEEN IN RIGHT OF

THE PROVINCE OF NOVA SCOTIA, AS
REPRESENTED BY THE MINISTER OF
TRANSPORTATION AND
INFRASTRUCTURE RENEWAL
Per:_______________________________

Per:_______________________________
BAY FERRIES LIMITED
Per:_______________________________

Per:________________________________

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SCHEDULE A
ELIGIBLE EXPENSES

Wages and Related Cost

o Vessel wages - BFL and third party contractors
o Crew travel and per diems
o Crew training
o Crew accommodations
o Stevedores
o Terminal wages BFL and third party contractors
o Unit head, administrative, marketing staff
o Regulatory severance cost
o Recruitment cost
Shared Services (corporate wages, telephone, courier, rent)
Marine Biologist
Crew Agency fees
Crew Feeding
Travel
Training
Fuel
Winter Layup cost
Lube Oils
Vessel drydocking and repairs and maintenance (including needed spares)
Consumables
Laundry & housekeeping
Insurance (vessel, terminal and other)
Delivery and redelivery expense (cost of moving vessel for drydock or winter layup)
Vessel Charter
Broker commission
Dockage/Harbour fees
Pilot fees
Classification/inspection fees
Diver inspections
Marine Service fees
Utilities (data/WIFI, electricity, etc.)
Telephone & cellular
Office expense
Advertising and sales
Damage claims
Insurance deductibles
Terminal leases Portland and Yarmouth
Terminal maintenance
Infrastructure start-up cost (docks, terminals)
Other start-up cost aside from $750,000 in interim agreement
Vessel and terminal staff uniforms
Call Center and Reservation software
Computers, printers, office equipment and software
Property or business tax
Professional Fees (legal, tax advice, audit fees, etc.)
Miscellaneous (bank charges, payroll fees and other)
Security and bonding fees
Withholding tax if applicable

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Sales commissions to agents or onboard concession operators

Cost associated with operating onboard food service and gift shop
Currency exchange gains or losses
Other expenses required to operate a ferry service from Yarmouth to the US.

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SCHEDULE B
OPERATING SUBSIDY AND MANAGEMENT FEE PAYMENT SCHEDULE

Operating Subsidy

Fiscal 2015-16:

S. 17(1)(d)

Fiscal 2016-17:

S. 17(1)(d)

Management Fee

Fiscal 2016-17:

S. 17(1)(d)