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RSNL1990 CHAPTER L-27

LOWER CHURCHILL DEVELOPMENT ACT

Amended:

2001 cN-3.1 s2

CHAPTER L-27

AN ACT TO FACILITATE THE DEVELOPMENT OF THE HYDRO-ELECTRIC POWER POTENTIAL OF THE LOWER CHURCHILL RIVER

Analysis



Short title

        1. This Act may be cited as the Lower Churchill Development Act.

1979 c17 s1

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Definitions

        2. In this Act

             (a)  "amending agreement" means the agreement referred to in subsection 4(1) and set out in Schedule B;

             (b)  "corporation" means Lower Churchill Development Corporation Limited;

             (c)  "option agreement" means the agreement referred to in subsection 5(1) and set out in the Appendix to Schedule A; and

             (d)  "principal agreement" means the agreement referred to in subsection 3(1) and set out in Schedule A.

1979 c17 s2

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Principal agreement

        3. (1) The agreement executed and delivered by and between the Crown in right of Canada represented by Honourable Alastair Gillespie, Minister of Energy, Mines and Resources of Canada of the 1st part and the Crown in right of the province represented by Honourable Frank D. Moores, Premier and Minister for Intergovernmental Affairs (Acting) of the Province of Newfoundland and Labrador and Honourable A. Brian Peckford, Minister of Mines and Energy of the Province of Newfoundland and Labrador of the 2nd part, dated November 24, 1978, and set out in Schedule A is ratified, confirmed and adopted from that date.

             (2)  From November 24, 1978 ,

             (a)  the principal agreement is valid and binding upon all persons affected by it and has the full effect of law for all purposes as if expressly enacted in this Act; and

             (b)  the parties to the principal agreement and their successors and assigns may do and perform or omit to do and perform the several acts, matters and things in and by the principal agreement provided to be done or not to be done in the manner and with the effect and under the conditions stipulated and provided in the principal agreement.

1979 c17 s3; 1987 c28 Sch B; 1989 c23 Sch B; 2001 cN-3.1 s2

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Amending agreement

        4. (1) The agreement executed and delivered by and between the Crown in right of Canada represented by Honourable Alastair Gillespie, Minister of Energy, Mines and Resources of Canada of the 1st part and the Crown in right of the province represented by Honourable A. Brian Peckford Premier and Minister for Intergovernmental Affairs of the Province of Newfoundland and Labrador and Honourable C. William Doody, Minister of Mines and Energy of the Province of Newfoundland and Labrador of the 2nd part, dated November 24, 1978 and set out in Schedule B is ratified, confirmed and adopted from that date.

             (2)  From November 24, 1978 ,

             (a)  the amending agreement is valid and binding upon all persons affected by it and has the full effect of law for all purposes as if expressly enacted in this Act; and

             (b)  the parties to the amending agreement and their successors and assigns may do and perform or omit to do and perform the several acts, matters and things in and by the amending agreement provided to be done or not to be done in the manner and with the effect and under the conditions stipulated and provided in the amending agreement.

1979 c17 s4; 2001 cN-3.1 s2

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Option agreement

        5. (1) The Minister of Mines and Energy of the province is authorized to enter into, execute and deliver, for and on behalf of the Crown in right of the province an option agreement between the Crown in right of the province of the 1st part and Lower Churchill Development Corporation Limited of the 2nd part, the terms of which shall be substantially similar to the option agreement set out in the Appendix to Schedule A.

             (2)  Upon the execution and delivery of the option agreement it is considered to have effect from November 24, 1978 , and from that date

             (a)  is valid and binding upon all persons affected by it and has the full effect of law for all purposes as if expressly enacted in this Act; and

             (b)  the parties to the option agreement and their successors and assigns may do and perform or omit to do and perform the several acts, matters and things in and by the option agreement provided to be done or not to be done in the manner and with the effect and under the conditions stipulated and provided in the option agreement.

1979 c17 s5; 1987 c28 Sch B; 1989 c23 Sch B

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Purchase of own shares

        6. (1) Notwithstanding the Corporations Act or another Act, regulation or law of the province, the corporation may purchase any of its Class A common shares out of its capital in accordance with subclause 9(4) of the principal agreement.

             (2)  The purchase by the corporation of any of its Class A common shares is considered not to constitute a reduction of the authorized or issued share capital of the corporation.

             (3)  Part III of the Corporations Act does not apply to the purchase by the corporation of any of its Class A common shares.

             (4)  A payment or other distribution made in respect of the Class A shares of the corporation, or a notice of payment, shall not be made or given in respect of those shares that are held by or on behalf of the corporation while they are so held.

             (5)  The corporation, or a person who holds any of its Class A common shares on its behalf, shall not vote any of those shares.

1979 c17 s6

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Sale of purchased shares

        7. Class A common shares of the corporation purchased by the corporation may be sold by the corporation at those prices and on the terms and conditions that its board of directors may decide, and upon the sale the Class A common shares so sold confer on the holders the same rights and they have the same attributes as they had before their purchase by the corporation.

1979 c17 s7

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Holding etc. of shares

        8. (1) The Crown in right of the province may acquire the ownership of the issued shares of the corporation and hold the shares in its own name, in the name of a minister of the Crown, or in the name of an agent of the Crown, in accordance with the principal agreement and the option agreement.

             (2)  While the voting shares in the corporation are held in the name of

             (a)  the Crown in right of the province;

             (b)  a minister of the Crown; or

             (c)  an agent of the Crown,

the Lieutenant-Governor in Council, the minister, or the agent, as the case may be, may vote all the shares in accordance with the principal agreement, the option agreement, the memorandum and articles of the corporation, theCorporations Act and another Act, regulation or law.

1979 c17 s8

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Effect of ownership of shares

        9. Notwithstanding the Corporations Act or another Act, regulation or law of the province, the acquisition or ownership of all the issued shares of the corporation by the Crown in right of Canada , the Crown in right of the province, or an agent of either of them, or 1 or more of them, does not

             (a)  affect the status of the corporation or its capacity to carry on business or make it liable to be wound up; or

             (b)  increase the liability of a shareholder of the corporation above the amount unpaid on the shares held by the shareholder

even though, as a result of the acquisition or ownership, there are less than 3 share holders.

1979 c17 s9

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Rates

     10. Notwithstanding the Public Utilities Act or another Act, regulation or law of province, the corporation may, in its sole discretion, establish rates for the sale of electricity generated under a project established under the principal agreement.

1979 c17 s10

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Sale in province

     11. (1) Electricity generated under a project established under the principal agreement shall not be sold directly or indirectly for consumption in the province to a person other than Newfoundland and Labrador Hydro.

             (2)  The rates to be charged by the corporation for sale to Newfoundland and Labrador Hydro for consumption in the province

             (a)  shall be reasonable and not unjustly discriminatory; and

             (b)  shall not be higher than those necessary to provide sufficient revenue to the corporation to enable it to earn a just and reasonable return, so that it is able to achieve and maintain a sound financial position.

             (3)  Nothing in subsection (1) precludes the corporation from negotiating directly for the sale of electricity to consumers in the province, where Newfoundland and Labrador Hydro is the seller of the electricity.

1979 c17 s11

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Discriminatory laws

     12. The corporation is not subject to an Act, regulation or law of the province, other than Acts, regulations and laws of general application, that would

             (a)  impair the financing or construction of a project established under the principal agreement or that would adversely affect the profitable operation of the project upon its completion; or

             (b)  discriminate against the corporation's property, rights and interests or discriminate against the corporation with respect to approvals, consents, licences, franchises or concessions that may be required by the corporation to carry out its activities contemplated by the principal agreement.

1979 c17 s12

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Part II, Crown Lands Act

     13. Part II of the Crown Lands Act does not apply to the Lower Churchill Basin as defined in paragraph 1(1)(f) of the option agreement, while the option agreement is in effect.

1979 c17 s13

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Interpretation

     14. Sections 6 to 13 are not to be interpreted so as to restrict the generality of sections 3, 4 and 5.

1979 c17 s14

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Schedule A

THIS AGREEMENT made as of the 24th day of November, 1978.

BETWEEN:  HER MAJESTY THE QUEEN IN RIGHT OF CANADA

(hereinafter called " Canada "), herein acting through and
represented by the Minister of Energy, Mines and                      
Resources,

- and -OF THE FIRST PART

HER MAJESTY THE QUEEN IN RIGHT OF
NEWFOUNDLAND (hereinafter called "
Newfoundland "),
herein acting through and represented by the Minister of
Mines and Energy and the Minister for Intergovernmental
Affairs,

OF THE SECOND PART

WHEREAS Canada and Newfoundland have agreed to establish Lower Churchill Development Corporation Limited (hereinafter called the "Corporation") with the primary objective of establishing a basis for the development of all or part of the hydro-eclectic potential of the Lower Churchill Basin as more particularly described in clause 1;

AND WHEREAS Canada and Newfoundland have also agreed to cause the Corporation to undertake the Study Stage Work as defined in clause 1;

AND WHEREAS, subject to the results of the Study Stage Work and to further agreements between the parties as contemplated by sub-clause 15(3), both Canada and Newfoundland consider it to be desirable to proceed with the Project as defined in clause 1 if it is found to be economically, financially and technically justifiable;

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises and of the mutual covenants and the agreements herein contained, the parties hereto agree as follows:

        1. Interpretation

             (1)  In this Agreement, unless the context should otherwise require:

             (a)  "Lower Churchill Basin" means the waters of the Churchill River downstream of the point of intersection of the Churchill River with the meridian of 63° 40' West of Greenwich and between that point and the intersection of the Churchill River with the meridian of 60° 46' West of Greenwich and within the catchment area of the Churchill River between those two points, but the expression "Lower Churchill Basin" does not include any rivers in the said catchment area other than the Churchill River, whether or not such other rivers are tributary to the said Churchill River;

             (b)  "Option Agreement" means the agreement between the Corporation and Newfoundland substantially in the form of the Appendix hereto, as such agreement may from time to time be amended or supplemented by the parties thereto;

             (c)  "Project" means the development of the hydro electric potential in any part of the Lower Churchill Basin and associated transmission facilities, and includes without limiting the generality of the foregoing,

                      (i)  the construction and operation of facilities for the generation of hydro electricity from any part of the Lower Churchill Basin ,

                     (ii)  the construction and maintenance of transmission facilities for the delivery of power developed in the Lower Churchill Basin to the grid on the Island of Newfoundland , and

                    (iii)  an inter-tie with the power development at Churchill Falls on the Upper Churchill River ;

in accordance with any agreement made pursuant to sub-clause 15(3), after the completion of the Study Stage Work;

             (d)  "Study Stage Work" means the search for and analysis of the most economically feasible means of carrying out the Project and includes:

                      (i)  a recommendation as to the part or parts of the Lower Churchill Basin that should be included in the Project and the preparation of a detailed estimate of the capital and operating costs of the Project;

                     (ii)  the preparation of a detailed program for the construction of the Project, including a projection of the time at which capital expenditures will be required to be made;

                    (iii)  the preparation of a detailed plan which has as a target the financing of approximately 90% of the capital cost of the Project through the issue of obligations of the Corporation to lenders or investors supported, where feasible, by sales of Project output; provided that any such financing arrangement will be such as will not imperil the tax-free status of the Corporation under the laws of Canada and Newfoundland;

                    (iv)  taking into account sub-paragraph 2(1)(v) and also taking into account the estimated future requirements of the Province of Newfoundland for electricity generated by the Project, the preparation of a detailed plan for the marketing of the electrical output of the Project over a period of at least 15 years following the commercial start-up of the Project with the primary object being to ensure that the Corporation obtains reasonable terms for the power sold including, whenever possible, protection by way of price escalation or price redetermination throughout the term of any long term contractual arrangements and to ensure, whenever possible, that sales contracts assist in raising the funds to finance the Project;

                     (v)  the preparation of a detailed plan regarding the acquisition of any property interest, licenses, rights or contractual commitments required for the construction or operation of the Project;

                    (vi)  the preparation of environmental assessment studies with respect to the Project;

                   (vii)  the assessment or the participation with others including the Government of Canada, of Newfoundland and any other relevant groups, in the assessment of the socio-economic impact of the Project upon the native and other people living in or using the area affected by the Project and the development of corporate policies to deal with, or participate in dealing with, any concerns that arise as a result of the assessment;

                  (viii)  the development of specific principles and plans which shall endeavour to ensure that the supply of goods and services for the Project will be such as to give to residents of Newfoundland and then all residents of Canada a preference for employment in the construction and operation of the Project and for the supply of materials, machinery and equipment originating or manufactured in Newfoundland or elsewhere in Canada to the Project;

                    (ix)  the preparation of a detailed report analyzing the changes required in the laws and regulations of Newfoundland and Canada in order to give effect to the provisions of this Agreement and the Option Agreement;

                     (x)  assessment of the economic feasibility of the hydro electric development based on the foregoing study elements;

                    (xi)  such other studies as the parties may reasonably require.

             (2)  All references to dollar amounts and all references to any other money amounts in this Agreement are, unless specifically otherwise provided, expressed in terms of coin or currency of Canada which at the time of payment or determination shall be legal tender in Canada for the payment of public and private debts.

             (3)  Words in this Agreement importing the singular number shall include the plural and vice versa, and words importing the masculine gender shall include the feminine and neuter genders.

             (4)  Where a word is defined anywhere in this Agreement, other parts speech and tenses of the same word have corresponding meanings.

             (5)  Wherever in this Agreement a number of days is prescribed for any purpose, the days shall be reckoned inclusively of the first and exclusively of the last.

             (6)  Whenever this Agreement requires a notice to be given or a request to be made on a Sunday or a legal holiday, such notice or request may be given or made, on the first business day occurring thereafter, and, whenever in this Agreement the time within which any right will lapse or expire shall terminate on a Sunday or legal holiday, such time will continue to run until the next succeeding business day.

             (7)  The headings of all of the clauses are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

             (8)  Any reference in this Agreement to a clause, a sub-clause, a paragraph or a sub-paragraph shall, unless the context other-wise specifically requires, be taken as a reference to a clause, a sub-clause, a paragraph or a sub-paragraph of this Agreement.

             (9)  This Agreement may be executed in two or more counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts together shall constitute one and the same instrument.

        2. General

             (1)  Canada and Newfoundland agree to:

                      (i)  cause the Corporation to be incorporated, organized and operated as set forth in clause 3;

                     (ii)  subscribe for shares of the Corporation as set forth in clause 4;

                    (iii)  cause the Corporation to enter into the Option Agreement with Newfoundland pursuant to clause 4 relative to the Gull Island Assets and Water Rights as therein defined;

                    (iv)  cause the Corporation to undertake the Study Stage Work pursuant to clause 5;

                     (v)  cause the Corporation to grant to Newfoundland a first right of refusal of the power produced by the Project which shall be evidenced by an agreement between the Corporation and Newfoundland and Labrador Hydro which shall be entered into after the completion of the Study Stage Work and prior to or contemporaneously with the agreement referred to in sub-clause 15(3);

                    (vi)  preform their responsibilities as shareholders of the Corporation in accordance with this Agreement.

             (2)  Either party to this Agreement may nominate one or more departments or agencies such party or corporations of which not less than 90% of the shares are owned by such party to carry out any of the obligations of such party under this Agreement; provided, however, that such party shall continue to be responsible to the other party for the performance by such department, agency or corporation under this Agreement.

        3. The Corporation

             (1)  Canada and Newfoundland agree that the Corporation shall be incorporated and organized as a company limited by shares under Part I of the Companies Act (Newfoundland) RSN 1970 Ch.54, as amended, with a Memorandum of Association and Articles of Association in such form as may be agreed from time to time by Canada and Newfoundland.

             (2)  The authorized capital of the Corporation will consist of 35,000 Class A common shares with a par value of $10,000 each and 3,000 Class B common shares, also with a par value of $10,000 each. Each Class A share shall have the same rights, restrictions, conditions and limitations attaching thereto as shall attach to each Class B share, except in respect to the right to receive dividends payable by the Corporation, as more particularly described in sub-clauses 3(3) and 3(4).

             (3)  The parties shall cause their respective nominees on the board of directors of the Corporation to implement a dividend policy whereby all of the moneys of the Corporation properly available for the payment of dividends shall be paid out as dividends to the Class A and Class B shareholders in accordance with sub-clause 3(4), except where the declaration or payment of such dividend would be contrary to law or would result in the breach of any of the terms, conditions or provisions of, or constitute a default under, its memorandum and articles of association, or any indenture, mortgage, deed of trust or other agreement or instrument made at any time hereafter to which the Corporation is a party. Except as aforesaid, the dividend policy shall provide that until an average annual dividend of $1,000 per Class A share has been paid in respect of each fiscal year immediately succeeding the commencement of the commercial operation of the Project and after taking into consideration any dividends previously paid on the Class A shares, no other dividend shall be paid on the Class A or Class B shares.

             (4)  Subject to sub-clause 3(3), dividends on the Class A shares and the Class B shares, as and when declared by the board of directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, shall be paid as follows:

                      (i)  Each Class A share shall be entitled to receive a cash dividend of $1,000 in respect of each complete fiscal year of the Corporation immediately succeeding the commencement of commercial operation of the Project;

                     (ii)  after the payment in full of the dividend referred to in paragraphs 3(4)(i), each Class A and Class B share shall be entitled to receive on a pari passu basis a cash dividend of up to but not exceeding $800 in respect of each such fiscal year;

                    (iii)  after the payment in full of the dividends referred to in paragraphs 3(4)(i) and 3(4)(ii), all further dividends in respect of each such fiscal year shall be paid to the holders of the Class B shares;

                    (iv)  in the even that the date of commencement of commercial operation of the Project does not coincide with the first day of a fiscal year of the Corporation, the provisions of sub-clause 3(3) and this sub-clause 3(4) shall apply mutatis mutandis in respect of the partial fiscal year between such date of commencement and the last day of the fiscal year in which such date of commencement occurred but the amount of the dividend shall be that proportion of the dividend in respect of the complete fiscal year which the number of days in the partial fiscal year bears to the number of days in such fiscal year.

             (5)  Unless otherwise agreed by the parties, the only business of the Corporation will be to implement the provisions of the Agreement which relate to the Corporation.

        4. Issued Capital of the Corporation

             (1)  Following the incorporation and organization of the Corporation, Canada agrees to subscribe for 500 Class A shares in its capital stock for a consideration of $5,000,000 payable in cash by way of an initial payment of not less than $100,000 upon receipt by Canada of the share certificate evidencing the 500 Class A shares, with the balance being payable on or before April 30, 1979. The Corporation shall allot and issue the aforesaid 500 shares in its capital stock as soon as reasonably possible following the organization of the Corporation.

             (2)  Contemporaneously with the subscription for shares referred to in sub-clause (1), Newfoundland shall execute and the parties shall cause the Corporation to execute the Option Agreement in respect of the Gull Island Assets and Water Rights as defined in the Option Agreement. In consideration of the grant of the option of the agreed value of $5,200,000 on the Gull Island Assets and Water Rights by Newfoundland to the Corporation pursuant to the Option Agreement, the parties shall cause the Corporation to issue to Newfoundland 520 Class A shares in the capital stock of the Corporation. The aggregate of 520 Class A shares shall be issued to Newfoundland and or its nominee as fully paid and non-assessable for the agreed value set forth in the preceding sentence which has been determined to be the fair market value of the option to be granted to the Corporation by Newfoundland pursuant to the Option Agreement, which agreed value as provided by sub-clause 7(8) of the Option Agreement shall be applied in respect of the Purchase Price of the Gull Island Assets if the option provided by the Option Agreement is exercised.

             (3)  Following the issue of the shares described in subclauses (1) and (2), Newfoundland will own beneficially approximately 51% of the outstanding Class A shares of the Corporation and Canada will own beneficially approximately 49% of such issued Class A shares. No additional Class A shares shall be issued prior to the completion of the Study Stage Work without the consent of the parties hereto; provided that if the cost of the Study Stage Work should exceed $5,000,000, such excess cost shall, subject to mutual agreement by the parties be borne by cash subscriptions from Canada and Newfoundland to acquire Class A shares which shall preserve, as nearly as may be, the beneficial ownership in such shares as to 51% by Newfoundland and 49% by Canada. Any Class A shares issued after the completion of the Study Stage Work shall only be issued in accordance with the provisions of the Agreement referred to in sub-clause 15(3). If additional Class A shares of the Corporation are issued (other than as provided in sub-clause 4(4) or in the Option Agreement) they shall be issued so as to preserve at all times, as nearly as may be, the beneficial ownership in such shares of the Corporation as to 51% by Newfoundland and 49% by Canada . The Class A shares shall always be issued in such a manner that Newfoundland shall, at all times from the date of the execution of the Option Agreement by Newfoundland , hold more than 50% of such shares. Class B shares of the Corporation shall only be issued to Newfoundland in accordance with the provisions of the Option Agreement. Newfoundland agrees that as long as the Corporation is not in default under the Option Agreement, Newfoundland will not vote or permit to be voted any of the Class B shares of the Corporation at any meeting of the shareholders of the Corporation.

             (4)  Canada agrees to pay cash to the Corporation as the subscription price for any additional Class A shares of the Corporation which are issued to Canada pursuant to this clause 4. At any time while the Convertible Demand Debenture delivered pursuant to the Option Agreement remains outstanding, Newfoundland agrees to convert (until the full principal amount of such debenture has been converted) the appropriate principal amount of such debenture from time to time into Class A shares as Class A shares are issued to Canada pursuant to sub-clause 4(3) in order to maintain the ratio of beneficial ownership referred to in sub-clause 4(3). Newfoundland shall only be entitled to utilize the Class A shares resulting from the conversion of the first $80,000,000 principal amount of such debenture for the purpose of maintaining the ratio of beneficial ownership referred to in sub-clause 4(3) and thereafter Newfoundland shall pay cash as the subscription price for any additional Class A shares required to maintain such ratio. The balance, if any, of the principal amount of the debenture in excess of $80,000,000 shall be converted by Newfoundland into Class A shares at the same time as the conversion of that principal amount of the debenture which brings the total principal amount converted thereunder up to or exceeding $80,000,000 and, while such conversion may change the ratio of beneficial ownership referred to in sub-clause 4(3), the resulting Class A shares shall not be taken into account for the purposes of sub-clause 4(3).

             (5)  Newfoundland agrees that as long as the Corporation is not in default under the Option Agreement, Newfoundland will not demand payment of the principal of the Convertible Demand Debenture delivered pursuant to the Option Agreement, that it will not transfer or assign any of its rights under the Debenture except to a department or agency of Newfoundland or a corporation that is an agent of Her Majesty in Right of Newfoundland if Newfoundland owns the property of that corporation; provided that such transfer or assignment will be such as will not imperil the tax-free status of the Corporation under the laws of Canada and Newfoundland and further provided that Newfoundland or its permitted assignees will not exercise its or their conversion privileges under the Debenture except to the extent required or permitted by sub-clause 4(4).

        5. Study Stage Work

             (1)  The parties agree to cause the Corporation to carry out the Study Stage Work either through the use of personnel of the Corporation, personnel provided by either party hereto (including a Crown corporation, department or agency associated with that party) or consultants retained by the Corporation.

             (2)  The parties agree that they shall cause the Corporation to apply moneys subscribed pursuant to clause 4 solely for the performance of Study Stage Work or such other activities relating to the Project as the parties may mutually agree in writing.

             (3)  Each of the parties agrees to study the reports and other information supplied by the Corporation as its consultants in respect of the Study Stage Work and to provide on a timely basis to the Corporation and the other party comments regarding the Study Stage Work.

             (4)  Following the completion of the Study Stage Work, the parties agree that they will meet and review the feasibility of proceeding with the Project pursuant to the recommendations resulting from the Study Stage Work and the comments by the parties thereon.

             (5)  In the event that the parties agree to proceed with the Project either on the basis of the Study Stage Work or the Study Stage Work as amended by the parties, the parties will exercise all reasonable efforts to ensure that the Project is constructed and operated in accordance with such agreement.

             (6)  Canada and Newfoundland agree to consider in good faith, when the Study Stage Work is completed, whether either or both of them can, having regard to them existing conditions, support the financing by the Corporation referred to in sub-paragraph 1(1)(d)(iii) by such arrangements with the Corporation as may be required to permit the Corporation to obtain the financing needed for the Project, it being understood that as a target the parties expect that approximately 90% of the capital cost of the Project will be obtained through the issue of obligations of the Corporation to lenders or investors in accordance with the proviso to sub-paragraph 1(1)(d)(iii) supported, where feasible, by sales of Project output.

             (7)  If the parties decide not to proceed with the Project during the Study Stage Work or following its completion, any cash remaining in the Corporation following satisfaction of all liabilities shall upon liquidation of the Corporation, be returned to the parties pro rata to their previous cash payments to the Corporation.

        6. Management of the Corporation

             (1)  The general policy for the operation of the Corporation shall be determined by its board of directors consisting of 12 persons of whom 6 shall be nominees of Newfoundland , 5 shall be nominees of Canada and 1 shall be the chief executive officer. If the number of directors of the Corporation is increased or decreased, the same proportionate representation aforesaid on the board between nominees of Newfoundland and Canada shall be maintained to the extent practicable.

             (2)  The parties agree to use their best efforts to cause their nominees as directors on the board of the Corporation from time to time, when they are appointing members of an executive committee, an audit committee or any other committee, to appoint such committees so that to the extent practicable the respective representations of Canada and Newfoundland on such committees are in the same approximate proportions as their respective representations on the board of directors of the Corporation.

             (3)  Both parties agree to vote all the shares of the Corporation owned by them to comply with the provisions of this Agreement. The parties further agree to use their best efforts to cause their nominee directors on the board of directors of the Corporation to vote in accordance with the provisions of this Agreement with respect to filling any vacancies on the board of directors arising from resignation, death or removal of the nominee of either party. If any nominee director fails to implement the provisions of this Agreement, all necessary action will be taken to remove such person from office. Except as provided in the immediately preceding sentence, neither party shall use its voting rights to remove a director who is a nominee of the other party without the written consent of the other party.

             (4)  The board of directors shall elect from among their number a chairman who shall be nominated by Newfoundland after prior consultation with Canada and a Vice-Chairman who shall be nominated by Canada after prior consultation with Newfoundland . The Chairman, or in his absence, the Vice-Chairman, shall act as chairman at all meetings of directors. Subject to clause 8, in the case of a tie, the Chairman, if present, shall have a second tie-breaking vote and in the absence of the Chairman, the most senior nominee of Newfoundland on the board of directors of the Corporation who is present at the meeting shall have the tie-breaking vote.

             (5)  The day-to-day activities of the Corporation shall be under the supervision of its chief executive officer, who shall be responsible to the board of directors.

             (6)  The Corporation shall employ or retain such competent personnel and outside consultants as may be required, so that the Corporation may carry out the matters for which it is responsible under this Agreement. The retainer of outside consultants (including personnel provided by either party hereto or a Crown corporation, department or agency associated with a party hereto) and the allocation of various aspects of the Study Stage Work between such consultants and personnel of the Corporation shall be determined by the board of directors of the Corporation.

             (7)  The parties shall cause the Corporation to provide audited financial statements to the parties at such times and in such detail as may reasonably be required by the parties for their own purposes.

             (8)  Since it is likely that the Corporation will be entering into contracts from time to time with either party or with an entity controlled by either party, the parties agree that no director of the Corporation who is a nominee of either party shall be required to declare the existence of a conflict of interest in respect of any such contract pursuant to the Articles of Association of the Corporation and any nominee director of a party shall be entitled to consider and vote on any such contract at a meeting of the board of directors of the Corporation notwithstanding the existence of a conflict of interest.

        7. Covenants

             (1)  The obligations of Canada under this Agreement, including the subscription for the shares referred to in sub-clause 4(1) and the payment of the subscription price therefor, are subject to Canada obtaining from Parliament the necessary statutory authorization. Canada agrees that at the earliest possible opportunity having regard to the other business of Parliament, it will introduce the necessary legislation and will use its best endeavours to have such legislation enacted as quickly as possible.

             (2)  The obligations of Newfoundland under this Agreement, including the necessary authorization to enter into the Option Agreement with the Corporation, are subject to ratification by the Legislature. Newfoundland agrees that at the earliest possible opportunity, having regard to the other business of the Legislature, it will introduce the necessary legislation and that it will use its best endeavours to have such legislation enacted as quickly as possible. Newfoundland agrees that it will include in such legislation:

             (a)  a provision which will permit the Corporation in its discretion to establish rates for the sale of electricity from the Project; provided that no sales of electricity by the Corporation from the Project for ultimate consumption in the Province of Newfoundland shall be made to any person other than Newfoundland and Labrador Hydro (but this shall not preclude the Corporation from negotiating directly for the sale of electricity to consumers in Newfoundland, as long as Newfoundland and Labrador Hydro is the seller) and provided further that the rates to be charged by the Corporation for electricity sold by it for ultimate consumption in the Province of Newfoundland

                      (i)  shall be reasonable and not unjustly discriminatory; and

                     (ii)  shall not be higher than those necessary to provide sufficient revenue to the Corporation to enable it to earn a just and reasonable return so that it is able to achieve and maintain a sound financial position;

             (b)  a provision which will ensure that the Corporation is not subject to provincial regulation which would impair the financing or construction of the Project or the profitable operation of the Project following its completion; and

             (c)  a provision to the effect that the Corporation will not be subject to any laws, regulations or rulings within the jurisdiction of Newfoundland which would discriminate against the Corporation relating to its property, rights and interests or the approvals, consents, licenses, franchises or concessions which may be required by the Corporation to carry out its activities as contemplated by this Agreement.

             (3)  In the event that either Canada or Newfoundland is unable to obtain the necessary authorization or ratification contemplated by sub-clauses 7(1) or 7(2) within one year after the date of this Agreement, either party may, upon 90 days prior written notice to the other party, given within 3 months following the expiry of the one year aforesaid, elect to terminate its obligations under this Agreement.

             (4)  Each party agrees that it will take no action and will introduce no legislation within its jurisdiction which would subject the Corporation to any discriminatory tax, levy, assessment, duty or other charge.

             (5)  Each party further agrees that it will take no action and will introduce no legislation within its jurisdiction which would interfere with or prevent the Corporation from carrying out its business activities as contemplated by this Agreement.

             (6)  Each party further agrees to use every reasonable effort to ensure that

             (a)  no department, agency or corporation over which such party has jurisdiction will expropriate a material portion of the assets subject to the Option Agreement which would interfere significantly with the development, financing, construction or operation of the Project;

             (b)  problems arising under environmental laws over which the party has jurisdiction relating to the Project will be resolved as expeditiously as possible so that the development, financing, construction and operation of the Project will not be impeded.

        8. Corporate Restrictions

             (1)  Notwithstanding any provision to the contrary in the Memorandum, Articles, By-laws or Special Resolutions of the Corporation, the following matters relating to the Corporation shall require the consent of both parties, as evidenced by a written consent executed on behalf of both parties or by a unanimous affirmative vote at a meeting of the shareholders of the Corporation.

             (a)  any constitutional change in the Corporation, including a change or amendment to the Memorandum of Association or Articles of Association or any Special Resolution of the corporation relating to the alteration of such Memorandum or Articles;

             (b)  any change in the authorized or issued share capital of the Corporation or any commitments or obligations to do so, except as may be required in order to comply with the provisions of this Agreement, the Option Agreement and the Debenture issued thereunder;

             (c)  any material change in the business or activities of the Corporation from that contemplated by this Agreement;

             (d)  the dissolution or winding-up of the Corporation of any amalgamation or other statutory merger of the Corporation with any other corporation;

             (e)  the appointment or removal of the Corporation's auditors.

             (2)  Notwithstanding any provision to the contrary in the Memorandum, Articles, By-laws or Special Resolutions of the Corporation, the following matters relating to the Corporation set forth in this sub-clause shall require the consent of a majority of the nominees of Canada and a majority of the nominees of Newfoundland taken separately as evidenced by an affirmative vote of each such group at a meeting of the directors of the Corporation or any committee thereof. Canada and Newfoundland agree that, in order to facilitate the operations of the Corporation, their nominees aforesaid may agree to approve more than one related matter which would otherwise require separate approval pursuant to this sub-clause. By way of example of the foregoing, the directors could, if they so determined, approve, not only the capital budget of the Corporation pursuant to paragraph 8(2)(g), but also approve at the same time as they approve the budget any consequential acquisitions pursuant to paragraph 8(2)(a), any consequential contracts pursuant to paragraph 8(2)(b) or any corporate policy pursuant to paragraph 8(2)(j) which the directors might decide could properly be considered at the same time as the capital budget. Canada and Newfoundland further agree that any of the dollar limits set forth in this sub-clause 8(2) may be changed with the consent of both a majority of the nominees of Canada and a majority of the nominees of Newfoundland who are directors of the Corporation evidenced either by an affirmative vote of a majority of each such group at a meeting of the directors of the Corporation or by a written instrument signed by a majority of each such group of nominees. The matters to be approved under this sub-clause are as follows:

             (a)  any acquisition or disposition of assets involving, in either case, more than $100,000 or any commitment or obligation to acquire or dispose of such assets, including the exercise or any option to purchase Gull Island Assets pursuant to the Option Agreement;

             (b)  any contract, obligation, lease or license by or to the Corporation involving annual payments of more than $10,000 or any commitment or obligation to enter into any such contract, obligation, lease or license including the exercise of the option granted pursuant to the Option Agreement to obtain a lease in respect of the Water Rights;

             (c)  any distribution or payment by the Corporation to its shareholders by way of dividend, purchase, redemption, reduction of capital or any other payment on or in respect of shares; provided that no consent shall be required pursuant to sub-clause 8(2) in respect of any dividend required to be paid pursuant to the dividend policy set forth in sub-clause 3(3);

             (d)  any creation or incurring by the Corporation of any indebtedness for borrowed money (other than as contemplated by the Agreement or the Option Agreement) or the giving of any guarantee with respect to indebtedness for the borrowed money involving, in either case, more than $100,000;

             (e)  the creation of any mortgage, hypothec, charge, lien, pledge or encumbrance of any nature or kind on any of the assets of the Corporation involving in any case more than $100,000;

              (f)  the incorporation of a subsidiary of the Corporation or the carrying on of any activity by or on behalf of the Corporation by persons other than the Corporation that is not expressly permitted elsewhere in this Agreement;

             (g)  the appointment or removal of the Corporation's bankers;

             (h)  the establishment of corporate policies concerning the negotiation of collective agreements with collective bargaining agents;

              (i)  the establishment of corporate policy regarding the conduct of the Study Stage Work and the approval of any one contract or commitment in respect of the Study Stage Work involving more than $100,000;

              (j)  the continuation of the Study Stage Work or the making of any expenditure in connection therewith involving more than $100,000 if either party in good faith questions the validity of the Project in light of changed circumstances;

             (k)  the establishment of corporate policies concerning the financing of the Project;

              (l)  the establishment of corporate policies concerning the operation and management of the Project;

            (m)  the establishment of corporate policies concerning the marketing of electrical power produced by the Project; provided that all such policies shall recognize the first right of refusal of Newfoundland for power produced by the Project and shall also take into account the estimated future requirements of the Province of Newfoundland for electricity generated by the Project and provided further that the primary object shall be to ensure that the Corporation shall obtain reasonable terms for the sale of electricity produced by the Project, including, whenever possible, protection by way of price escalation or price redetermination throughout the term of any long term contractual arrangements and provided further that all such policies shall ensure, whenever possible, that sales contracts assist in raising funds to finance the Project;

             (n)  the establishment of corporate policies relating to the employment of personnel by the Corporation and the procurement of materials, machinery and equipment for the Project; provided that all such policies shall be such as to give to residents of Newfoundland and then all residents of Canada a preference for employment in the construction and operation of the Project and for the supply of materials, machinery and equipment originating or manufactured in Newfoundland or elsewhere in Canada to the Project;

             (o)  the approval of the annual operating plan and budget;

             (p)  the approval of the annual budget for capital expenditures by the Corporation;

             (q)  the appointment, duties, salary and removal of the chief executive officer of the Corporation;

              (r)  any agreement with the Province of Quebec relative to water flow in the Churchill River, any arrangements with respect of the transmission of electricity from the Project, the sale of electricity from the Project or any other arrangement of a material nature; provided that any such agreement or arrangement shall recognize the first right of refusal in favour of Newfoundland in respect of the power produced by the Project and shall also take into account the estimated future requirements of the Province of Newfoundland for electricity generated by the Project and provided further that the primary object of the Corporation shall be to ensure that it shall obtain reasonable terms for the sale of electricity from the Project, including, whenever possible, protection by way of price escalation or price redetermination throughout the term of any long term contractual arrangements and provided further that any such agreement or arrangement shall, whenever possible, assist in raising funds to finance the Project;

             (s)  any contract or commitment by the Corporation of a material nature with or to Canada , Newfoundland or any agency of either of them;

              (t)  any agreement between the Corporation and Newfoundland under the Option Agreement or any amendment thereto or any waiver of the provisions thereof in favour of Newfoundland .

             (3)  All share certificates of the Corporation shall bear a legend on their face referring to this Agreement and the fact that the rights of the holders of such shares are subject to the provisions of this Agreement relating to the shares.

             (4)  The parties agree that a disagreement as to any matters enumerated in this Clause 8 shall not be the subject matter of a dispute pursuant to Clause 10 and is not intended to be the subject matter of court proceedings pursuant to sub-clause 14(2).

        9. Dispositions of Shares

             (1)  Neither party may transfer ownership in its shares of the Corporation or any interest therein, except as hereinafter provided.

             (2)  Either party may transfer all or part of its shares in the Corporation to any department or agency or such party or to any corporation if such corporation is an agent of the party and its property is owned by the party; provided that any such transfer will not imperil the tax-free status of the Corporation under the laws of Canada and Newfoundland and provided further that such department, agency or corporation becomes bound by the provisions of this Agreement relating to shareholders and that the party so transferring the shares continues to be liable for the performance under this Agreement of such department, agency or corporation and provided further that such department, agency or corporation shall not part with any shares transferred to it except to the party that made the transfer.

             (3)  Newfoundland may at any time elect to acquire from Canada all of the shares of the Corporation issued to Canada and/or its nominees, pursuant to this Agreement, at a cash price equal to the amount obtained by subtracting

             (a)  the aggregate of

                      (i)  the sum of all dividend payments received by Canada on such shares from the date of Canada 's subscription therefore, until the date proposed for their acquisition by Newfoundland (hereinafter referred to as the "Acquisition Date"), and

                     (ii)  the sum of Accumulated Interest (as hereinafter defined) on each such dividend payment from the date such payment was made by the Corporation to the Acquisition Date.

             (b)  from the aggregate of

                      (i)  all amounts paid by Canada to the Corporation for such shares from the date of Canada 's payment therefore to the Acquisition Date, and

                     (ii)  the sum of Accumulated Interest on each amount paid by Canada for such shares from the date such payment was made to the Acquisition Date.

For the purpose of this sub-clause 9(3), "Accumulated Interest" in respect of each dividend payable referred to in sub-paragraph 9(3)(a)(i) by the Corporation to Canada and each payment for shares referred to in sub-paragraph 9(3)(b)(i) by Canada to the Corporation shall be computed as follows:

By accruing interest annually on each such payment for each year or part thereof between the date such payment was made and the Acquisition Date, at a rate of interest determined by adding 2.000 to the percentage rate of interest which the Minister of Finance of Canada had approved for loans made to Canada Crown Corporations in the quarterly period in which such payment was made and where the term for the repayment of the principal of such loans was equal to the number of years and, where applicable, fractions of years, between the date of such payment and the Acquisition Date. The rate of interest on loans to Canada Crown corporations referred to in this sub-clause 9(3) shall be certified conclusively by the Deputy Minister of Finance , Canada , or his nominee. The election may be made by Newfoundland upon 90 days prior written notice to Canada . The purchase and sale of shares contemplated by this sub-clause shall be completed within 90 days following the date of such election and Canada shall deliver the relevant share certificates against Newfoundland 's payment evidenced by a certified cheque. Notwithstanding the foregoing, if Newfoundland acquires the shares of Canada, pursuant to this sub-clause, then, as long as the liability whether absolute or contingent, of Canada in respect of the Project exceeds $150,000,000 Canada shall have the right by itself, or its servants or agents to continue its participation in the management of the Corporation as provided in clause 6 and to retain its control over the matters specified in clause 8 in the manner prescribed in that clause, as if Canada still held the shares so acquired by Newfoundland, provided that the right granted to Canada pursuant to this sentence shall cease in the event that the aforesaid liability is equal to or less than $150,000,000.

             (4)  Canada may elect to require Newfoundland to purchase from Canada all of the shares of the Corporation owned by Canada at a price calculated in accordance with sub-clause (3); provided that Canada may make an election under this sub-clause (4) only when the Project shall have been constructed and brought into operation and the total indebtedness of the Corporation issued upon the original long-term financing of the Project as contemplated in sub-paragraph 1(1)(d)(iii) and exclusive of any indebtedness resulting from any subsequent refinancing or additional financing does not exceed $150,000,000. The purchase price payable pursuant to this sub-clause may, at the election of Newfoundland, be paid in not more than ten equal annual instalments with interest on the unpaid balance at a rate equal to that computed for the purposes of sub-clause 9(3). Newfoundland may further elect, for the purposes of this sub-clause, that Canada and Newfoundland will cause the Corporation to acquire the shares owned by Canada in lieu of Newfoundland acquiring such shares, as long as the Corporation has the statutory authority to acquire such shares and, in such case, the Corporation shall have the benefit of any election that may be made under this sub-clause by Newfoundland. In the event that Newfoundland elects, within 60 days after receipt of Canada's election to sell the shares pursuant to this sub-clause, to have the purchase price paid in instalments, the first instalment shall be paid by certified cheque within 30 days after the date of Newfoundland's election pursuant to this sub-clause to pay by way of instalments and the remaining instalments shall be paid by certified cheque on consecutive anniversaries of the date upon which the first instalment was payable. Canada shall deliver the relevant share certificates to Newfoundland against receipt of the first instalment; provided that Newfoundland shall have granted to Canada a security interest in the transferred shares to secure effectively the payment of the remaining unpaid instalments. In the event that Newfoundland does not elect pursuant to this sub-clause to have the purchase price payable in instalments, the purchase and sale shall be completed within 90 days after the receipt by Newfoundland of Canada's election to sell pursuant to this sub-clause. The transaction shall be completed by Canada delivering the relevant share certificates against receipt of a certified cheque in payment therefor.

             (5)  Neither party shall mortgage, pledge, assign by way of security or otherwise encumber any shares of the Corporation or grant rights or interests in respect of such shares without the prior consent in writing of the other party, which shall not be unreasonably withheld.

     10. Disputes

             Unless otherwise resolved by mutual agreement, all disputes arising in connection with this Agreement (other than any dispute relating to the interpretation of a provision of this Agreement, a question of law or mixed fact and law which shall be determined in accordance with the provisions of sub-clause 14(2) shall be finally settled by a panel of 3 persons, acting as experts and not as arbitrators. Each of the parties hereto shall appoint one expert to the panel and the 2 experts so appointed shall appoint the third expert. If either party shall refuse or neglect to appoint an expert within 15 days after the other party has nominated its expert and notified the first-mentioned party of its nomination in accordance with clause 13, either party may apply to any Justice of the Trial Division of the Federal Court of Canada to appoint both the second and third expert to complete the panel. In the event that the parties appoint two experts but the experts are unable to agree upon the appointment of the third expert within a period of 15 days from the date of the appointment of the second expert, either party may apply to any justice of the Trial Division of the Federal Court of Canada for the appointment of such expert. The panel of experts shall have a period of 3 months from the completion of their selection to render a decision on any matter in dispute, but such period can be extended with the consent of both parties. If a decision is not rendered within the time so limited, the panel shall have no further authority under this clause and the parties shall proceed to select a new panel in accordance with the provisions of this clause; provided that any new panel so selected may include persons who were members of a former panel. In the event that any member of a panel dies, resigns or refuses to act, the member shall be replaced by a new member nominated by the party which nominated the member being replaced, or selected as otherwise provided in this clause. If a substitution is made for a member of a panel, after the panel has commenced its hearings, it shall not on the appointment of such expert and the resumption of the hearings, be necessary to rehear evidence already taken, the newly appointed expert is supplied with a transcript of all evidence and other material taken by or furnished to the panel before such resumption. The panel of experts shall have the power to summon witnesses, the power to hear evidence under oath and the power to state a case to the Federal Court of Canada. The experts may retain independent consultants to assist them and may reach their decision on such evidence and material as they may, in their sole discretion, determine. The majority decision by the experts (including any award as to the payment of the costs incurred by the panel and the parties pursuant to this clause) shall be the decision of the panel and shall be binding upon the parties for all purposes of this Agreement except as to any matter relating to the interpretation of a provision of this Agreement or any question of law or mixed facts and law which are subject to determination in accordance with sub-clause 14(2). Except as provided in sub-clause 14(2), the parties agree to be bound by the provisions of this clause in lieu or any federal or provincial legislation dealing with the arbitration or other extra-judicial settlement of disputes.

      11 . Force Majeure

             (1)  Neither party shall be deemed to be in default or in breach of this Agreement or be held responsible or liable for any loss, damage, detention, delay, failure or inability to meet any of its obligations under this Agreement caused by or arising from

             (a)  act of God, war, hostilities, invasion, insurrection, riot, sabotage, civil disobedience, explosion, flood, fire, strikes, lock-outs, labour disputes, labour shortages, failure of supplies, equipment or transportation or the action or failure to act of any government (other than the party relying on such action or failure or a body or government subordinate to such party); or

             (b)  any other event or cause of like or different nature which is unavoidable or beyond the reasonable control of such party.

             (2)  In the event that either party is unable to perform its obligations under this Agreement due to any cause described in sub-clause 11(1) or by reason of any event referred to in that sub-clause, the party so unable to perform shall give prompt notice to the other party, in writing, stating the cause of such inability, and the party so unable to perform shall make reasonable efforts to remedy such inability as quickly as possible and the time for performance of any such obligation shall be extended by the period of any delay resulting from any cause or event referred to in sub-clause 11(1).

             (3)  At any time prior to the completion of the Study Stage Work, where the performance by either party of any of its material obligations under this Agreement is interrupted due to any event referred to in sub-clause 11(1) for a period of 12 consecutive months, the other party hereto may, upon 3 months' notice to the party which is unable to perform its obligations as aforesaid, elect to terminate this Agreement at the end of such 3 months' notice if such party shall not, then, have so performed.

     12. Default

             (1)  A party shall be in default under this Agreement if

             (a)  it is in breach of any of its covenants contained in this Agreement in a material respect as hereinafter defined; and

             (b)  it does not remedy such breach within 90 days after receipt of written notice of default from the other party.

For the purposes of this sub-clause 12(1) a breach in any material respect includes any failure to meet any obligation or commitment under this Agreement which would impair in any significant respect the performance of the Study Stage Work or the conduct of any other activities entered into pursuant to this Agreement; provided that an inability by a party to cause to be enacted or brought into force special legislation contemplated by this Agreement shall not be considered to be a breach of this Agreement.

             (2)  If a party is in default under this Agreement and the other party advances to the Corporation moneys which should have been advanced to it by the party in default in accordance with this Agreement, then, the party that advances such moneys to the Corporation may elect to take control and management of the Corporation until such moneys (together with interest thereon as hereinafter provided) are repaid to it by the party in default. In such circumstances and during the period of such default

             (a)  the nominees of the defaulting party on the board of directors of the Corporation and any committee thereof shall cease to have any right to vote;

             (b)  the party in default shall have no right to vote its shares at meetings of the shareholders of the Corporation;

             (c)  the provisions of clause 8 of this Agreement shall not apply; and

             (d)  such moneys advanced to the Corporation by the party not in default shall bear interest at the rate of 3% over the prime rate of interest from time to time as quoted by the Bank of Montreal from the date such moneys are advanced until the party in default reimburses the other party for the amount advanced together with interest thereon;

             The rights of the party in default which shall have been suspended pursuant to this sub-clause 12(2) shall be restored on the date upon which the amount so advanced by the other party together with interest thereon is paid to that other party. In the event that a party is in default under this Agreement, nothing herein shall require the other party (not being in default) to continue with the Study Stage Work or the Project during the period of default. The remedy provided by this sub-clause 12(2) to the party not in default shall be in addition to and not in substitution for any remedy which the party not in default may otherwise have at law or in equity.

      13 . Notices

             Any notice required to be given hereunder shall be in writing and shall be deemed to be properly given if personally delivered, or mailed by prepaid registered mail addressed if service is made

             (a)  on Newfoundland to:

The Honourable The Minister of Mines and Energy,
Department of Mines and Energy,                               
Eastern Canada Building,                                               
95 Bonaventure Avenue,                                               
St. John's, Newfoundland

with a copy of such notice to:

The Chairman and Chief Executive Officer,                 
Newfoundland and Labrador Hydro,                           
Philip Place,                                                                      
St. John's, Newfoundland

             (b)  on Canada to:

The Minister of Energy, Mines and Resources,        
58Q
Booth Street ,                                                            
Ottawa , Ontario                                                               
K1A 0E4

Any such notice shall be deemed to have been given, if personally delivered on the date of delivery, or if mailed on the fifth day following the date of mailing thereof; provided that no notice shall be sent by mail at any time when a threatened or actual stoppage exists in Canada in which event notices shall be delivered or sent by telegram, telex or other graphically reproduced form.

     14. Governing Law

             (1)  This Agreement shall be construed and enforced in accordance with the provisions of the laws of the Province of Newfoundland and the laws of Canada applicable in such Province.

             (2)  By virtue of the provisions of section 19 of the Federal Court Act (Canada) RSC, 1970 Ch. 10, 2nd Supplement as amended and Section 2 of the Federal Courts Jurisdiction Act (Newfoundland) RSN, 1970 Ch. 127, the parties agree that any controversy between Canada and Newfoundland involving a question of law or mixed fact and law or the interpretation of any provision of this Agreement which the parties are unable to resolve shall be submitted to the Federal Court of Canada, which shall have exclusive jurisdiction to resolve the matter.

     15. Further Assurances

             (1)  Each party hereto shall, form time to time and at all times, do such further acts and execute and deliver all such further documents as shall be reasonably required in order to perform and carry out the terms of this Agreement. The parties agree to make all reasonable efforts to cooperate with one another and with the Corporation to implement the provisions of this Agreement and the Option Agreement.

             (2)  The parties shall cause the Corporation to enter into an agreement with the parties jointly and severally pursuant to which the Corporation will assume legally binding obligations of the corporation described in this Agreement.

             (3)  In the event that following the completion of the Study Stage Work the parties reach additional agreements referred to in sub-clause 5(5), the parties agree that they will execute an agreement supplemental to this Agreement or in replacement thereof reflecting the agreements reached pursuant to sub-clause 5(5).

     16. Termination of Agreement

             If the parties to this Agreement shall not have, within nine months after the completion of the Study Stage Work, entered into an agreement to proceed with the Project or the Project as amended by mutual agreement of the parties, then, at any time thereafter either such party may terminate this Agreement forthwith, including without limiting the generality of the foregoing, the Option Agreement by giving to the other party a notice in writing to the effect that it does not wish to proceed with the Project on the terms proposed in the Study Stage Work or the Study Stage Work as amended, as contemplated by sub-clause 5(5).

      17 . Time of Essence

             Time shall be of the essence of this Agreement.

      18 . Entire Agreement; Amendments

             (1)  This Agreement, including the Appendix hereto, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, undertakings, negotiations and discussions, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth or referred to herein. Either party may waive the performance of any provision of this Agreement by the other party by executing a written instrument to that effect. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided.

             (2)  This Agreement may be amended, supplemented or modified in accordance with a written instrument duly signed on behalf of both parties.

             IN WITNESS WHEREOF this Agreement has been executed and sealed on behalf of Her Majesty The Queen in Right of Canada in accordance with Order-In-Council No.                            by the Minister of Energy, Mines and Resources and has been executed and delivered on behalf of Her Majesty The Queen in Right of Newfoundland in accordance with Order-In-Council 1450-78 by the Minister of Mines & Energy and the Minister of Intergovernmental Affairs.

SIGNED AND DELIVERED in                                                                                  the manner aforesaid on behalf of                                                    Her Majesty The Queen In Right                                                                            of Canada in the presence of                Alastair Gillespie                                                                                  Minister of Energy, Mines &                                                                                                         Resources

             W. Rompkey

                                             Witness

SIGNED, SEALED AND                                               DELIVERED in the manner                                                                 aforesaid on behalf of Her Majesty                                                                           The Queen In Right of New-                                                              foundland in the presence of A. Brian Peckford                                                                                                                         Minister of Mines & Energy

             Joseph Goudie

                                             Witness

SIGNED, SEALED AND                                                                    DELIVERED in the manner                                                                 aforesaid on behalf of Her Majesty                                                                        The Queen In Right of New-                                       foundland in the presence of                Frank D. Moores                                                                                                                              Minister for Intergovernmental                                                                                                     Affairs (Acting)

             Victor Young

                                             Witness

APPENDIX

OPTION AGREEMENT

AGREEMENT made as of the             day of                       , 1978.

BETWEEN:  HER MAJESTY THE QUEEN IN RIGHT OF                                                                                NEWFOUNDLAND (hereinafter called " Newfoundland "),                                                                  herein acting through and represented by

                                                                   - and -                                 OF THE FIRST PART;

                                                                   LOWER CHURCHILL DEVELOPMENT                                                                                       CORPORATION LIMITED, a corporation incorporated                                                         under the laws of Newfoundland (hereinafter called the                                                           "Corporation")

                                                                                                                OF THE SECOND PART;

WHEREAS the Corporation was incorporated and organized pursuant to the provisions of the Principal Agreement (which term, together with other capitalized terms used throughout this Agreement, is defined in clause 1 hereof);

AND WHEREAS pursuant to clause 4 of the Principal Agreement Newfoundland agreed to enter into the Option Agreement with the Corporation with respect to the Gull Island Assets and Water Rights whereby the Corporation will acquire the option as hereinafter set forth;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto agree as follows:

        1. INTERPRETATION

             (1)  In this Agreement, unless the context should otherwise require:

             (a)  "Canada" means Her Majesty The Queen in Right of Canada acting through and represented by the Minister of Energy, Mines and Resources;

             (b)  "Closing Date" means the date upon which the purchase and sale of Gull Island Assets is to be completed pursuant to sub-clause 9(1);

             (c)  "Corporation" means Lower Churchill Development Corporation Limited, a company incorporated under the laws of Newfoundland ;

             (d)  "Principal Agreement" means the agreement made as of the 24th day of November, 1978, between Canada and Newfoundland relative to the Project and the incorporation and organization of the Corporation, as such agreement may from time to time be amended or supplemented by the parties thereto;

             (e)  " Gull Island Assets" means

                      (i)  all studies in the possession of Newfoundland or any agent of Newfoundland or of Gull Island Power Company Limited, and

                     (ii)  all assets, rights and interests owned by Gull Island Power Company Limited

that could be used or may be useful in the performance of the Study Stage Work or the construction or operation of the Project, and includes

                    (iii)  all right, title and interest of Gull Island Power Company Limited in or to improvements made by or on behalf of that Company on a right-of-way from the site of the Project in Labrador to the Island of Newfoundland for all transmission lines necessary for the transmission to the said Island of electricity generated by the Project;

provided that if the parties are unable to agree as to which studies, assets, rights or interests could be used or may be useful in the performance of the Study Stage Work or the construction or operation of the Project such dispute will be settled conclusively pursuant to the provisions of sub-clauses 7(3), 7(4), 7(5) and 7(6).

In determining whether studies, assets, rights or interests could be used or may be useful as aforesaid, the parties and the Consultants (as defined in sub-clause 7(3)) shall make such determination on the basis of whether at the time expenditures were made in respect of any such study, assets, right or interest, the person then making such expenditure could, acting reasonably and in good faith, have considered that such study, assets, right or interest would have been useful in the context of the work done at the time the expenditure was made.

              (f)  "Lower Churchill Basin" means the waters of the Churchill River downstream of the point of intersection of the Churchill River with the meridian of 63° 40' West of Greenwich and between that point and the point of intersection of the Churchill River with the meridian of 60° 46' West of Greenwich and within the catchment area of the Churchill River between those two points, but the expression "Lower Churchill Basin" does not include any rivers in the said catchment area other than the Churchill River, whether or not such other rivers are tributary to the said Churchill River;

             (g)  " Newfoundland " means Her Majesty The Queen in Right of Newfoundland;

             (h)  "Optioned Assets" means collectively the Gull Island Assets and the Water Rights;

              (i)  "Permitted Encumbrances" means as of any particular time any of the following encumbrances on the Optioned Assets:

                      (i)  liens for taxes not yet due or if due the validity which is being contested in good faith by the owner and liens for the excess of the amount of any past due taxes for which a final assessment has not been received over the amount of such taxes as estimated and paid by the owner;

                     (ii)  the lien of any judgment rendered, or claim filed against the owner which the owner shall be contesting in good faith;

                    (iii)  undetermined or inchoate liens and charges incidental to construction or current operations a claim for which shall not at the time have been registered against the Optioned Assets or of which notice in writing shall not at the time have been given to the owner pursuant to the Mechanics' Lien Act, as amended from time to time, or any lien or charge a claim for which, although registered, or notice of which, although given, relates to obligations not overdue or delinquent;

                    (iv)  any mortgage, charge, lien or encumbrance, payment of which has been provided for by deposit with the Corporation of an amount in cash or other security satisfactory to the Corporation sufficient to pay the same in principal and interest until the date of its maturity;

                     (v)  reservations, limitations, provisoes and conditions expressed in any original grants from the Crown;

                    (vi)  easements, rights-of-way and servitudes which existed on February 14, 1978 ;

                   (vii)  easements, rights-of-way and servitudes which came into existence after February 14, 1978 and which in the opinion of Counsel will not in the aggregate materially and adversely impair the use of the land concerned for the purpose of implementing the Principal Agreement;

                  (viii)  zoning and building by-laws and ordinances and municipal by-laws and regulations which, in the opinion of Counsel, do not materially interfere with the use of the property affected thereby for the purpose of implementing the Principal Agreement;

                    (ix)  title defects or irregularities which, in the opinion of Counsel, are of a minor nature and in the aggregate will not impair the use of the property concerned for the purpose of implementing the Principal Agreement;

                     (x)  prospecting, exploratory, mining, timber and quarry rights heretofore granted by Newfoundland in respect of the area which is to be subject to the Water Lease;

                    (xi)  the customary right of the public to free use of lakes, ponds and rivers which are within the area of which is to be subject to the Water Lease for the purpose of fishing, shooting, hunting, trapping, logging and travelling; provided that the rights referred to in this sub-paragraph shall not materially impair the use of the property concerned for the purposes of the Project;

              (j)  "Project" means the development of the hydro-electric potential of any party of the Lower Churchill Basin and associated transmission facilities and includes without limiting the generality of the foregoing

                      (i)  the construction and operation of facilities for the generation of hydro-electricity from any part of the Lower Churchill Basin ,

                     (ii)  the construction and maintenance of transmission facilities for the delivery of electricity generated, in the Lower Churchill Basin to the Island of Newfoundland , and

                    (iii)  an inter-tie with the power development at Churchill Falls on the Upper Churchill River ,

in accordance with any agreement made pursuant to sub-clause 15(3) of the Principal Agreement, after the completion of the Study Stage Work;

             (k)  "Purchase Price" means the consideration payable by the Corporation to Newfoundland pursuant to clause 7 for the Gull Island Assets;

              (l)  "Study Stage Work" means the search for and analysis of the most economically feasible means of carrying out the Project and includes

                      (i)  a recommendation as to the part or parts of the Lower Churchill Basin that should be included in the Project and the preparation of a detailed estimate of the capital and operating costs of the Project;

                     (ii)  the preparation of a detailed program for the construction of the Project, including a projection of the time at which capital expenditures will be required to be made;

                    (iii)  the preparation of a detailed plan which has as a target the financing of approximately 90% of the capital cost of the Project through the issue of obligations of the Corporation to lenders or investors supported, where feasible, by sales of Project out-put; provided that any such financing arrangement will be such as will not imperil the tax-free status of the Corporation under the laws of Canada and Newfoundland;

                    (iv)  taking into account sub-paragraph 2(1)(v) of the Principal Agreement, and also taking into account the estimated future requirements of the Province of Newfoundland for electricity generated by the Project, the preparation of a detailed plan for the marketing of the electrical output of the Project over a period of at least 15 years following the commercial start-up of the Project with the primary object being to ensure that the Corporation obtains reasonable terms for the power sold including, whenever possible, protection by way of price escalation or price redetermination throughout the term of any long term contractual arrangements and to ensure, whenever possible that sales contracts assist in raising funds to finance the Project;

                     (v)  the preparation of a detailed plan regarding the acquisition of any property interest, licenses, rights or contractual commitments required for the construction or operation of the Project;

                    (vi)  the preparation of environmental assessment studies with respect to the Project;

                   (vii)  the assessment or the participation with others including the Governments of Canada, of Newfoundland and any other relevant groups, in the assessment of the socio-economic impact of the Project upon the native and other people living in or using the area affected by the Project and the development of corporate policies to deal with, or participate in dealing with, any concerns that arise as a result of the assessment;

                  (viii)  the development of specific principles and plans which shall endeavour to ensure that the supply of goods and services for the Project will be such as to give to residents of Newfoundland and then all residents of Canada a preference for employment in the construction and operation of the Project and for the supply of materials, machinery and equipment originating or manufactured in Newfoundland or elsewhere in Canada to the Project;

                    (ix)  the preparation of a detailed report analyzing the changes required in the laws and regulations of Newfoundland and Canada in order to give effect to the provisions of this Agreement and the Principal Agreement;

                     (x)  assessment of the economic feasibility of the hydro-electric development based on the foregoing study elements;

                    (xi)  such other studies as the parties may reasonably require;

            (m)  "Water Lease" means the water lease between Newfoundland and the Corporation of the Water Rights more particularly described in sub-clause 2(a) as such lease may from time to time be amended or supplemented by the parties thereto;

             (n)  "Water Rights" means the rights granted by Newfoundland to the Corporation pursuant to the Water Lease to use exclusively all usable waters in a designated part of the Lower Churchill Basin .

             (2)  All references to dollar amounts and all references to any other money amounts in this Agreement are unless specifically otherwise provided, expressed in terms of coin or currency of Canada which at the time of payment or determination shall be legal tender in Canada for the payment of public and private debts.

             (3)  Words in this Agreement importing the singular number shall include the plural and vice versa and words importing the masculine gender shall include the feminine and neuter genders.

             (4)  Where a word is defined anywhere in this Agreement, other parts of speech and tenses of the same word have corresponding meanings.

             (5)  Wherever in this Agreement a number of days is prescribed for any purpose, the days shall be reckoned inclusively of the first and exclusively of the last.

             (6)  Whenever this Agreement requires a notice to be given or a request to be made on a Sunday or legal holiday, such notice or request may be given or made, on the first business day occurring thereafter, and, whenever in this Agreement the time within which any right will lapse or expire shall terminate on a Sunday or legal holiday, such time will continue to run until the next succeeding business day.

             (7)  The headings of all of the clauses are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

             (8)  Any reference in this Agreement to a clause, a sub-clause, a paragraph or a sub-paragraph shall, unless the context otherwise specifically requires, be taken as a reference to a clause, a sub-clause, a paragraph or a sub-paragraph of this Agreement.

             (9)  This Agreement may be executed in two or more counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts together shall constitute one and the same instrument.

        2. GRANT OF OPTION AND OTHER RIGHTS

             In consideration of the issue by the Corporation to Newfoundland of 520 Class A shares in the capital stock of the Corporation as fully paid and non-assessable of the value of $5,200,000 Newfoundland hereby grants to the Corporation:

             (a)  The sole and irrevocable option to purchase from Newfoundland the Gull Island Assets and to enter into the Water Lease with Newfoundland comprising the waters in that part of the Lower Churchill Basin in respect of which a commitment shall have been made by Canada and Newfoundland in an agreement made pursuant to sub-clause 15(3) of the Principal Agreement after the completion of the Study Stage Work, and the Water Lease shall provide that

                      (i)  the Corporation will have the exclusive (subject to Permitted Encumbrances) royalty-free right and license to use the Water Rights for an initial term of 99 years from the Closing Date;

                     (ii)  the Corporation will have the option to renew the Water Lease for one further term of 99 years commencing at the end of the initial term, with such renewal lease to contain the same terms and conditions as the original Water Lease (other than the renewal option);

                    (iii)  the Corporation will not be required to pay to Newfoundland during the term of the Water Lease including any renewal thereof, any amount in respect of the Water Rights, whether by way of rent, license fee, royalty, concession fee, tax, tariff or any payment no matter how described;

                    (iv)  the Corporation will have the full right and liberty to flood any lands within the catchment area of the Water Lease, subject to Permitted Encumbrances and any rights granted to others as permitted by clause 6;

                     (v)  the Corporation shall have the exclusive right (subject to Permitted Encumbrances and the other provisions of this Agreement) to exploit, harness and make use of all hydro-electric and hydraulic power rights comprised in the Water Rights, and the right to regulate the flow of all water courses in the catchment area of the Water Lease; provided that the Corporation's rights shall be subject to the rights of all upstream proprietors, licensees and other users of the waters of the said Churchill River existing immediately before the date of the execution of the Principal Agreement and which accrued or were accruing on February 14, 1978;

                    (vi)  Newfoundland will, from time to time, grant to the Corporation by way of a royalty-free lease, license, permit or other assurance of or in respect of such Crown Lands not then irrevocably granted, leased, licensed or otherwise alienated to any third party as may be reasonably necessary in connection with or incidental to any aspect of the Project, and where any such lease, license, permit or other assurance is reasonably required for the term of the Water Lease or any renewal thereof, the term of such lease, license, permit or other assurance shall be co-extensive with the term of the Water Lease, and where any such lease, license, permit or other assurance is required for a shorter period, the term shall be such as may be reasonably necessary for the Project, and every such lease, license permit or other assurance shall be granted upon such rentals and other terms and conditions as may from time to time and as to each particular request be mutually agreed upon as reasonable and equitable by the parties to this Agreement, and as shall not be more burdensome than those generally applying at the date of the Principal Agreement for similar leases, licenses, permits or other assurances;

                   (vii)  Newfoundland shall acquire private land or rights at the request of the Corporation on terms similar to that set forth in clause 10;

                  (viii)  the Corporation shall have the right to grant any form of security interest in the rights granted under the Water Lease for the purpose of financing the Project without the prior consent of Newfoundland, and any lender (including a trustee, receiver or agent acting on behalf of such lender) may realize on such security interest without the consent of Newfoundland;

                    (ix)  the Lease shall be governed by Newfoundland law;

and the Water Lease shall contain such other ancillary provisions as may be reasonably necessary for the construction and operation of the Project.

             (b)  full right and liberty without cost to the Corporation to utilize the Optioned Assets without interference during the term of this Agreement for the purposes of carrying out the Study Stage Work, with the Corporation having the right to grant similar rights to its consultants retained pursuant to the Principal Agreement in connection with the Study Stage Work.

        3. EXERCISE OF OPTION

             (1)  The Corporation shall be entitled to exercise the option granted by sub-clause 2(a) by notice in writing given to Newfoundland at any time in the period after Canada and Newfoundland have given to the Corporation written notice that they jointly intend to proceed with the development of the Project and provided such notice is given while this Agreement is in full force and effect. The option granted by sub-clause 2(a) may only be exercised by the Corporation in respect of all or a part of the rights in respect of the waters in the Lower Churchill Basin provided that the Corporation also acquires all of the Gull Island Assets at the same time as such rights are acquired.

             (2)  When the Corporation exercises the option granted to it by clause 2 in respect of any waters forming part of the Lower Churchill Basin , the remainder of the waters in the Lower Churchill Basin shall, thereupon, be freed and released from the option granted by clause 2. In such event Newfoundland agrees that it will not undertake or permit to be undertaken any development of waters within the Lower Churchill Basin not included in the Water Lease or of any rivers in the catchment area of the Lower Churchill Basin which would have a material adverse affect upon the development of the Project. Newfoundland further agrees that if Newfoundland and Canada decide subsequent to the exercise of the option granted by clause 2, that the Corporation should develop all or part of the waters in the Lower Churchill Basin freed or released pursuant to this sub-clause 3(2), Newfoundland will agree to an amendment to the Water Lease that it applies to the additional waters, such amendment to be made without any consideration being payable to Newfoundland in respect of the additional waters. On the Closing Date, Newfoundland shall deliver to the Corporation a separate covenant in form reasonably satisfactory to counsel for the Corporation and enforceable against Newfoundland which will continue the benefit of this covenant following the termination of this Agreement.

        4. REPRESENTATIONS AND WARRANTIES

             Newfoundland represents and warrants to the Corporation that

             (a)  Newfoundland owns beneficially the Optioned Assets free and clear of all liens, charges and encumbrances of any nature or kind other than Permitted Encumbrances:

             (b)  The only Permitted Encumbrances of which Newfoundland is aware as at the date of this Agreement are as listed in a letter from Newfoundland to the Corporation
dated                        ; provided the Corporation acknowledges that Newfoundland is not required to conduct any title search preparatory to delivering the aforementioned letter; and

             (c)  there is not now in existence any other option or any agreement capable of becoming, or providing for, any option or right to acquire, lease or license the Optioned Assets.

Newfoundland acknowledges that the Corporation is entering into this Agreement in reliance upon the foregoing representations and warranties and such representations and warranties shall survive the exercise by the Corporation of the option granted by clause 2 and notwithstanding the exercise of such option, shall continue in full force and effect for a period of 3 years following the closing provided for in clause 9; provided that Newfoundland shall have no obligation under this Agreement or otherwise to remove or correct any Permitted Encumbrance at its expense and the Corporation agrees that no claim shall be made against Newfoundland in respect of any such Permitted Encumbrance in the event that the Corporation exercises the option granted by clause 2.

        5. ACCESS RIGHTS

             From the date hereof until the Closing Date, Newfoundland agrees to

             (a)  grant without cost to the Corporation unrestricted access by the Corporation and its employees, agents, and other representatives to all real property and other tangible assets forming part of the Optioned Assets, including all books, accounts, records and other financial and accounting data, title documents, contracts, agreements and instruments in the possession of Newfoundland or any department or agency of Newfoundland or Gull Island Power Company Limited or any other corporation holding any of the Optioned Assets and which would be useful in the conduct of the Study Stage Work; and

             (b)  grant without cost to the Corporation the right for the Corporation and its employees, agents, and other representatives to use any intangible rights forming part of the Optioned Assets including proprietary or confidential information, know-how relating to the Study Stage Work, project studies and analyses, marketing information and any other information or data useful in connection with the Study Stage Work,

provided that the rights granted under this clause shall be subject to Permitted Encumbrances and all other reservations and provisions of this Agreement.

        6. RESTRICTIONS WHILE OPTION OUTSTANDING

             (1)  Newfoundland agrees that as long as the option herein granted is outstanding and, if such option is exercised hereunder, until the date of closing of such option:

             (a)  the Option Assets or any rights therein shall not be granted, leased, licensed, assigned, pledged or charged to or in favour of any third party or otherwise encumbered save and except for Permitted Encumbrances or as otherwise expressly provided in this Agreement;

             (b)  no Optioned Asset having a book value or fair market value (whichever is higher) in excess of $10,000 shall be sold, leased or otherwise disposed of except with the consent of the Vice-Chairman of the Board of Directors (which consent shall not be unreasonably withheld);

             (c)  no license or other right to develop the Water Rights shall be granted to third persons.

             (2)  Before making any grant, lease or license of minerals, timber, quarry, materials or land anywhere in the Lower Churchill Basin to third parties after the execution and delivery of this Agreement, Newfoundland will, subject to sub-clause 6(3), inform the Corporation in writing of its intention to do so and allow the Corporation at least sixty (60) days from the date of service of the notice to enable the Corporation to make any objection to such proposal that it wishes to make; provided that Newfoundland shall not be required to inform the Corporation of the intention of Newfoundland to make any grant, lease or license pursuant to this sub-clause if Newfoundland has determined in good faith that it is not reasonably possible that such grant, lease or license would adversely affect any development area likely to be identified for the Project.

             (3)  Newfoundland may make any grant, lease or license referred to in sub-clause 6(2) on the expiration of the period of the notice prescribed in that sub-clause, provided that no such grant, lease or license shall interfere in any material respect with the Project or the development of any Water Rights.

             (4)  When a commitment shall have been made by Canada and Newfoundland in an agreement made pursuant to sub-clause 15(3) of the Principal Agreement after the completion of the Study Stage Work and the Corporation shall have exercised the option granted to it in clause 2 of this Agreement and designated that part of the Lower Churchill Basin in respect of which the option is exercised, the Corporation shall deposit with the Minister of Mines and Energy for the Province of Newfoundland a plan and description of the development area envisaged in the Project, and the plan and description shall be in such form and shall be accompanied by such information as shall be satisfactory to the said Minister. Newfoundland acknowledges that it may be necessary for the Corporation to amend, from time to time, the plan and description originally filed with the said Minister pursuant to this sub-clause, in order to include an additional area or to exclude an area already included, and Newfoundland agrees to permit such amendments to the plan as may be reasonably necessary to effect the purposes of the Project.

             (5)  Whenever, after the date of the delivery of the plan and description of the development area to the Minister of Mines and Energy referred to in sub-clause 6(4) and subject to sub-clause 6(6), a grant, lease or license is made to a third party of unoccupied Crown Lands located in the development area (or any area immediately adjacent thereto) or of any rights thereon, therein or thereunder, a provision shall be inserted in such grant, lease or license reserving in favour of the Corporation, the right to flood or otherwise impair the land comprised in the grant, lease or license and to the extent conferred on the Corporation by any Water Lease granted pursuant to clause 2 of this Agreement, to construct and operate storage reservoirs thereon, therein or thereunder without paying any compensation, fine or other indemnity in respect of the loss or damage suffered by the grantee, lessee or licensee.

             (6)  Subject to the provisions of sub-clause 6(3), sub-clause 6(5) shall not apply in respect of

             (a)  any option or concession granted by or under any Act or Agreement, before the deposit of a plan and description of the development areas with the Minister of Mines and Energy in accordance with sub-clause 6(4) to any person, company, partnership or association conferring on such person, company, partnership or association the right to acquire and occupy Crown Lands or any rights thereon, therein or thereunder by way of grant, lease, license, permit or other assurance of title; or

             (b)  any grant, lease, license, permit or other assurance of title made at any time before the deposit with the Minister of Mines and Energy of a plan and description of the development area referred to in sub-clause 6(4) or made at any time thereafter in pursuance of an option or concession referred to in paragraph (a) of this subclause 6(6).

             (7)  The parties agree that while the option granted hereunder is outstanding, the parties shall cooperate together in good faith for the purpose of developing the hydro-electric potential of the Lower Churchill Basin .

        7. DETERMINATION OF PURCHASE PRICE

             (1)  Subject to sub-clause 7(8) the value of Gull Island Assets shall be the net amount of all applicable cash expenditures made or obligations incurred in the behalf of the Gull Island Assets (without consideration of escalation or depreciation) as determined in accordance with and pursuant to this clause 7, less all amounts received by or owing to Newfoundland from any source in respect of the Gull Island Assets.

             (2)  Any cash expenditure or obligation shall be included in the valuation of Gull Island Assets if made or incurred in consideration of an item or service actually obtained prior to the date of the Principal Agreement provided that such item or service was for the benefit of the Gull Island Assets. Payments or obligations shall include, but not be limited to, the following items:

             (a)  purchase of materials, supplies or equipment;

             (b)  payments of salaries and wages, and fringe benefits and taxes applicable thereto;

             (c)  payments or settlements in accordance with materials or service contracts;

             (d)  lease or rental payments;

             (e)  transportation costs for materials, supplies or equipment;

              (f)  personal travel costs;

             (g)  taxes;

             (h)  insurance, storage and maintenance costs on assets acquired;

              (i)  interest actually incurred on the agreed value of the Gull Island Assets computed from the later of April 1, 1974 or the date on which the expenditure was made to the Closing Date.

Notwithstanding the foregoing, if any expenditure in respect of Gull Island Assets was met by funds provided by Canada or Newfoundland as part of a cost-sharing program, the amount of such expenditure shall be excluded in the valuation of the Gull Island Assets.

             (3)  An examination of Gull Island Assets shall be conducted by consultants (hereinafter referred to as the "Consultants") selected by the board of directors of the Corporation in accordance with sub-clause 8(2) of the Principal Agreement. The cost of the Consultants shall be paid by the Corporation and included in the cost of the Project. The Consultants shall verify that the engineering studies and designs were conducted or preformed for the Project or any part thereof, conduct a field survey of all physical facilities to identify and list the costs to be attributed to each facility. They shall examine the record of accounts in respect of the Gull Island Assets and perform any other examinations or tests necessary to establish the value of the Assets. In the event that the parties to this Agreement have been unable to agree upon which studies, assets, rights and interests could be used or may be useful in the performance of the Study Stage Work or the construction and operation of the Project for the purposes of sub-paragraph 1(1)(e) within 4 months after the signing by Canada and Newfoundland of the Principal Agreement, the consultants shall also determine all such studies, assets, rights and interests which in their opinion should be included within the definition of "Gull Island Assets" as set forth in sub-paragraph 1(1)(e).

             (4)  The Consultants shall deliver a written report to Newfoundland and the Corporation not later than six months after the signing by Canada and Newfoundland of the Principal Agreement as to the value of the Gull Island Assets (exclusive of the computation of interest as provided by paragraph 7(2)(i)) together with details satisfactory to both parties with respect to the basis upon which valuation was made. Such written report shall also contain a statement of the studies, assets, rights and interests which fall within the definition of "Gull Island Assets" if the Consultants have been required to make the determination described in the last sentence of sub-clause 7(3).

             (5)  The parties shall have a period of 180 days from the receipt of the report referred to in sub-clause 7(4) to review the report and to reach agreement as to the value of the Gull Island Assets (and those studies, assets, rights and interests to be included in the definition of "Gull Island Assets" if the report delivered pursuant to sub-clause 7(4) is required to contain such information) either as set forth in such report or as it may be revised by mutual agreement between the parties. In the event that any dispute between the parties as to the determination of the value and or description of the Gull Island Assets cannot be resolved by negotiations by the parties within the aforesaid period of 180 days after the receipt of the report pursuant to sub-clause 7(4), such dispute shall be referred to such national firm of independent chartered accountants as the parties may agree, or failing such agreement within a period of 30 days following a nomination by one of the parties of a firm acceptable to it, as shall be specified by the then President of the Canadian Institute of Chartered Accountants for the determination of the matters in dispute in accordance with the provisions of this Agreement and such determination shall be made in accordance with the rules prescribed in sub-clause 7(2) hereof and the other provisions of this clause and in conformity with all other provisions of this Agreement and shall be final and binding upon the parties hereto. Any such firm of independent chartered accountants selected in accordance with this clause may reach their decision on such evidence and material as they may, in their sole discretion, determine and may retain independent experts to assist them in reaching their decision. Such firm of independent chartered accountants may, as part of their decision, make an award as to the cost of the proceedings to be borne by either or both parties.

             (6)  If, in the course of the determination of any dispute by the independent chartered accountants referred to in sub-clause 7(5) any question of law or mixed fact and law arises, such question shall be referred by the independent chartered accountants to the legal representatives of the parties hereto. If the matter cannot be settled by the legal representatives of the parties hereto within a period of 90 days, the matter shall be submitted by the parties to the Supreme Court of Newfoundland for determination in proceedings in accordance with Part VI of the Judicature Act, Chapter 187 of The Revised Statutes of Newfoundland, 1970, as now or hereafter amended.

             (7)  Newfoundland and the Corporation agree that the consideration payable by the Corporation to Newfoundland for the grant of the Water Lease shall be 3,000 Class B shares of the Corporation which shall be issued by the Corporation to Newfoundland as fully paid and non-assessable.

             (8)  The Purchase Price in respect of the Gull Island Assets shall be an amount which shall be the lesser of

             (a)  $100,000,000, and

             (b)  the amount determined pursuant to sub-clause 7(5) plus interest on the value of the Gull Island Assets, the said interest rate to be determined in accordance with paragraph 7(2)(i)

less the amount of $5,200,000 represented by the shares issued by the Corporation to Newfoundland pursuant to clause 2.

        8. AGREEMENTS UPON EXERCISE OF THE OPTION

             The exercise by the Corporation in accordance with clause 3 of the option granted to it by clause 2 will result in a binding agreement of purchase and sale between Newfoundland and the Corporation in respect of the Gull Island Assets and a binding agreement between Newfoundland and the Corporation to enter into the Water Lease, in each case, subject to the following terms and conditions to be fulfilled or preformed at or prior to the Closing Date:

             (a)  The representations and warranties of Newfoundland set forth in clause 4 shall be true, complete and correct at the Closing Date as though such representations and warranties were made at the Closing Date.

             (b)  Newfoundland will have performed and complied with all agreements and conditions required by this Agreement to be performed and complied with on or prior to the Closing Date.

             (c)  The Corporation shall receive such favourable legal opinions from its counsel and counsel for Newfoundland as the Corporation may reasonably require with respect to the transactions herein provided for, including opinion as to the title to the Optioned Assets.

             (d)  The Corporation shall be furnished with evidence satisfactory to it that the facts, representations, warranties and agreements with respect to the matters referred to in paragraphs 8(a) and 8(b) are accurate.

             (e)  No substantial damage to the Optioned Assets shall have occurred prior to the Closing Date.

              (f)  All necessary steps and corporate proceedings as approved by counsel for the Corporation shall be taken to permit the Gull Island Assets to be duly and regularly transferred to the Corporation.

In case any of the foregoing conditions or agreements shall not be fulfilled, at or prior to the Closing Date, the Corporation may rescind the aforesaid agreements by notice to Newfoundland at or prior to the Closing Date. Any such conditions or agreements may be waived in whole or in part by the Corporation without prejudice in either such case to its rights of rescission in the event of the non-fulfillment of any other condition or conditions.

        9. CLOSING ARRANGEMENTS

             (1)  In the event of the exercise of the option granted by this Agreement, the sale and purchase of the Gull Island Assets provided for by this Agreement shall be closed at the head office of the Corporation in St. John's, Newfoundland, at 10:00 o'clock in forenoon (St. John's time) on the 30th day after the exercise of the option (or if such day is a non-business day, then on the next following business day), or on such other date as may be agreed upon, the actual date and time when the said sale and purchase is to be closed being herein referred to as the Closing Date.

             (2)  On the Closing Date Newfoundland shall deliver to the Corporation all conveyances, transfers, assignments and other agreements reasonably necessary in the opinion of counsel for the Corporation to vest in the Corporation good and marketable title to the Gull Island Assets free of all mortgages, pledges, charges and liens except for Permitted Encumbrances.

             (3)  On the Closing Date, Newfoundland and the Corporation shall execute and deliver the Water Lease in the form determined in accordance with paragraph 2(a).

             (4)  The Corporation shall issue and deliver to Newfoundland a Convertible Demand Debenture substantially in the form set forth in the Annex hereto, in the principal amount equal to the Purchase Price determined in accordance with clause 7 and having such other attributes (including subordination to external financing for the Project) as the Corporation, Newfoundland and Canada may agree.

             (5)  The Corporation shall issue and deliver to Newfoundland 3,000 Class B shares of the Corporation as fully paid and non-assessable representing the consideration payable to Newfoundland by the Corporation for grant of the Water Lease.

     10. SPECIAL COVENANT

             If the Corporation is desirous at anytime of acquiring private lands or any rights therein or thereover, reasonably necessary for or in connection with or incidental to any aspect of the development and transmission of hydro-electric power under the Project or under such Project as amended by agreement of the parties hereto, Newfoundland will acquire such land or rights by purchase, expropriation under the Expropriation Act, Chapter 121 of the Revised Statutes of Newfoundland, 1970, as now or hereafter amended, or otherwise (and the mode of acquisition and the acquisition cost shall be determined by mutual agreement; provided that the consent to such mode and cost will not be unreasonably withheld by either party) and Newfoundland will transfer title and possession of such land or rights to the Corporation at cost. In the event that the Corporation exercises its option pursuant to clause 2, Newfoundland shall deliver to the Corporation on the Closing Date a separate covenant in form reasonably satisfactory to counsel for the Corporation and enforceable against Newfoundland which will continue the benefit of this covenant following the termination of this Agreement.

     11. TERM OF THIS AGREEMENT

             This Agreement shall continue in full force and effect until the first to occur of the following dates:

             (a)  the date which is 48 months after November 24, 1978 ; provided that the parties may by mutual agreement extend the said period at any time before its expiration without the further payment of consideration;

             (b)  12 months after the date upon which notice is given pursuant to clause 3 to the Corporation that Canada and Newfoundland jointly intend to proceed with the development of the Project; or

             (c)  the date upon which either party terminates the Principal Agreement.

     12. NOTICES

             Any notice required to be given hereunder shall be in writing and shall be deemed to be properly given if personally delivered, or mailed by prepaid registered mail addressed if service is to be made

             (a)  in Newfoundland to:

             (b)  in the Corporation to:

Any such notice shall be deemed to have been given if, personally delivered on the date of delivery, or if mailed on the fifth day following the date of mailing thereof; provided that no notice shall be sent by mail at any time when a threatened or actual stoppage exists in Canada in which event notices shall be delivered or sent by telegram, telex or other graphically reproduced form.

     13. TIME

             Time shall be of the essence of this Agreement except that the time for completing any act under this Agreement required to be preformed by either party shall be extended by the period of any delay arising out of causes beyond the control of such party and without its fault or negligence.

      14 . GOVERNING LAW AND FORUM

             This Agreement shall be construed and enforced in accordance with the laws of the Province of Newfoundland and the laws of Canada applicable in such Province, and every action or other proceeding arising hereunder shall be determined exclusively by a court of competent jurisdiction in the said Province, subject to the right of appeal to the Supreme Court of Canada, where such appeal lies.

      15 . FURTHER ASSURANCES

             Each party shall, from time to time and at all times, do such further acts and execute and deliver all such further documents as shall be reasonably required in order to preform and carry out the provisions of this Agreement. Without limiting the generality of the foregoing, Newfoundland agrees to cause any corporation which is controlled directly or indirectly by Newfoundland and which possesses any of the Optioned Assets to perform the obligations of Newfoundland under this Agreement as if such corporation were a party to this Agreement. Newfoundland further agrees that during the term of this Agreement it will not take, nor will it permit any other person within its control to take, any action which would preclude any corporation aforesaid from granting the rights to the Corporation contemplated by this Agreement including, without limitation, the transfer of title to the Gull Island Assets or the lease contemplated by the Water Lease or the right-of-way referred to in sub-paragraph 1(1)(c).

 

             IN WITNESS WHEREOF the Honourable                                  , Minister of                                       , for the Province of Newfoundland for and on behalf of Her Majesty the Queen, in Right of Newfoundland, has hereunto his hand and seal subscribed and set, and the Common Seal of Lower Churchill Development Corporation Limited was hereunto affixed in accordance with its rules and regulations and in the presence of its duly authorized offices the day and year first before written.

Signed, Sealed and Delivered on                                                                             behalf of Her Majesty the Queen                                                      in Right of Newfoundland by the                                                     Honourable                         , Minister                                                                       of                                     , in the                                                                             presence of                                              . . . . . . . . . . . . . . . . . . . . . . . .                                                                Minister of

The Common Seal of Lower Chur-                                                                           chill Development Corporation             . . . . . . . . . . . . . . . . . . . . . . . . . .

Limited was hereunto affixed in                                                                               the presence of                                        . . . . . . . . . . . . . . . . . . . . . . . . . .

1979 c17 Sch A; 1986 c42 s153

ANNEX

LOWER CHURCHILL DEVELOPMENT CORPORATION LIMITED

(Incorporated under the laws of the Province of Newfoundland )

CONVERTIBLE DEMAND DEBENTURE

             Lower Churchill Development Corporation Limited (hereinafter called the "Corporation") for value received, hereby promises to pay to Her Majesty The Queen in Right of Newfoundland, acting through and represented by the Minister of Finance for Newfoundland (hereinafter called "Newfoundland") 60 days after demand on presentation and surrender of this Debenture the sum of                          dollars ($       ), or any part of such principal as remains unpaid, in lawful money of Canada at any branch in Canada of the Bank of Montreal at Newfoundland's option and to pay interest on the principal amount hereof at the rate of 10% per annum from                        or from the last interest payment date on which interest has been paid or made payable for payment on this Debenture, whichever is later, at any of said branches, at Newfoundland's option, in like money half-yearly on                    and                                                 in each year; and should the Corporation at any time make default in the payment of principal, to pay interest after default on the amount in default at the rate of 12% per annum in like money, at any of the said places, at Newfoundland's option, and half-yearly on the same dates. As interest on this Debenture becomes due, the Corporation (except in the case of payment on redemption at which time payment of interest will be made upon surrender of this Debenture) shall forward or cause to be forwarded by ordinary post to the registered address of Newfoundland for the purposes of this Debenture, a cheque or warrant drawn on the Corporation's bankers for such interest, less any tax required by law to be deducted, payable to the order of Newfoundland and negotiable at par at any of the places at which interest upon this Debenture is payable, at Newfoundland's option. The forwarding of such cheque or warrant shall satisfy and discharge the liability for interest upon this Debenture to the extent of the sum represented thereby (plus the amount of any tax deducted as aforesaid) unless such cheque or warrant be not paid on presentation.

             Subject to the provisions of an agreement (which agreement as it may be amended and supplemented is herein called the "Principal Agreement") made as of the 24th day of November, 1978 between Her Majesty the Queen in Right of Canada and Newfoundland, this Debenture is convertible at the option of Newfoundland at any time (i) prior to the demand for the payment of all or any part of the principal hereof or (ii) after the date upon which payment of such principal or part thereof is required to be made, into fully paid and non-assessable Class A shares in the capital of the Corporation as presently constituted at the conversion price of $10,000 per share, being at the rate of one Class A share for each $10,000 principal amount hereof; provided that this Debenture shall not under any circumstances be convertible into more than 10,000 Class A shares as presently constituted.

             Subject to the provisions of the Principal Agreement, this Debenture is convertible at the option of the Corporation in respect of all or any portion of the principal for which demand for payment has been made at any time after the date of such demand and prior to the date in respect of which payment therefore is required, on the same terms as are set forth in the preceding paragraph. In addition, this Debenture may be redeemed at the option of the Corporation at any time upon the payment of the principal outstanding and accrued interest thereon, without bonus or penalty.

             In order to exercise the conversion privilege, Newfoundland shall surrender this Debenture to the Corporation at its head office in St. John's, Newfoundland accompanied by a written notice (which shall be irrevocable) signed o behalf of Newfoundland stating that it elects to convert the Debenture or a stated portion of the principal amount hereof constituting an integral multiple of $10,000. The Class A shares shall only be issued in the name of Newfoundland, a department or agency thereof or a corporation if the corporation is an agent of Newfoundland and its property is owned by Newfoundland, provided that the issue of such shares does not imperil the tax-free status of the Corporation under the laws of Canada and Newfoundland. As promptly as practicable, the Corporation shall issue or cause to be issued to Newfoundland a certificate or certificates in the name of Newfoundland or, subject to the provisions of the Principal Agreement, a nominee of Newfoundland, for the number of Class A shares deliverable upon the conversion. Such conversion shall be deemed to have been effected immediately prior to the close of business on the date of receipt of the notice of conversion and at such time the rights of Newfoundland in respect of this Debenture as to the principal amount to be converted shall cease and Newfoundland shall be deemed to have become on such date the holder of the Class A shares resulting from the conversion. No payment or adjustment shall be made upon conversion on account of any dividends on the Class A shares issuable upon conversion or on account of any interest accrued thereon.

             In order for the Corporation to exercise the conversion privilege provided hereunder to it, the Corporation shall notify Newfoundland in writing within 30 days after the receipt by the Corporation of a demand for payment of all or any part of the principal hereunder, that the Corporation will exercise its right of conversion in respect of the principal amount for which such demand for payment has been made. Upon receipt of such notice from the Corporation, Newfoundland shall surrender this Debenture to the Corporation at its head office in St. John's , Newfoundland and the procedures set forth in the preceding paragraph shall be followed.

             Upon surrender, to the Corporation of this Debenture for conversion in part only, Newfoundland shall be entitled to receive, without expense to it, a new Debenture for the unconverted portion of the principal amount of this Debenture.

             Notwithstanding anything herein contained, the Corporation shall in no case be required to issue fractional Class A shares upon the conversion of all or any part of this Debenture and the principal amount of the new debenture shall be the principal amount remaining after such conversion as if a fractional Class A share had been issued, but with such principal amount increased by an amount equal to such fractional interest.

             In case the Corporation should (i) declare a stock dividend in Class A shares or make a distribution in Class A shares on its then outstanding Class A shares in Class A shares; (ii) divide its outstanding Class A shares into a greater number of shares, or (iii) consolidate its outstanding Class A shares into a smaller number of shares, then, for the purpose of converting this Debenture into Class A shares, the conversion price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision or consolidation shall be proportionately adjusted so that Newfoundland shall be entitled to receive the number of Class A shares which it would have owned or been entitled to receive had this Debenture been converted immediately prior to such time.

             The Corporation shall at all times while this Debenture or any debenture issued in replacement thereof remains outstanding, reserve and keep available out of its authorized but unissued Class A shares, for the purpose of effecting the conversion of this Debenture or any replacement thereof, such number of Class A shares as shall from time to time be sufficient to effect the conversion of the full principal amount of outstanding on this Debenture or any replacement thereof. As a condition precedent to taking any action which would require an adjustment of the conversion price hereunder, the Corporation shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Corporation shall have unissued and reserved in its authorized capital, and may validly and legally issue, the shares to which Newfoundland is entitled under this Debenture on the full exercise of its conversion rights in accordance with the provisions thereof.

             If either Newfoundland or the Corporation exercises the conversion privileges herein contained, no shares issued to Newfoundland as a result of such conversion may be voted at any meeting of shareholders of the Corporation to the extent that such shares together with other shares owned beneficially by Newfoundland would represent more than 51% as nearly as may be of the outstanding Class A shares of the Corporation at any time during which Her Majesty The Queen in Right of Canada is a shareholder of the Corporation; provided that nothing in this paragraph shall prevent Newfoundland from voting any shares issued as provided in sub-clause 4(4) of the Principal Agreement in respect of the principal amount of this Debenture in excess of $80,000,000.

             In case this Debenture (or any new debenture issued in replacement thereof) shall become mutilated or be lost, destroyed or stolen, the Corporation shall issue and deliver to Newfoundland a new debenture of like date and tenor as the one mutilated, lost, destroyed or stolen, in exchange for and in replacement of such mutilated, lost, destroyed or stolen debenture. Newfoundland shall bear the cost of the issue of such new debenture and in case of loss, destruction or theft, shall, as a condition precedent to the issue thereof, furnish to the Corporation such evidence of ownership and of loss, destruction or theft of the debenture so lost, destroyed or stolen as shall be satisfactory to the Corporation and Newfoundland may also be required to furnish indemnity in amount and form satisfactory to the Corporation and shall pay the reasonable charges of the Corporation in connection therewith.

             IN WITNESS WHEREOF Lower Churchill Development Corporation Limited has caused its corporate seal to be hereunto affixed and this Debenture to be signed by its President and Secretary.

             DATED as of the          day of                            , 19     .

                                             LOWER CHURCHILL DEVELOPMENT                                                                                       CORPORATION LIMITED

                                             By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                President

                                             By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                Secretary

1979 c17 Annex

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Schedule B

AMENDING AGREEMENT

THIS AGREEMENT made as of the 24th day of November, 1978.

BETWEEN:  HER MAJESTY THE QUEEN IN RIGHT OF CANADA (hereinafter called " Canada ") herein acting through and represented by the Minister of Energy, Mines and Resources

OF THE FIRST PART

AND:  HER MAJESTY THE QUEEN IN RIGHT OF NEWFOUNDLAND (hereinafter called " Newfoundland "), herein acting through and represented by the Minister of Mines and Energy and the Minister for Intergovernmental Affairs.

OF THE SECOND PART

WHEREAS Canada and Newfoundland have entered into an agreement made as of the 24th day of November 1978 (hereinafter called the "original agreement") for the establishment of Lower Churchill Development Corporation Limited with the primary objective of establishing a basis for the development of all or part of the hydro-electric potential of the Lower Churchill River Basin;

AND WHEREAS Canada and Newfoundland have agreed that it would be desirable to amend the Original Agreement as permitted by sub-clause 18(2) of the Original Agreement;

NOW THEREFORE Canada and Newfoundland agree to amend the Original Agreement with effect from November 24, 1978 , as follows:

        1. By deleting the first sentence of sub-clause 3(2) thereof and substituting the following:

             "The authorized capital of the Corporation will consist of 35,000 Class A common shares without nominal or par value and 3,000 Class B shares, also without nominal or par value."

        2. By adding the following sentence to the end of sub-clause 3(5) thereof:

             "Further, unless otherwise agreed by the parties, each Class A or Class B share of the Corporation shall be issued for a consideration (either in cash or a consideration other than cash) of $10,000."

        3. By deleting sub-clause 5(2) thereof and substituting the following:

           "(2)  The parties agree that they shall cause the Corporation to apply moneys subscribed pursuant to clause 4 solely for the performance of Study Stage Work, the incorporation, organization and operation of the Corporation or such other activities relating to the Project as the parties may mutually agree in writing."

        4. By deleting the references in sub-clause 8(2) thereof to "paragraph 8(2)(g)" and "paragraph 8(2)(j)" and substituting therefor respectively "paragraph 8(2)(p)" and "paragraph 8(2)(i)".

             The Original Agreement, as amended by this Amending Agreement, is hereby ratified and confirmed.

             IN WITNESS WHEREOF this Agreement has been executed and delivered on behalf of Her Majesty The Queen in right of Canada in accordance with Order-in-Council No. P.C. 1979-365 dated 15 February, 1979 by the Minister of Energy, Mines and Resources, and has been executed and delivered on behalf of Her Majesty The Queen in right of Newfoundland in accordance with Order-in-Council No. 452-79 dated April 11, 1979 by the Minister of Mines and Energy and the Minister of Intergovernmental Affairs.

SIGNED AND DELIVERED in                                                                                  the manner aforesaid on behalf of                                                    Her Majesty The Queen in right of                                                                         Canada in the presence of                     Alastair Gillespie                                                                                  . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                           Minister of Energy, Mines &                                                                                                        Resources

James Deacey                                                                                                             . . . . . . . . . . . . . . . . . . . . . . . . . .

SIGNED, SEALED AND                                               DELIVERED in the manner                                                                 aforesaid on behalf of Her Majesty                                                                           The Queen in right of New-                                                               foundland in the presence of A. Brian Peckford                                                                                                                         . . . . . . . . . . . . . . . . . . . . . . . . .                                                              Premier and Minister for Inter                                                                                                        governmental Affairs

Cyril J. Greene                                                                                                             . . . . . . . . . . . . . . . . . . . . . . . . .

SIGNED, SEALED AND                                               DELIVERED in the manner                                                                 aforesaid on behalf of Her Majesty                                                                           The Queen in right of New-                                                               foundland in the presence of C. William Doody                                                                                                                         . . . . . . . . . . . . . . . . . . . . . . . . .                                                              Minister of Mines & Energy

Cyril J. Greene                                                                                                             . . . . . . . . . . . . . . . . . . . . . . . .

1979 c17 Sch B